Historic Volatility Tells Me This Stock Market is in the Middle of an Equally Historic Crash

A gigantic spike at the very end after two of the craziest trading days I’ve seen. Here’s how my trades went. But that’s it for me. I’m staying out of this market, it’s just too crazy.

By Wolf Richter for WOLF STREET:

Holy moly, that was fast and whiplash inducing. Today, the S&P 500 exploded higher by 9.3% to 2,711, nearly erasing yesterday’s 9.5% plunge, which had been the steepest plunge since the 22.6% DOW collapse on Black Monday in 1987, which had been the steepest in history. Today’s action was a classic bear-market rally. Even I could see it coming after yesterday’s plunge. “That was fast, too fast,” I mused yesterday, as the S&P 500 Index was going to heck in a straight line. But that is simply not possible, according to our proven-beyond-a-scintilla-of-doubt and utterly indisputable WOLF STREET beer-mug dictum: “Nothing goes to heck in a straight line.”

Over the five days through today, the S&P 500 jumped or plunged between 4.9% and 9.5% a day, with two moves over 9%, one move of 7.6% and two moves of 4.9%:

This pattern of five trading days in a row with moves of over 4.9% hasn’t occurred in the data going back to at least 2008. In fact, there haven’t even been five days in a row of 2%-plus moves. In fact, there haven’t even been four days in a row of 2%-plus moves – and this includes the gyrations during the Financial Crisis. This is how crazy and record-breaking whiplash-inducing this market is.

But these moves are not surprising, according to our beer-mug dictum: “Nothing goes to heck in a straight line.” And just when you think the beer mugs are wrong, the market snaps back violently and proves them right. During the Financial Crisis, as stocks were crashing, the violent one-day-wonder-bounces were a sight to behold, with several exceeding 10% — in the middle of a crash!

This is typical of most crashes, especially now with algo trading being dominant, and with stock markets being equipped with “circuit breakers” that are supposed to prevent that kind of bottom-fell-out-event that we saw in 1987 (-22.6% on Black Monday).

I consider today’s event a bear-market bounce that confirmed that we’re in the middle of possibly a historic crash, given the already historic volatility, the historic level of stock-market overvaluation in February, and the challenges facing the economy and businesses, of which we’ve only seen the first signs. So today’s bounce was not a good sign in my book.

And one more thing, over half of today’s jump came in the last 30 minutes of breathlessly frenetic and chaotic trading. It was completely nuts minutes before the close, with stock prices on my screen jumping all over the place.

After today’s violent bounce, the S&P 500 has now dropped 20% over the past 17 trading days and is back where it had first been in January 2018.

Like many human and algo dip-buyers  – no “Plunge Protection Team” required – I reacted in two ways to the historic plunge shortly before the close yesterday: One I covered my short position that I’d taken out on December 30; and two I bought, as I said, “some of the worst beaten-down crap for a short-term trade that I hope to unwind over the next few days without getting drawn and quartered.”

And I added, “Please don’t follow me in my footsteps. Watch the spectacle from a safe distance. I’ll try to entertain you with the results.” This afternoon, I unwound all those trades. So here we go with the results.

When I started selling, the market was up about 4%. At the close, it was up 9.3%. I missed much of that end of the frenetic spike because I wanted to make sure I got all this crap unloaded before the close. The worst piece of crap stock in my lineup surged over 70% in the last few minutes! And this reeked of manipulation.

Not everything was a win at the time I sold. It was chaos at the end. Ten minutes later, they would all have been the hugest winners. Yup a few minutes made a year’s worth of difference today, which is another sign of how nuts this market is. So these are the results:

  • Two of “the most beaten-down airlines”: +3.2% and +2.1%
  • Two “abandoned hotel REITs”: +17.9% and +5.1%
  • One “sunk cruise-ship operator”: +9.3%
  • One “crushed aircraft maker”: +10.9%
  • One “near-collapse shale-oil driller”: +23.1% (it went on to surge over 70% in the last few minutes, clearly heavily manipulated)
  • One “crushed automaker”: +0.4%
  • One “wrecked rideshare outfit”: -3.7%
  • One “internet furniture-retail cash-burn machine”: +6.1%

So folks, the way I see it, we’re in a historic market. We’d been in a historic run-up through February, amid historic stock market euphoria, reaching historic bubble highs during a period of languid global growth. And now we’re already in a historic crash, in terms of volatility. We’re facing the bit-by-bit shutdown of parts of the economy not just in the US but globally, with governments and central banks lining up bailout programs for companies, homeowners, banks, and others. That’s how bad it is – unprecedented really.

And even if all this blows over by summer, the consequences will linger for a long time, and some shifts and changes will become permanent.

As me for me, I’m going to stay out of this market for now, because this is just too crazy for me. And I’m going to watch it from a safe distance.

The Fed is going nuts trying to contain this. Read… As Everything Bubble Implodes, Frazzled Fed Rolls Out Fastest Mega-Money Printer Ever, up to $4.5 Trillion in Four Weeks

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  286 comments for “Historic Volatility Tells Me This Stock Market is in the Middle of an Equally Historic Crash

  1. NARmageddon says:

    Is that you, Wolf? :-)

    • Wolf Richter says:

      Seems like it, no?

    • Reality says:

      The House always wins. Always.

      • Old-school says:

        We focus too much on asset prices in my opinion. The SP500 is a proxy for the US economy. Your adult financial life is 60 years split between accumulation and withdrawal. Daily asset prices shouldn’t mean much. Accumulate 10 – 15% of your salary on the up side and withdraw 3% – 4% of portfolio on the down side and it’s a long enough period that asset noise washes out. 100 – age in stocks still is a pretty good rule of thumb.

  2. C in MP says:

    How do I buy a mug?

    • Wolf Richter says:

      C in MP,

      There are two ways:

      1. For $25 with free shipping in the US. This is where commenter RIPP runs the show:

      2. If you donate $100 or more. But then you’re not “buying” a mug. Instead, I will personally send you the mug as free thank-you gift.

      • Martin says:


        What do you think about metals at these prices? If the everything bubble affects fiat currency, would it be possible to see a new uptrend in gold or silver? Not in a matter of days, but weeks to come.

        Thanks for your insights.

        • Wolf Richter says:


          I got burned with silver badly early on. If you buy precious metals as a trade, you need to watch the long-term trends. They’re very long with PMs. You could end up being on the wrong side of the trade for far longer than you intended to hold the PMs. It you’re buying PMs and you never intend to sell them, then that’s a different story.


          In terms of fiat currency, what you need to watch is inflation … different kinds: consumer price inflation, wage inflation, home-price inflation, general asset-price inflation. They’re all a measure of how fast the dollar is losing purchasing power. If the current set of problems cause home prices to come down, the dollar is gaining purchasing power v. homes. So I don’t think the connection is going to be clear and simple.

        • c1ue says:

          Yes, to back up what Wolf said:
          my mother bought 1000 oz of silver at $11 during the first spike (in the 80s!). She used it as a doorstop for literally decades.
          I offered to buy it from her in 2005 for 10% over market cost then: $8.50/oz.
          I then used it as a doorstop until 2011 – when I dumped it for $45/oz.
          After that bubble popped, silver has been bouncing around in the mid teens.
          Decadal time scales…

        • WES says:

          Martin:. Wolfe is 100% correct!

          You buy metal for insurance!

          You will never get rich owning metals.

          You can most certainly grow very poor owning metals.

          Metal prices are rigged and have always being rigged!

          If you buy metal, you will be fighting the central bankers!

          The central bankers can print money longer than you can stay solvent and longer than you will ever live!

          Backed up by over 6 plus decades of very painful experience!

        • GotCollateral says:

          People would be better off thing of metals as 0 coupon collateral that CBs cant print (not an acceptable collateral type with frbny bailout desk), thats also used as collateral and subject to margin calls (like everything else people are long when their portfolios are getting smacked), and banking rules like Basel III. If gov paper yields go up, metals will go down.

        • MC01 says:

          Fresnillo has the Juanicipio mine coming fully online in Q3 2020. Anticipated annual production is 11.7 million ounces of silver, plus about 45,000 ounces of gold. On top of that the new Pyrites plant will become fully operation about the same time: this will recover historic and present tailings at the large Zacatecas mine and and add a further 3.5 million ounces of silver and 13,000 ounces of gold.
          In 2022 the two new gold mines of Centauro Deep and Orisyvo will start production: the latter alone is expected to produce 135,000 ounces of gold per year.

          This is just a single mining company, albeit a large one, operating in a single country. And there are hundreds of similar outfits all over the world: they all have access to that free money to increase production by buying the tech to mine even deeper or recover tailings or bribe local politicians and mine squat in the middle of a nature preserve.

          Like LNG or copper precious metals are facing an oversupply issue: too much supply increase in a market that only grows so much. And what happens when India starts seeing the same changes in precious metal ownership we have seen in Europe in 2005-2010? Who’s gonna buy all that gold and silver once the great sinkhole disappears?

          I know I will probably sound like a burned-out idol on her way to graduation talking to fresh-faced hopefuls, but be very very careful about what gold bugs say. Most of them are just true believers, they are either genuinely convinced about what they say or need to keep repeating the line to justify the thousands of dollars they have sitting in a safe somehwere. But there’s a large number of scoundrels preying on true believers, newcomers and very conservative investors by pitching to them precious metals just before prices are about to enter a looooong downward slope or the shares of two-bit mining companies whose only product is hype.

          If you want to get into this market, learn to do your homework by yourself and don’t allow others to lead you around, no matter how honest and reassuring they may sound.

        • QQQBall says:

          Gold reached record highs against many currencies recently?

        • Petunia says:

          Around 2010 we sold my gold jewelry to survive. It was easy to sell, the silver they didn’t want, I still have it.

  3. TraderX says:

    Wolf, the last couple of days were wonderful for traders.
    Today’s dramatic rise was fully expected based on the Fed’s blasting the markets with money.

    You could see the S&P begin to ‘air-break’ yesterday (jumps then slow declines). While the actual amount of today’s rise couldn’t be predicted, the leap up was well telegraphed. The only reason the market’s moved up during the last year was because of Fed largess.

    If we get back to S&P 3000-3100 , I suggest you put back on your short. There’s nothing but dark days ahead.

    Nothing goes to zero in a straight line.:)

    • unit472 says:

      I’m a dead man walking. 68 and on dialysis. A widower I am ambulatory with excellent lab reports. Withdrew from the transplant list because I do not want to take immuno suppressant drugs. In fact, it was my active immune systems that compromised my kidneys. The non PC condition is called Wegener’s disease. I have enough money to last 20 more years ( but I won’t ).

      I mention all this because it is important.

      Whom do we save? Do we let Donald Trump and Nancy Pelosi mortgage the future of the millennials so I can survive? Good deal for me but maybe not for them. 150+% debt to GDP ratios come at a price and I cost the taxpayer enough already. Were I to have to pay for my own treatment I might last 4 or 5 years if I was lucky. That’s reality. Maybe science would find a way to transplant pig kidneys into humans but, like most medical advances including a coronavirus vaccine, they are always in the future ( I remind you that the common cold, also a coronavirus, has eluded medical science.

      We need to face some hard facts now. I can linger on and do what I can to avoid becoming infected even though my reality is going to a clinic three times a week where people much sicker than I am congregate or we can focus on those under 40 and give them a future.

      • Gold is just..gold says:


        Be assured:

        ‘There Are No Accidents In The Universe’

        To confirm this, look up to the stars on a clear night with a clear mind and tell me there’s no order or majesty or purpose & meaning..

        It’s all perfect, though hard to accept when in poor health and facing death (as we all do eventually; me too more imminently). It’s called ‘life & death’. No escape.

        To be honest I don’t worry a lot about the 40 year olds’ or 30 or 20 year olds’ because.. well, see opening comment.

        It’s how we act in the moment that makes a difference. You can’t change what’s gone & done, only what will be through what you do now. Even when close to the end.

        Now, as the Wolf Man will delete this as OT finance, I’m doing a 180 to stay on track by saying ‘Keep stacking man!’

        • William Smith says:

          Agree totally with your comments. I have had out of body experiences and now have NO fear of “death” at all. My perspectives consequently radically changed. I always tell people that they will be delighted with their new (post “death”) estate. I like watching the markets as a hobby, but I am not worshiping money because you never know when the “great beyond” will tap you on the shoulder. Smelling the roses (not the lucre) is important. Yes, I know that none of this is “scientifically” believable. I am just having fun watching the (once in a lifetime) completely ludicrous market conniption fits.

        • Brant Lee says:

          Precious metals are for those who can’t trust their government and currency (like most of the world). Here in this American utopia, we’ve been conditioned to trust our leaders and our dollar because of these ‘good times’ of the last few generations. It cannot end, right?
          Our federal government never asks the question “Can we afford it”? No, it’s print or borrow with no intention of ever paying it back.
          What have the gyrations of the stock market of the last few weeks shown you? Take your pick:
          1. A strong foundation of never-ending profit and security for wealth.
          2. A floundering government-backed bubble of overnight evaporating I.O.U’s.
          Someday Substance will have value in the U.S. again when we’re grubbing out a living. But that can’t happen, right? Take your pick.

        • kam says:

          Looking up into the sky is looking at the past. No matter how elegant and static it may appear, it is a giant cauldron of temporary dynamic balances of yesterday.
          The exact same as the markets.
          One relatively benign virus and suddenly the globalist world we are supposed to love and embrace, and we have the whole deck of cards collapsing.

      • OutWest says:

        Very powerful comment and I agree, it is far from politically correct to discuss but shutting down civil society to essentially keep the oldest 5% among us alive has consequences, beginning with a financial crash that will perhaps be well beyond anything we have witnessed in modern times.

        Think about how many young abled bodied people who’s livelihoods and futures are being trashed on a daily basis right now.

        I have a few neighbors who are probably going to lose their homes and be wiped out by mid summer and at their age it will be difficult to recover financially in their lifetime.

        It is the young as you say who will be left with our nationally debt and their personal debt. Keeping people alive at all cost has consequences that we are actively experiencing on a daily basis. An ethical dilemma that know one is discussing openly.

        • VintageVNvet says:

          At age 75, but with 4 grand children for whom I feel really poorly about the world we are leaving to them, I agree with the concept that we should NOT continue to heap the burdens on the younger folks/future generations as has been done with the current run up of debt done by the ”crony” politicians/puppets on both sides of the aisle.
          However, I will point out that many younger people in USA are also being supported either totally or majorly at this time, without regard to ethnic origin, etc., as well as many young folks employed taking care of the elderly, especially the very elderly. This work was formerly done in the multi-generation home, also enjoyed/benefited from the wisdom learned over the lifetime of the old folks.
          The foundation going forward is real education of every person to act in their own and their family’s long term interest, education which is sorely lacking today either in most homes or in most public schools. IMHO, the ”elite” get this education both places, and that’s one of the reason many families continue to be elite. And I will add that I taught part time in two high schools for a couple of years, and was astonished by the lack of basic education of many of the students, almost seeming to be deliberate.
          My spouse and I both worked our way through college and worked full time ever since, ( up to last year for me) and have no mortgage or long term debt.
          I really had no idea how unusual that is for folks who have mostly worked manual labor most of their lives until learning about it on this site, looking farther and finding confirmation; one answer may be that beyond the new pick ups I have bought for biz and travel, we pretty much buy what we need and only what we need.
          I think I am done ”working for the man” now, but in any case, that work has only paid for increased investment in wine futures the last few years!

      • You’re just as alive as any of us, don’t let the deplorables start shoveling dirt on you

      • c1ue says:

        @Brant Lee
        Leave the politics out of it.
        PMs are for the return OF your money as opposed to the return ON your money.
        It is insurance, not a magic wand, and is insurance against liquidity risk.
        Do you really see that coming, given the trillions printed in the last decade plus?
        Most importantly: there is actual precedent for the US government cracking down on PMs: FDR passed an executive order where all gold was forced bought by the government – in order to reprice it. In that era, you could not open a safety deposit box without an IRS agent present.
        So any significant quantity of PMs is simply not liquid in a true TSHTF situation unless it is an actual zombie apocalypse – at which point food and ammo is more important. That ain’t what’s going to happen here.

  4. Michael Gorback says:

    The reaction makes no sense because people have no notion of how to deal with a supply/demand shock that’s independent of financial interventions.

    How do you deal with a strategy that boils down to social distancing? Where’s the playbook for that? I met with a landscaper today. He wouldn’t shake hands but he let me use his pen. Useless.

    Are you signing for your credit card purchases using the provided electronic pen?

    Are you using touch screens at the ATM?

    How about pumping gas? Wearing gloves?

    Have you been stopped for speeding and handed your license to the cop? Wearing gloves?

    There are so many holes in our only defense and they can’t be plugged up with money.

    The elite are running to their hidey-holes. Have the flight attendants on the private jets been screened for the virus? Who used the private jet before you did? Read Poe’s Masque of the Red Death to see how power and privilege are not protection against plagues.

    This time really is different. It’s not a financial crisis. The financial crisis is a result, not a cause. Here be dragons.

    • VintageVNvet says:

      Glad to read you are out of the long positions Wolf, and not to worry about losing a dime or two; there are certainly going to be some really good buys when this settles down, which it will sooner or later.
      Meanwhile, since it should be clear to anyone paying attention to this virus that it must now be assumed to be everywhere, as a small payback to you and folks here, I suggest the following protocol I worked out to protect my family when I was carpentering on a huge PEMB, the columns of which were being sprayed with friable asbestos for a couple of weeks, and then later, taking all kinds of asbestos out of many older houses in the SF Bay Area before any of the laws passed to mandate asbestos removal protocols.
      When getting home from anywhere even remotely possibly a contagion situation:
      1. Gently brush off and then take off outer clothes either outside if possible, or inside in front of the washer, and put them into the washer. Don’t touch them again until thoroughly washed.
      2. Walk directly into the shower, remove any remaining clothes in the shower and place them into bucket and then into washer with other possibly polluted clothes.
      3. Shower thoroughly, working from top to bottom, and either use pre prepared ‘neti pot’ or similar to wash sinuses.

      I started this right after the first articles on the new ”science” of epidemiology came out in the New Yorker magazine in 1977, before anyone in the construction industry was paying any attention to the asbestos/cancer connection, other than Johns Manville, etc., who apparently knew about it in the 1930 era but suppressed it to their eventual demise.
      Other than that, after really messing it up in 1992, my doctor told me the only way considered reliable to strengthen immune system was lots of Vitamin C and lots of the best fresh and unprocessed food I could stand to eat.
      Good luck to all of us, eh?

      • Lisa_Hooker says:

        Reminds me of when I was being “trained” to use a Tyvek bunny suit and respirator. I had to teach the instructor how to remove the suit by slowly and carefully turning all of it inside out to contain surface contaminants as much as possible. Also had to tell the instructor to tell people to take off the respirator LAST as he had demonstrated removing it first.

      • kam says:

        One simple thing not being discussed.

        Washing your hands is completely useless if you do not use a fingernail brush to scrub the hidden bugs from beneath your fingernails.

    • Mark_2 says:

      “Poe’s Masque of the Red Death to see how power and privilege are not protection against plagues”

      Excellent cite

      30 years later when they emerge from their “hidey-holes” I’ll be waiting outside, a zombie, ready to eat their brains!

    • roddy6667 says:

      I’m here in Qingdao, China. I see everybody wearing masks but they have bare hands. They touch everything, including each other. Washing your hands when you finally get home is not the answer. I have a huge box of the blue medical examination gloves. That’s what I wear when I go to the market. Early in the outbreak, my wife and ,I flew to Seoul and back wearing masks and the blue gloves. I’m normally semi-paranoid about germs. I don’t touch door handles, elevator buttons, escalator rails and all that. I carry a package of antibacterial wipes when I’m outside. In ten years I have had the flu once and only about 3 mild colds.

      • California Bob says:

        re: “… I don’t touch door handles, elevator buttons, escalator rails and all that. I carry a package of antibacterial wipes when I’m outside. In ten years I have had the flu once and only about 3 mild colds.”

        So, you have no immunity whatsoever?

      • RoseN says:

        As with bare hands, just make sure you don’t touch your face with your gloves on. Those gloves still can have the virus on them! And take them off carefully and then wash your hands.

        • unit72 says:

          I too wore blue latex gloves to the grocery store. I get them from my dialysis clinic as we have to ‘hold’ the area when the needles are pulled out. As for elevator buttons and door handles I have found a use for the plastic grocery bags ( not yet banned in Florida). When I have to go out I take a few and use them to pump gas, grab door handles, etc. I hang another one on my gear stick in the car to put the ‘used’ ones in and throw them away when done. I was never a germaphobe before but I am now.

  5. Cobalt Programmer says:

    I am sure, documentary makers like Micheal Moore are taking notes about plots of the story. I have a few questions about this flu

    1. what took so long for WHO to declare a pandemic. By Feb 25, couple of weeks ago the disease was already in Asia, SE Asia, Middle east, Europe and US. who influenced WHO to stay quiet?

    2. How come in USA, economic questions came to the forefront? Fed chairman and Larry Kudlow are in focus while Surgeon General, CDC head and other doctors were in the back seat?

    3. Did CDC really botched the kits? WHO was distributing free kits to countries like India. Why cant US get the kits from CDC. Rumors has it still now only 5000 people were tested?

    4. What is the major roadblock to close the schools, daycare, theaters and non-essential offices until the situation resolved?

    Feel free to add your questions…

    • OSP says:

      CP, I read that there was a “pandemic” bond issue of several hundred million dollars (paying high interest to the bondholders) in which the payout (and loss of bondholders principal) was dependent on whether a breakout of disease was designated as a pandemic.

      This could be a reason it took so long for COVID19 to be declared a pandemic. Wolf may have some insight into this.

      • WES says:

        OSP:. Goes to show you how corrupt the WHO is!

        Those bonds came due this July, so the WHO were desperately hoping to wait until after July, before using the dreaded word “pandemic”!

    • Jay says:

      Simple answers to all you questions:
      Kill off old and sick people, “burdens”.
      Hide the financial sins.
      But the politicians acted soon enough to “do something”.
      Taylor made virus, released at a perfect time and place.
      It was not real till a few celebraties got it.

    • Jared Mayer says:

      I will take a counter approach which is not necessarily my opinion.

      1. Is this really a pandemic of biblical proportions or is the mass injection of panic from every angle part of plan?

      2. Why shouldn’t economic questions be at the forefront in order to distribute the greatest amount of supplies, to the most people, at the lowest prices?

      3. Do you believe testing kits spring from thin air, when supply chains to make those tests have been disrupted?

      4. Should we be closing down all of these functions, vast swaths of economic activity, wiping out earnings for months? And schools too? Placing children in fear? Perhaps the economic harm and the imprint of fear will in the end lead to more death and suffering than the virus itself?

      Just asking questions is all.

      • Deanna Johnston Clark says:

        Right on all counts…and the tests are only to show a transient virus that is probably on it’s way down the toilet, not sickness itself.

        The fact that “Mr. Rogers” has a public display of it gives the game away.
        Personally I believe only half what I see and nothing I hear! But peace, faith, and healthy eating are worth more than gold and worth betting on!!

    • Bobber says:

      My main questions is – why is China only showing 10-15 new cases per day lately? A few weeks ago, they had 80,000 infections across the country. And now they are almost all back to work????????

      Something doesn’t pass the smell test!!!!

      • Cas127 says:

        There are a lot of disparities across countries and even within single countries across time.

        Some of it is probably just chaos (I think people tend to overestimate the proficiency of the medical industry…the more experience you have with it, the more you realize its good reputation may not entirely be earned…like a lot of “institutions” in theoretically advanced nations..).

        Some of it due to natural variability.

        And some of it due to political/media shaping.

        I think the best you can do is to look at it across countries (some sites break out the detailed data) and try to puzzle out for yourself what may be going on in each.

        Ditto for the pct breakdown of severity (unhospitalized illness – which seems like it must always be an estimate, hospitalizations – more accurate but with a lag/chaos, ICU admissions – more accurate still because lower numbers, fatalities – presumably the most accurate due to post mortems, but even there errors in cause can occur…was it C19 or traditional flu that triggered the ARDS that led to death? In a swamped environment, errors, oversights, and sloppiness will occur)

      • intosh says:

        I’m having the same feeling. My spidey senses tell me something’s fishy.

        Probably an elaborate masquerade to prevent massive panic and market crash. It just took some time for the authorities to plan and set up the masquerade.

        • Mad Puppy says:

          I can’t help but think the Chinese government is looking for a “fall-guy”, those dastardly ” foreigners, to blame for supposedly re-importing the virus and causing a spike in the death rate which I believe is being under-reported now. Compare the infections per million population with countries in the west and try coming up with a different explanation for the discrepancies. In doing so, the government might just survive what could be coming.

      • robt says:

        Probably because they implemented draconian measures to contain it, despite all the criticism from the rest of the politically correct world.
        And every country that implemented severe border entry restrictions after the China outbreak has had limited impact from the virus.

    • California Bob says:

      re: “2. How come in USA, economic questions came to the forefront?”

      You’re kidding, right?

    • Anmol says:

      @ Cobalt Programmer CDC did not give any kits to India. India does have a functional pharma manufacturing sector. These kits and most essential drugs are manufactured in India itself. 100K kits were passed out last week. More are being made available.

      • Cobalt Programmer says:

        WHO gave it to India and other smaller countries I guess. My idea is US can get it from WHO rather than CDC

    • wkevinw says:

      Cobalt Programmer: No questions; maybe some semi-answers.

      During the fog of war decisions must be made with incomplete or erroneous information.

      “Theory” of operation of some aspect of response can be simple, but in times of crisis capacity/numbers get to be the problem. There is simply no way to plan for the numbers or tests, amount of medical equipment or hospital beds one could imagine as worst case scenario.

      1. Mistakes will be made.
      2. Everything seems obvious in hindsight

  6. Unamused says:

    Historic Volatility Tells Me This Stock Market is in the Middle of an Equally Historic Crash

    He might be depressed again on Monday, but today Mr. Market was, well, manic. Not only is the herd mentality striking, but Mr. Market is responding strangely to the signals.

    For example, just because Fearless Leader has gotten on board with dealing with the pandemic doesn’t mean the late, inadequate, and reluctant response is going to prevent any serious damage to the US economy. But that’s how Mr. Market acted.

    And there are other examples.

    The US banking sector hasn’t been doing all that great but has been able to disguise it. Otherwise it wouldn’t be needing such a huge bailout so early in the course of the pandemic, and the recession in the real economy hasn’t even hit it yet. Mr. Market doesn’t seem to appreciate that. He doesn’t seem to be appreciating what’s going on in the fossil fuel industry either.

    We know he can turn on a dime, though, because he keeps doing it. The financial markets can’t really be expected to behave all that rationally anyway because there’s all that constant gaming going on. Lots of unpriced risk.

    • Paulo says:

      Today I compared the difference in actions between Canada and the USA with regards to this pandemic. In the US there are brinkmanship negotiations going on about the relief package, namely, the Dems want to bail out people and the Repubs want to bail out business and threaten to scuttle everything if it involves paid sick leave for workers. It is all being done in the hostage aura of an election year.

      In Canada, the PM had a press conference this afternoon and stated no Cdn citizen would suffer not being able to pay their rent because of the virus, or miss their mortgage payment, or not be able to buy required food. Additionally, all business would be supported immediately by fiscal changes and adjustments. Unemployment insurance waiting periods are reduced for longer term layoffs, and of course testing is actually being done throughout the country, is free, as is hospital care to address any illness. Unemployment is a Federal responsibility in Canada whereas in the US Feds want to download any costs to states and local Govt that ultimately control state unemployment programs. There is also insistence of medicaid caps and not getting rid of co-pays for the benefit of the medical insurance industry.

      A country that has no heart for its citizens will not survive in the end. Pure and simple. The US, (any country), must look after its interests and not just the interests of selected industries and the connected wealthy.

      What ever happened to by the people for the people?

      Today, there was a call in our local news feed to stop all WA ferries that enter BC. Furthermore, all levels of Govt urged Canadian residents not to travel outside Canada, anywhere, including to the states. If they leave they should self-quarantine for 14 days. Travel medical insurance will most likely be void for Canadians if they contract illness in the US. Our skies are still open to Europe, but all intl passengers are funneled through select port of entries for enhanced screening. There are no blanket embargoes.

      The point of this comment is to state my belief that the US is at a turning point. I do not believe it will survive in its present form unless it pulls together against the virus. The economy is just the seasoning, the garnish. More people have to start winning and sharing the wealth going forward.


      • Unamused says:

        All true. Thank you.

      • Martok says:

        Paulo – likewise as Unamused, and I will add it’s obvious which US party cares for the middle-class, and poor.

        The other party cares about the survival of the rich, and the hell with the rest of the people. – It’s always been this way.

        • p coyle says:

          “it’s obvious which US party cares for the middle-class, and poor.”

          indeed. the one we don’t have.

        • Trinacria says:

          P Coyle is right…the way I see it, one party will kill us, while the other party will kill us, but with “care”. This is all coming down folks…Canada included. Sorry to say, but I believe it. And, it was a bipartisan effort…democans and republicrats. Interest rates have been on a downward trajectory since the peak in 1981. If money is priced too cheaply, ultimately bad things will happen. Too many folks have been seduced into borrowing to buy crap they don’t need. Governments and big corps. have borrowed too much as well. Well, this is a fine mess they’ve gotten us into Stanley (as in Laurel). I am not kidding when I say, gird your loins. In summary, gov’t., corps., and consumers behaving badly…a sociological event over time that will manifest itself financially in a ruinous manner…they rest of the world and Canada included.

      • Seen it all before. I was “screened” and made to wear a dust mask when I flew to Argentina back during… Hm. The LAST great financial meltdown. And who even remembers the name they gave to THAT viral horseman of the Apocalypse. Chicken flu? I defaced my dust mask with “paranoia” and enjoyed sharing maté, wine and social kisses with those who still enjoyed life. Wag the dog.

        • Gandalf says:

          Rudy Gobert did the exact same thing and single-handedly shut down the NBA.

          This virus is way more infectious

      • Bart says:

        This a great opportunity for these over indebted companies to discharge a lot of their debts and start fresh . Bailouts would allow the money renters (Bankers) to continue extracting their pound of flesh .

      • Old-school says:

        The government can never be big enough to take care of all of our problems. Our founding fathers recognized that men were not angels. We are living in la la land that we each can shirk our personal responsibilities and shift that to the government. Now we just say it would be nice if we lived in utopia and print the money to make it happen. It is the road to be slaves and not free people. Taking care of yourself and your family is a lot cheaper than giving your money to the government and letting them manage it.

      • Deanna Johnston Clark says:

        Yes, but bureaucracies alone can’t do it It has to be a cultural improvement in neighborhoods, families, person to person, churches that care more about the living than about sound systems and buildings.

      • Wolfbay says:

        A country with a Fiat currency and no fiscal discipline will not survive in the end. Adding more and more public, private and corporate debt is eventually unsustainable.
        I agree with the actions of the Canadians and our lives and health are the priority.
        However if the virus is the pin that busts the “everything bubble” there is going to be a lot less wealth to share in the future.

        • Old-school says:

          The Fed has the ability to elevate asset prices, but elevating the price of the asset class doesn’t alter the future real earnings stream.

          In reality if someone pays the elevated price their future real rate of return is lower. In many ways it’s a deception to instill confidence in society that we are wealthier than we are.

          Just answer this question. Would a central banker prefer to have assets over valued, correctly valued or under valued. We know the answer is over valued (wealth affect).

      • Lisa_Hooker says:

        Paulo, the old trick was having some (plural) children out of wedlock to develop a government income stream – at least for 18 years.

        I fear a new trick is to be officially tested positive for COVID-19 so that you qualify for free rent, mortgage and student loan holds, etc. This seems to be a reasonable strategy for the young as the recovery from a mild case is quite certain. It’s obvious from the drug problem that many are not particularly concerned about health. But you do need to be officially tested and certified.

      • intosh says:

        “I do not believe it will survive in its present form unless it pulls together against the virus.”

        It’ll take much much more than this virus (which isn’t even that deadly in the first place) to take down the nation that essentially calls the shots on planet Earth. The USA is the game master, and as such, it’ll stay in the game for a long long time. It may come out of this with a small bruise but no big deal; and certaintly not enough to promote any real change. Even if when it’s all said and done this virus claims the lives of thousands of citizen, it will pass and everyone will go back to business as usual. You will be surprised how resilient the status quo is.

        The Gov/Fed will print trillions (since they are the game masters, they can keep doing that for a long long time) and the millions of people, minus the few thousands who died, will still be able to buy their toys and enjoy their entertainment, while feeding themselves more food than they really need. Why would they want to get off their couch and demand (real) change? They aren’t even ready for Sanders for crying out loud; how the hell would they be ready for any real fundamental change?

        • Lisa_Hooker says:

          Big difference between “game master” and banker. Ever play Monopoly? It’s only fun if the banker is honest and the play money is limited. In the 19th century England was the banker. How’re they doing now?

    • otishertz says:

      Premature rehypothecation

    • timbers says:

      Hi Unamused,

      You may already follow NC based on your highly informed comments. NC has some great articles today on our response to the virus. California can only do 20 tests a day and so is choosing to alter it’s response to the disease. The so called greatest healthcare system in the world can’t do what China other did (lots of testing) to narrow the disease.

      It exposes the falsehood of those who keep saying we are prepared because we have the best healthcare on earth.

      It really drives home how our privatized corporatized for profit healthcare systems is one of the worst in the world, makes us unprepared, and is 3rd world at best, and hurts all of us.

      “The admission that the US, even if it had coronavirus test results, lacked the institutional capacity to do contact tracing, is a stunner. Gee, we supposedly live in a world of AI and big data, but our Silicon Valley gearheads can’t come close to what China has done?
      But we can find the resources to do VIP contact tracing, like of the politically important attendees of the CPAC conference.”


      Public health officials in California’s state capital region announced this week they have stopped tracing the contacts of patients diagnosed with the novel coronavirus. They’ve also ceased recommending quarantines for residents exposed to people confirmed to have the virus.
      It was a grim recognition of the virus’ infiltration — and is yet another sign of the detrimental effects of a lack of capability in the U.S. to test people for the deadly coronavirus as it continues to spread.
      “The reason we have to move on is because testing did not occur. We’re still able to do about 20 tests a day,” said Dr. Peter Beilenson, director of Sacramento County’s Department of Health Services. “If you really wanted to quarantine and contain the situation, you would have wanted to know who was positive and quarantine them. Because we never had the tests, it’s kind of a moot point, and the horse is out of the barn.”

      • Unamused says:

        Yes, I’ve been following that. Thanks!

      • Wolf Richter says:


        This: “California can only do 20 tests a day and so is choosing to alter it’s response to the disease”– is uninformed BULLSHIT.

        For example, Kaiser Permanente has set up three drive-through locations in the Bay Area where you drive up, stick your head out the window, and they will take samples (from mouth and nostrils), and off you go. 5 minutes. This is the system in place in South Korea. Drive-through testing avoids the issue of contaminating the whole hospital.

        • Unamused says:

          It was true when first reported. Things certainly move fast, don’t they?

          Believe it or not, CA broke federal regulations by using test procedures developed by its university system, seeing that CDC kits were defective. So did other states. FDA has since then approved some of them.

        • David H says:

          Yes I agree with Wolf this comment is uninformed

          Do you remember who the first country was to come up with an accurate reporting mechanism and post it on the internet ? China ? No, the US and Johns Hopkins university.

          The issues with medical insurance aside , there’s still a highly sophisticated medical system in the US

        • Unamused says:

          Do you remember who the first country was to come up with an accurate reporting mechanism and post it on the internet ? China ? No, the US and Johns Hopkins university.

          China built its reporting system during the SARS epidemic years ago. They’ve been through this before.

          California is being forced to shift from containment to mitigation. So is King County in Washington state. That’s dangerous but they don’t have much choice. Testing did not occur in time and will still take weeks to ramp up.

          Don’t argue it with me. Argue it with the governor of California and the California Health Care Foundation.

          As of yesterday, the number of U.S. residents tested stood in the thousands, the efforts of Kaiser Permanente and others included. By contrast, South Korea has been testing 10,000 people a day for weeks. China has been able to trace tens of thousands of contacts each day. The US has been able to do that for top connected politicians, but only belatedly, and is almost unable to do that anywhere else.

          The horse is out of the barn.

          The issues with medical insurance aside , there’s still a highly sophisticated medical system in the US

          Not that it matters. The logistical capability simply isn’t there. Decades of reduced and stagnant budgets have left public health departments trying to do more with less, from the top down.

          And that was despite major outbreaks of other diseases almost every year. Naturally, the US has had ‘other priorities’.

      • mike says:

        Amen. WHO offered them tests reportedly. US is like a group of countries. it is not to late to improve in uninfected areas with travel restrictions to protect them.

    • Lisa_Hooker says:

      Had an early dinner with Mr. Market and a few friends late Friday. One of us asked him what the heck was going on. He said he really didn’t know as he has been semi-retired for several years and on a vacation at home the past two weeks. He said he hasn’t been doing much business of late and that what we are seeing is just the result of random uncontrolled “noise” from ignorant money.

  7. michael says:

    In my mind the the market target is at least the 2019 low.

  8. Paul says:

    you meant to say “safe distance”

    yep it is like the GFC…. a lot of fixed buy orders I put in were not filled as some others orders were filled way up into unrealistic prices no one would buy at during the GFC so I was only successful with a few buys and waited it out. A portfolio simulator I ran on different crisis scenarios said it would survive and it did with a large recover bounce one year after but my cheeks turned red when I first saw how much it cratered.

    Here on the TSX it now appears more orderly but I am waiting on the sidelines and watching a few stocks.

    Some plumbing in the fanatical system has sprung a leak…pun intended.

    In normal times I put in a buy order for 500 shares of some bank and it came out as 5000 shares which was unnerving to correct but it did not cost be much except the anxiety at the time.

    Just came from reading Garth Turners blog where he says all is good and life will be normal soon. What does he know with his balanced fund strategy typically takes 3.5 years to break even like all of them during the GFC if one checks it out.. I read it for the housing market insights..

    • Dan Romig says:

      I took “save distance” to be literal: saving one’s money by staying on the sidelines and not getting back in the game.

    • Danno says:

      Garth Turner is a financial advisor and I feel he wrongly told all his readers and clients to hold tight and dont sell this….

      No one knoes the future but reading Wolf Zero listening to experts like Gundlach and Shiller, something was up.

      I hate arrogant financial advisors.

      • MC01 says:

        Advisors can be wrong, and sometimes spectacularly so. It’s in the human nature to screw up, sometimes catastrophically: only pathological liars, braggarts and fanatics never commit mistakes.

        But general rule of thumb is to use extra-caution around people peddling books with titles like “Sheeple” and “The Strategy”, and even more so around people who give away their supposed secrets for free or nearly so.

      • Old-school says:

        Probably the best financial advisor was Mr. Boggle that founded vanguard. Use sp500 index and total bond index and don’t monkey around with it and you will beat about 80% of investors.

      • David H says:

        To be fair both Shiller and Gundlach completely predicted this crash within about 6 months of it happening !

        • Danno says:

          Yes they are experts with a great productive track record.

          It’s wise men like Wolf who stay away from giving advice and being objectively independent that don’t vs arrogant clowns like Garth Turner that spew arrogance on their blogs all in the probable self promotion of their offerings for profit.

  9. Yi says:

    The bounce was not unexpected if one considers the size of repo operation and liquidity injection by the Fed.

    When you shorted the market in the beginning of the new year, I thought it was a brilliant trade but personally my guess at the time that it was too early, and I was right.

    At current level, I disagree with you that this is a historic market crash. In fact, we are in the middle of a overdue correction. If Hyman Minsky were right, this is not what he would call “the Minsky Moment” like 2008 GFC. My assessment is that the market has not reached the “ponzi stage” of the Minsky model and there are still way to go.

    Anyway, I am happy for you that your shorts and subsequent longs have worked well for you. I strongly advise you to reassess the current market situation and think over again.

    • BobbyDents says:

      That wasn’t a injection of liquidity. Nor did it have anything to do with the market “reversal”. It was just shaky traders deciding they wanted to hold into the weekend. This happens all the time.

      There is no liquidity crisis. Period. If there was, banks would have traded off assets, but they ignored the Fed repo move and demanded higher interest rates.

  10. Mike says:

    I’m relatively young (39), fortunately sold a business in November before all of this chaos began, and have a bit of liquidity for the first time in my life.

    I’ve been reading this site for the past few months. I have a bit of money across a few asset classes, but my basic thesis right now is that cash is a pretty good place to be while waiting for the dust to settle and opportunities to emerge. Is this perspective invalidated with the flood of liquidity from the Fed? Seems like cash would inevitably be discounted as a result.

    Anyhow, just trying to get a sense for what smart people are doing with the money that they’d like to preserve and–ideally–grow.

    • Martok says:


      I sure don’t have all the answers, but have been investing since ’82 and this is the most extreme action I have ever witnessed. – I read tons of investment newsletters and Wolf is at the top of the list.

      I’m all in cash until things settle down, and IMO we are in for a wild ride, and believe we will be in a sustained bear market, and the fallout from future business defaults, bankruptcies, mergers, bailouts, unemployment, and unforeseen problems, et, etc, – makes it real real risky to invest, and believe we will enter a recession or crash.

      The interventions of the Fed make a “rigged market” and luckily exited all short option positions Thur. after I heard the Fed was going to intervene in a big way and knew the markets would most likely rally today.

      I can’t recommend doing options, the learning curve is steep, and takes many years to grasp.

      The market was weak way before the coranavirus, but believe this rally will be short lived as we enter a recession, and more downward action, or maybe a epic crash that will be worse than 2008.

      Many here are in physical gold, silver, and cash too – read the comments of people like Unamused, and several others, I certainly have gained a lot of knowledge and insights too.

      There isn’t a rush to invest in anything – stay in cash, you have made some wise chooses at ’39 – and capital preservation is key to investing – it will be many months before this settles, if ever.

      • Martok says:

        ps – I also read Ray Dalio who runs one of the world’s largest hedge funds.

        • David H says:

          IMHO he’s over rated – he released the “cash is trash” article only a few weeks before this monumental crash. And ironically it crashed shortly after and his hedge fund isn’t doing very well

          I would suggest following Jeremy Siegel, Yardeni, Jeff Gundlach and Robert Shiller. Jim Cramer has also done a much better job at following this event than Ray Dalio, no offence to the poor man ….!

        • Martok says:

          David H,

          Yes looking back he did say that, however he has given good commentary about the market and bubbles and crashes.

          He did say cash is trash, – I thought he was crazy at the time Jan 2020, – but in Nov 2019 he had a 1.5 billion put on the market.

          He said today he can’t believe he missed the move, but he got the 2008 move.

      • Mike says:

        Thanks for the response. I guess patience is probably the best course at this stage.

        I do have a bit of gold (physical and ETF) but with the GVZ >37 I am a bit worried that this is going to be subject to the same pullback as the larger market.

        For now, sitting in cash and waiting for strong opportunity signals is maybe the best bet.

        Appreciate your thoughts. Lots of experienced and smart folks on this site.

    • Shiv says:

      I’m in a similar situation (sold my business in August), I’ve been looking for a nice cashflowing business to buy but luckily haven’t found one yet.

      • Mike says:

        You’ll probably be able to pick one up for pennies on the dollar once the dust settles. I am extraordinarily grateful that we cashed out when multiples were ridiculously stupid. It looks like things are going to tighten up quite a bit moving forward.

  11. George says:

    You “hit the nail on the head” using the word “manipulation.” That’s powerful and can explain many gyrations in heavily traded markets. Add to those “tools” the power of margin clerks to create and fuel downward spirals with the taps of buttons and you have an unmitigated horror show. The damage is unrelenting. The profits realized by a few are stratospheric to say the least. Fasten your seat belts girls and boys, the plane is about to do back loops and front loops!

  12. Joel says:

    Wolf- what is your SPX upper and lower range between now and year end?

  13. Pilgrim says:

    I think this whole virus saga will peter out in a few months. Trading will probably stabilize after a few drops & rebounds. But I doubt the large correction (50%+) will happen – they won’t allow it.

    • Jake H says:

      I hope not but the fed pushing that much into the economy could cause hyperinflation in the cost of living (as it allready is) and that would force most people out of the markets while greatly raising debts(that are already out of control), more business closures, layoffs, causing another collapse and possible reset. If that happend pms will be a great postion to be in, physical holdings…

      • HowNow says:

        I think that the “hyperinflation” fear is way off. We haven’t experienced hyperinflation since forever. The fears in the 70s/80s were greatest when the CPI hit about 7%. Volcker jacked-up interest rates (while Congress was railing against him – may have just been theatrics…) and at its height, the FED raised the rates to about 20%. That was short-lived though. The economy sunk very, very fast – borrowing came to a complete standstill, construction projects were halted unfinished, and a deep recession hit. Major developers in Los Angeles went bankrupt. I don’t know about other cities.
        Back then, what the FED was doing wasn’t front page news. Few paid attention to the FED until there was inflationary fear and some had nightmares about a true hyperinflation.
        If the FED were to raise rates now to stop a serious uptick in inflation, the market would plunge, businesses would dive, banks wouldn’t have takers for loans, and whatever inflation was evident would be shut down pronto.
        That’s not to say that the currency isn’t turning into toilet paper. It’s just that the fear of hyperinflation is exaggerated.

    • Ron says:

      The US rate of infections mirror Italy at this point maybe worse for sure NY
      here is an American living in Italy under their lockdown rules

      p.S. Dr Ho from Columbia who created the antibodies that fight HIV and is currently working on COVID-19 said today that it will be months before any drugs can be developed and used. You are on your own.

    • michael says:

      Because you believe they are in charge?

      • Pilgrim says:

        Ultimately kind of ‘yes’. Rules can be changed. Fed can start buying stocks. Many different kind of rabbits waiting to be pulled out of the hat I think. See the big guns they pulled for just a 10% drop?

        • Anmol says:

          I asked this many times earlier, sadly wolf prevents the post from coming up. What happens when the market fixers themselves fall ill? The pres, vp and all the feds men get the virus.

        • cas127 says:


          What happens when decisionmakers get ill?

          Well, even if they only get average care…80 pct are likely to not even have to go to the hospital.

          That is what the worldwide stats continue to show…and the fatality rates are generally in the 1 pct to 3 pct range (of the hospitalized, not the entire population)

          So far, the actual numbers don’t support the wholesale panic that keeps creeping back in.

          Most of the major steps taken (national emergency) have been taken to slow the rate of infection (assumed to be high, although multiple other countries seem to have greatly limited hospitalization number growth) in order to make sure that the finite ventilator numbers in US are not overwhelmed by demand spikes from the 5 to 10 pct of the infected who end up needing truly intense medical care.

        • You mean QE for stocks? Can they do that??

        • Gandalf says:

          Haven’t you heard? The Stable Genius is the healthiest and most virile man alive on this planet! His doctor says he is already immune to the virus and thus will never need to be tested, ever!
          People get minor colds all the time!

  14. Iamafan says:

    Keith McCollough of Hedgeye has a trading rule. When the VIX is above 31, stop buying and relax. They’re smart guys (my “neighbor” here in CT).

    • JRM says:

      Yep agree – “Macro show” Hedgeye subscriber here for a couple of years. Their analysis and trading approaches, even for infrequent traders like me, help take a lot of the angst out of trading. Not to mention help to make money ; works for me. Their 2018 bond call has been awesome and the “risk ranges” were spot on for increasing / reducing my position, but I finally sold my stake after things got wierd in the last couple of weeks. N.B. I also support wolfstreet by clicking on all the ads, but I confess that I never buy anything…

  15. James Franklin says:

    The unfolding stock market crash, the economic slowdown, and the overriding fear has to spread into other markets. Which bubble pops next, housing or corporate debt?

    • Jon says:

      Here in Socal my friends who hold multiple properties think housing in southern California is immune to all things

  16. phathalo says:

    I have been long a volatility index etf for longer than 6 months so I can say I am grateful for the gyrations. Here’s hoping the gyrations intensify a little bit and that actually fully reflects on the damn thing for a change.

  17. Jake H says:

    I think the dow will drop 5,000 more points by the end of the year. I think the fed is simply trying to slow it down. Pms will decline until people run for it as a hedge than it will explode in price. Just my opinion. Inflation will push pms to the max, pms will be highly sought after in a year or two.

  18. Adam says:

    This “last hour” extreme spike seems to be a regular occurrence in the past two weeks. Algos? It doesn’t feel like human action, although I’ve long given up trying to predict the stock market.

    Granted, Trump gave a speech today an hour right before the close, so that could explain the rise today; although from what I heard about the speech, it wasn’t one to inspire confidence.

    • Iamafan says:

      Seems like it was the first minute and the last 25 minutes of regular trading hours. Like the algos going wild.

      Those with the cajones left to trade.

  19. andy says:

    Doesnt matter how much cash you have/the Fed tips in -even trillions – if the price is not right, no-one will buy it.

    And the price of US securities debt and equity has been rigged for years.

    Equity is purging now, and debt will follow.

    Until debt purges expect hi vol and low/no liquidity.

    Even the Fed cant hold back markets forever, and the markets time has come.

    • Cas127 says:

      In general, I think you are on the right track – despite the thousands in pt losses, we are only actually back a couple of years in terms of index price levels – ZIRP has pumped a ton of air into valuation metrics and only about half of that excess has been let out.


      ZIRP elevated SP 500 PEs to about 25, from a long-term, non-ZIRP norm of about 15.

      C19 impact to date has dropped the PE down to about 20.

      As the real world earnings hit register in the months to come, the lower multiplier will be applied against lower e(arnings) as well, dropping the price level further.

      How much, unknown.

  20. Trinacria says:

    Again I ask, where are the Dow 40,000 folks in all this ?

    • DR DOOM says:

      Trinacria: I fess up , to being a Dow 30k+ parrot . I believe that covid19 was the pin that pricked the bubble.The bubble would eventually pop but but I still believe that the bb on the edge of the razor blade Dow would hang 10 till after the election .

      • Trinacria says:

        Dr Doom – by “hang 10” do you mean Dow 10,000 – I believe it will happen … unfortunately … but hope I am wrong.

      • Jon says:

        If covid19 didn’t happen dow could be much higher
        People like shiller predicting for crash and others could never see predict it I guess

    • S says:

      >>where are the Dow 40,000 folks in all this<<

      Why wouldn't the Dow hit 40,000? As the currency is devalued, certain asset prices should rise. The goal is to pick the right assets to be in as the devaluation unfolds.

      The playbook I'm going by says first there will be a burst of deflation (and a Fed response), then stagflation (and no Fed response or an underwhelming Fed response), and then hyper-inflation. My time line is 3 to 4 years on this playbook.

      • Trinacria says:

        It will get there eventually, I believe you are correct, but I also believe it will take the scenic route and go below 10,000 first.

  21. Mock turtle says:

    I am not so smart. But it looks to me that the Dow rose over 1000 points in the last 20 minutes …or so. And I would bet on thin volume in comparison to sell off volume. The syste is, of course , rigged.

    • Anmol says:

      Or Trump made a call to his wall Street buddies so his speech would look good. I’m going to trade when Trump gives his speeches.

    • Iamafan says:

      I get very amused and laugh as the Bernoulli bands widen like a ballon. Trading on 2-3 sigma moves is better than caffeine.

    • unit472 says:

      I do note that market ‘stops’ are only for the downward direction.

  22. GotCollateral says:

    If you think equity is crazy, well dont look at credit markets or UST markets LOL

  23. WES says:


    Your feeling this time is different is backed up by how savagely the central bankers have hit gold but more importantly gold stocks.

    Gold itself is only down 10% but gold stocks are down 40% and more.

    Senior gold stocks fell another 10% plus today while the general market recovered 10%. So they are down 40% verses 20% for general market.

    This something I don’t think I saw happen in 2007 in such a short period of time. Over time gold stocks nearly died!

    I believe this time central bankers targeted both gold and gold miners.

    I take it as a sign central bankers are much more desperate this time.

    • HowNow says:

      If you really think that the FED was targeting gold and gold miners, you should consider psychotherapy.

      • WES says:

        HowNow:. In a Fiat system, it is very important that there is no “real” horizon for reference. That is the reason central bankers need to keep gold and silver prices down.

        It is just like flying an airplane. For the pilot everything is referenced to the horizon. As soon as a pilot looses sight of where the horizon is, he is in big trouble!

        Ask Kobe Byrant what loosing track of the horizon means.

        • Cas127 says:

          Speculatively true in terms of fiat G incentives…but hard to prove.

          The fiat dollar is a very jealous mistress (having been turned out and abused for decades), and it is hard to tell just how far she might go to brook no rival (because she desperately cannot afford to).

          But in the end, people only have use for stores of value that actually store…and they won’t stop looking until they find one.

          DC’s power exists on ever thinner presumptions, having presumed upon them for so long.

    • QQQBall says:


      Well, in 2007, I dont think the mines were in danger of closing en masse. What happens when miners start testing positive? Plus, the underlying is also dropping? And they are heavily in debt.

    • MJ says:

      Gold stocks went down because everyone took profits there to cover stock losses. Hang in with them. As read earlier here, they are insurance.

  24. timbers says:

    “Don’t under estimate the power of the Fed. The inability to generate profit or engineer planes transportation entertainment is insignificant next to the power of QE5.” – Darth Jerome.

    • Cas127 says:

      Yeah, but look at how that turned out, Darth…btw, you still owe the mortgages on DS 1, 2, 3…

  25. Reggie says:

    If the markets did not have breakers on them that halts trading, and the PPTs did not exist, the markets WOULD go to hell in a straight line.

  26. Michael Francis says:


    The same thing happened with the Australian Stock market which is a day ahead of everyone else.
    The All Ords started out about 7% down then rallied to close at around 1.6% in the green at the 4 PM close. Funny thing is after the close the All Ords rallied another 3% or more for the next hour. In a nutshell the All Ords rose almost 10% from high to low.
    There’s definitely a pattern. Reckon all Central Bankers come up with a strategy in an emergency during a phone hook up and Australia due to its time zone advantage gets to be the first to try it out and the rest follow. Happens all too often.

    • Gold is just..gold says:

      ” The same thing happened with the Australian Stock market which is a day ahead of everyone else.”

      Or behind.

      On a certain night in Oct 1987 couldn’t sleep, half listening to BBC World News….heard of the the SM crash, woke up real fast and by 8.20AM was on the doorstep of a managed fund office (MLC Centre) where I had a large chunk of cash wealth ‘invested’ (now use the term loosely).

      Full withdrawal accepted, Bingo! They didn’t have a ‘wait’ clause. Out in full.

      Raced to another fund in Pitt Street (CR) where another chunk of funds were ‘invested’. Ooops! Smarter lawyers, detailed fine print, suck it up.

      Scary days, to be repeated now in spades… different scenarios, similar outcomes = Screwed.

      Unless, of course….. Oh! if you haven’t figured it out by now, or are really, really smart and can catch a short falling knife, …never mind..

  27. Kasadour says:

    You must feel vindicated in that things certainly do not go to heck in a straight line, but huge zig zaggy ones.

  28. otishertz says:

    I’m out too but will be back in with both feet after a 50 + percent drop stabilizes.

    I can’t help but believe what we are seeing is induced deflation with the latest viral pandemic being the scapegoat. Call me a naysayer on TEOTWAWKI. Corona is a conveniant excuse. We are not all going to die.

    There was too much money sloshing around the system. Orchestrated capital destruction is now a monetary policy tool. The punchbowl used to be pulled away with raising interest rates. That’s no longer an option.

    You see, Mortimer, if we destroy “money” now, we get to create more “money” later.

    • HowNow says:

      Too bad that conspirators get to voice their wacko opinions. Absolute B.S., otishertz. You might be singing a different tune if a few in your family get a bad case of this. If people were less narcissistic, there’d probably a LOT fewer conspiracies floating around.
      Yes, you actually “can’t help but believe”. It’s belief; it’s not reality.

      • otishertz says:

        Why so angry? It’s only an opinion. I could be wrong.

        The aspersions you cast define who you are.

    • Cas127 says:

      “Orchestrated capital destruction is now a monetary policy tool”

      Well, G friendly Keynesians do hate ’em some private savings…interfering as they do with the theorized “optimal” growth path the enlightened G can always seem to envision, but never seem to achieve…

  29. Ghassan says:

    So you kept your SPY? If so are you planning to sell next week? I mean +%9 in one day seems a good win to me considering the situation, no?

      • Ghassan says:

        Yes I have read that article and I assumed that you thought this is the bottom or near the bottom, but then today you sound to be not so sure judging from this article. It seems that you could have waited a little longer to cover your short considering the spread and the effect of the virus just started in the U.S….. I’m asking to learn not criticizing by the way

        • Wolf Richter says:

          I outlined the three reasons in the article why I covered the short, and none of them indicated that I saw a market bottom:

          1. I’ve had enough.
          2. I feared we’d get a violent bounce-back on Friday (and we did)
          3. The Fed’s new bazooka, and I wanted to see what it was aimed at.

          These bounce-backs are now so violent that I don’t want take out another short. It’s just crazy. I’ve never seen the markets being this volatile day after day.

      • wkevinw says:

        Again,great short!

        These crashes create great buying opportunities.

        I did raise some cash at end of Feb. It wasn’t because of the virus issue: the markets were showing quantitative weakness. (Note- if you can’t use quantitative measures that signal opportunities like this, you shouldn’t “trade”.)

        In the next 1-6 months, assuming the virus is dealt with properly, there should be at least a several month long bull market (some kind of “mini-bull” at least).

        Mid-2021? After another bull run-up-Could be very challenging.

        • VintageVNvet says:

          Depends entirely upon the election IMO.
          Though I am also thinking the oligarchy that own the world have decided to replace the incumbent pres by allowing and possibly encouraging this crash now, as opposed to after the election.
          How soon the SM and commodities ”settle down” will be very interesting to watch, and add some clues to which way the election is to turn out.

  30. tim says:

    Gold and Silver plunged hard again on Friday. “Nothing goes to heck in a straight line.”

    Except gold and silver… for some reason. I bought some silver on Wednesday… so please don’t follow my investments, or you’ll be poor.

    • HowNow says:

      But “something can go to stupid in a perfectly straight line”. Stop “investing” in precious metals. It’s a manipulated market. May as well play roulette.
      Took my late father-in-law’s late wife’s wedding ring into a few jewelry shops. Under a microscope, they identified a crack in the diamond. It was worth zero. The 24K gold ring? About $85. But his receipt for the ring, bought many years earlier, was $1200.

      • X-PAT DE says:

        Jewelry isn’t an “investment”. You will inevitably always have to suck up the scrap/melt price.
        Buy gold/silver for your children/grandchildren – wealth preservation.

    • Gold is just..gold says:

      You’ll be poor only if you sell at a large loss (and if you have to sell & that makes you poor maybe you bought for the wrong reasons in the first place?)

      In this ‘once in a century event’, in this coming massive depression, the general sell-off will be epic, the liquidation unparalleled, and is only just beginning!

      PM’s will take a huge hit and weak hands will be (are already) in capitulation mode. So all is on course, as planned.

      China, Russia, India & others, plus CB’s are unlikely to part with their gold (maybe just a little, to encourage the sellers and to buy more). Then, when the streets run blood red with glistening streaks of unwanted gold, will come the denouement.

      But will I be alive to see it? And does anyone care?

      BTW all this (without the histrionics) was spelled out well over a decade ago by a very smart lady ‘Stoneleigh’ of The Automatic Earth. She’s long gone – to NZ I last heard, but so far her economic predictions have been spot on.

  31. Nat says:

    Congrats on your moves on this Wolf, you have been riding the lightning very successfully. I agree with getting out because its getting too crazy. If you look at your up-day v.s. down-day graph at the top of this post one scary thing becomes clear: the magnitude of both the ups and the downs are increasing with time …

    Along those lines a bunch of large players bought VIX calls with a strike at 100 (something like 22,600 of them!) and an expiry at Friday next week. If these hedges or bets prove right then next week will be like nothing ever seen before in any financial market ever.

    Out of curiosity, which “piece of crap” shot up 70% by close on Fri, because that definitely is eye-catching and brow furrowing.

  32. Mars says:

    Hi Wolf,

    Comfort zones are important.

    I’m a glass-half-full person. FWIW, still have NG shorts and Puts started around 2.20.

    Have seen VIX blow up (not) like this a few times in past 40+ years. I was ready this time and have multiple strikes P and C. Bot in FEB APR25&30C at 14, to name a couple :) Bot multiple strike Ps when it hit 70 on Thursday :)

    Not investment advice, just have the casino on the laptop because I have seen what happens when volatility is volatile. Parlay from VIX C positions opened in Feb fully funding the thesis.

    Next week/month is going to be fun.

    • Unamused says:

      I’m a glass-half-full person

      The glass is neither half-full nor half-empty. It is the wrong size.

      This isn’t investing, it’s betting on how it’s going to be manipulated. I tied and pruned vines yesterday. That’s investing.

      The road to hell is paved with unbought stuffed dogs. Not my fault.

      Here’s a tip for everybody: Bold Enforcer in the fourth at Belmont.

      • VintageVNvet says:

        TOO funny,,, and actually very amused!! Your best yet IMHO. Please keep up the good work.
        So, since we all have had the ”wrong size glass,” I guess we should all immediately order one of Wolf’s mugs, ”believing” that the mug will be the right size glass going forward, eh?

      • Mars says:

        Un – I’m not arguing, however…

        glass-half-full = you can make money when stocks go down. Size is irrelevant. 60% is 60% in a $30 trade, $3,000 trade or $300,000 trade.

        40+ years = seeing VIX rip to 40 only a few times then it goes back down. Look at any 30 year VIX chart. Beyond 35 to 70 is mind boggling. Delta of Delta and Theta are my friends here. Roller coasters and whipsaws come to mind. I have been waiting for this a long time and already beat last year, entirely, in three and a half weeks (and this doesn’t include taking STNG from 39 buying back at 25, that 6 million share finance overhang came into play;)

        not investing = clearly stated “Not investment advice” and reference to casino. I apply no moral filters to trades.

        Right now every horse in the race would test positive for Lasix. Bet accordingly.

        Now, I’ll finish my eggs and go back to making Feynman diagram mobiles.

  33. Jeff Relf says:

    The 1918 flu was a symptom of WWI;
    it killed-off 3 % of humanity,
    5 times more than the war itself.

    The 2009 flu was a symptom of
    the Global Financial Crisis; 12 K died.

    The 2019 flu is a symptom of the trade war;
    5+ K have died so far.

    // Boeing execs used share buybacks to
    // extract 43 billion $ from the company.
    // They know Boeing is “too big to fail”;
    // so it’s: heads they win, tails we lose.

    Q. How does one treat the flu ?

    A. Painkillers like:
    > > > heroin, religion, negative interest rates
    > > > and negative risk premiums.

  34. Jeff Relf says:

    People lose their job and go insane.
    People go insane and lose their job.

    – Heroin, Religion.
    – Negative interest rates.
    – Negative risk premiums.

  35. VeryStable says:

    No need to worry. The prez fixed it

  36. EternalSkeptic says:

    “Staying out of this market”

    Its a good strategy until the FED hit the print button. I had rotated to cash in early Feb and increased my bond holdings. The only stock I kept was a pipeline stock that got crushed, but eh I’ll just hold it, im not even remotely worried. I used about all half my cash to buy suncor shares at 15 YEARS LOW. Keeping half as a war chest.

  37. Andre says:

    Wolf, are you comfortable with large cash balances in bank accounts?
    I mean not today or tomorrow, but intermediate term.
    I am not. Currency will be printed in even more bizarre quantities.
    Besides, bail-ins could happen and/or devastating inflation at some point.
    Being comfy in cash is not warranted in my opinion. In the end, nothing will be spared.

    • Ran says:

      Honestly asking because I am money stupid.

      What would be a better position to be in? Holding assets that could tumble even further seems equally scary, especially when this economy takes a hard fall.

      • Andre says:

        tumble against what is the question.
        we like to value everything in currency, but that’s proven to lose purchasing power. with negative real interest at an ever higher speed. and i am not even talking about a likely pickup in inflation at some point.
        currency is not a store of value. a simple thought experiment reveals the intuitive knowledge about this fact:
        if you had to put your cash balances in a box and would not be allowed to touch it for two decades, would you put paper bills or PMs in there?

    • Wolf Richter says:


      I think you’re raising two points (if I understood you correctly): 1. The shitty income generated by bank deposits. 2. The safety of bank deposits. So let me address both of them.

      I’m not “comfortable” with earning 0.02% at the bank when inflation is 3.0%. You’re right, it’s a rip-off. Many banks offer higher yields, but they’re still low. T-bill yields are also low. Right now, cash just doesn’t earn much, and earns a lot less than consumer price inflation. But that’s what it is.

      The other option is putting your money into riskier assets. So you want to get the 10.7% dividend yield that Ford offers on its stock. You buy the shares to earn that yield, and three weeks later, Ford cuts or eliminates the dividend, and your yield is gone, and the shares plunge by 25%. If you invest in an investment-grade bond portfolio, you might get 2.5% or 3%, depending on how much higher-risk stuff is hidden in it. If you invest in an index fund, your investment might plunge 20% or 50%. These are among the choices and possible outcomes you have to struggle with. And that’s why there are no simple answers.

      In terms of safety of your bank deposits, in the US, I’m not worried about deposits that adhere to FDIC limits and rules. The FDIC is part of the US government, and the US government is backed by the Fed’s printing press.

      You can have brokered FDIC-insured CD’s of $250,000 each (FDIC limit) from 10 different banks, and thus get $2.5 million in FDIC insured deposits. You can own these CDs like others own stocks, and you get a lot of money under the FDIC umbrella that way, if that’s what you want to do.

      If you have cash that exceeds FDIC limits – a lot of companies have billions of dollars in “cash” – you would put those funds in Treasury securities, such as T-bills. But the amounts you need for your operations (payroll, paying vendors and creditors, etc.), are in a bank, and the amounts over the FDIC limits are at risk.

      In the US, when a bank fails (4 banks failed last year), shareholders get bailed in first, then preferred stockholders. There are a lot of assets in every bank, and only the amount by which a bank’s liabilities exceed its assets is at risk. This is usually a fairly small amount. So the FDIC steps in, pays off the insured depositors, sells the assets, and the proceeds get distributed to the rest of the creditors (including uninsured depositors), and the FDIC itself, to cover part of the funds it paid the insured depositors.

      In practice, normally, when a bank fails, the FDIC sells the assets and in return, the buying banks take the deposits (liability) as part of the deal. I’ve been through three bank collapses like this, and it’s smooth, usually happens over a weekend, and on Monday, your money is in a different bank, readily accessible.

      • I am worried. If you have ever had an account frozen you know what I mean. You are in cash, you just can’t touch it. We are probably not far from that. Should you go to physical cash, the rules are written to prevent you from deploying that money without a long paper trail. Trust is in real short supply right now. First they lock your account, then they drain it.

      • sierra7 says:

        Mr. Richter:
        Kudos to you for writing this reply to those who are not certain what to do with their money.
        It’s all about choices and the risk factor tolerance.
        Your post should be printed out by those who are not sure or just don’t really understand all the jagged road to stock/casino world, framed and mounted on a wall that they can view and digest every day.

        In addition I have family that has a multi-decade small business in Silicon V. Conversation this morning with them ranged around how some of their customers are already keeping employees at home; family sells (won’t say precisely) “hi-tech units” and jokes go that, “….with any new unit their customer buys they will throw in a multi-pak of TP.
        Nobody knows what to think; I’m sure most or your commenters have read/heard about how many school districts are now shutting down. Family has gone to Wal Mart and Costco and observed outright panic buying; the WalMart they visited had large gaps within the shelves.
        They (family) themselves are trying to prepare their own employees for an inevitable shutdown; restricted traveling for their techies for services; more “phone servicing” etc.
        I personally live in the Sierra foothills and shopping at my local Save-Mart (some miles away) Thursday this week the store was fairly well stocked but the TP shelves (hundreds of linear feet) were bare.
        We are in uncharted territory.
        I was expecting an imminent serious pullback in the “markets” 6 months ago; now with this virus that can escalate into gigantic severe global commercial restrictions, it could get much, much worse.
        Thx for your blog.

      • Andre says:

        thanks! I will need some time to digest your extended reply.
        In Switzerland individual accounts are insured up to CHF 100 000, however the insurance is a fund of the size of a few billion. In reality the default of just one middle sized bank would deplete this fund. Therefore any systemic crisis is largely uninsured.

        And yes, the other concern is a fast and unexpected devaluation of paper money. The Ambrose scenario below is also very valid.

        This week once more reminds us how changes blow up in ways we couldn’t have imagined. Don’t feel safe in cash, it’s a trap.

      • Cas127 says:


        As usual, good thorough post on a specific topic.

        Actually liked the first part best (though least focused on FDIC) as it highlights the ever shrinking corner that prudent savers find themselves thrust into by the policies of an ever more desperate government that is having to deal with the manifold sins of its past.

  38. Unamused says:

    And this reeked of manipulation.

    Meanwhile, back in the real world, prosecution of white collar crime has plunged to an all-time low and will become a thing of the past once the current crop has been cleared.

    You haven’t seen anything yet. As Rambeau said, chaos is king and magic is loose in the world.

  39. Michael Engel says:

    1) In the last x5 days Gold collapsed from 1704 to 1504.
    2) Investors sold gold, because its very liquid, to support margin calls.
    3) 70% stocks // 30% Bonds ==> in the last x5 days TLT was sold to support stocks margin calls.
    4) Option : SPX on the way to LPSY #1.
    5) March/ Apr spike #1 might be followed by another spike, LPSY #2. Between 1929 til 1932, there were x7 spikes of fake hope.
    6) There is little open space between backbone #1 from 74 to 82 lows and backbone #2 from the 90’s.
    7) Backbone #1 might be breached.

  40. Old-school says:

    I think David Stockman had it right that Fed policy just turned the financial markets into a casino.

    What percentage of people really research a company and then buy and hold it for 10 years? Hardly no one because it’s more profitable to just listen to how much money the Fed is going to serve up.

  41. Realist says:

    Somehow I’m getting the feeling that the early 90s will be nothing compared to what is now brewing in the economy world wide. The early 90s was a nasty time indeed, 2008/2009 was nothing compared to that.

  42. Alex says:

    I have been a bear for years, but I dont think this is the real crash. the fallout is so fast so hard is mostly due to ppl are too greedy. There is a reason for a big correction but the greedy traders are buying puts like crazy to make big bucks. the real crash will come when ppl lost hope. I think it should be at least weeks away if not months because companies need to tap out their credit line. in Q4 2019, banks still have 91% of lending capacity for commercial firms. it just barely started but this time the beginning is way worse than any other crisis, its because ppl are greedy. this fallout not justified by the fundamentals yet nor companies are on the verge of defaults, the default wave will come when their rev stream halt and cant make payment, it should take a few months.

    • Bet says:

      Why am I a greedy trader if I buy puts? I did my research. You don’t think someone buying and holding AAPL up 100 percent in a year on total bs isn’t greedy? Markets are a two way street. Or elevator. I am still buying and holding puts on selected issues and indexes because it was insanity for at least the last four years. Hopefully the 2016
      Levels will hold Got news. We still have so far to fall because it was all bs to climb to the previous levels. So buckle up. It ain’t over in the intermediate term

  43. Iamafan says:


    On corporate credit, Minerd wrote that BBB bonds could “easily reach” a spread of 400 basis points over U.S. Treasuries and that high yield bonds “would follow suit,” with BB bonds at 750 basis points over and single B bonds at 1100 basis points over.

    “Our estimate is that there is potentially as much as a trillion dollars of high-grade bonds heading to junk,” Minerd wrote.

    On stocks, Minerd said technical analysis suggested support around 2,600 on the S&P 500 Index, with a recession scenario closer to 2,000.

    • Bobber says:

      Do you really think the rating agencies are going to downgrade? There will be much political resistance to that. I think they’ll give the BBB companies a pass based on government stimulus action. In reality, they will be downgraded, but not on paper.

      Look at what they did in the last crisis. They changed the accounting rules so banks wouldn’t have to show losses. When the “powers that be” want something, they get it.

      • Iamafan says:

        It happened Aug 6, 2011.

        One of the world’s leading credit rating agencies, Standard & Poor’s, has downgraded the United States’ top-notch AAA rating for the first time ever. S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits.

        It can happen again. That was almost 9 years ago.

        Why can’t it happen to companies?

      • Bill says:

        The ratings agencies were eviscerated … demonized … for how they massaged mortgage-backed securities. It’s my hope they’re smart enough to avoid making that mistake a second time.

  44. timbers says:

    Robert Schiller on pandemic narrative. Hope Mr market doesn’t decide it needs a war to change the narrative…”The other example that comes close is the 1918 influenza pandemic, but that wasn’t exactly the same narrative because it came right before the Armistice in World War I. So the peak month for talk about the influenza pandemic was October 1918. And the Armistice was signed in November 1918.

    So there was a recession, but the stock market didn’t take a big hit back then. The narrative was different. The overriding narrative then was the war. So we don’t really have another example.”

  45. Francesco says:

    I believe american people are way behind the learning curve and emotionally far to understand what’s going to happen to their life. I’m living in the north of Italy where health care system is one of the top 5 in the world, 9,9/10 while US states like Alabama or West Virginia are under 2/10. Let me explain what’s happening here. COVID-19 is extremely contagious, death rate is low IF AND ONLY IF the sick who shows pneumonia is treated with ICU and ECMO (ExtraCorporeal Membrane Oxygenation introduced as it is today, by prof. GATTINONI and prof. PESENTI in Monza, Italy 20 years ago). This is extremely complex health care, there are no more than 1 machine every 10.000 people in all advanced countries (ECMO is beyond most ICU). COVID-19 develops acute pneumonia in about 10% of the cases. So in case a of wide spread pandemic death rate literally explodes to iranian level, health care system implodes and all the other intensive care illnesses are in their own. So, beware, America is unprepared to what is coming. UK is even worst, just read about the mass murder plan of Boris J.

    China, Singapore and Corea did it well, Italy is trying, all the others are lagging or not acting at all. If the worst shows up in the US markets will be closed for months or go to zero.

    • Gandalf says:

      mi scusi signore,

      ECMO was first developed in the 1950s by American cardiac surgeons Gibbons and Lillihei. It started being used for premature neonates in the 1960s, also in the united States.

      During the 1970s, as open heart coronary bypass operations in the US skyrocketed, ECMO’s main competition was the bubble oxygenator – cheaper, easier to use, and more likely to cause a Post Pump Syndrome (basically from showers of microemboli to the brain). So today, mainly ECMO is used

      Any cardiac or chest surgery that requires the heart to be stopped needs ECMO cardiopulmonary bypass.

      Any US hospital with a heart surgery program thus has ECMO available. High level Neonatal ICUs will have ECMO for infants

      Therefore, congratulations to Prof. Gattinoni for starting ECMO in Northern Italy some 20- 30 years after it started becoming widely available in the US and nearly 70 years after it was first developed in the US.

      P.S. ECMO is an expensive limited availability technology, in Italy as in the US, still.
      Which means that whether you are in Socialist Universal Healthcare Italy or in the Free For All For Profit Healthcare United States, not everybody will have access to ECMO. The peasants in the country side will have the least access, and the wealthy in the cities with excellent hospitals will have the best access

      • cas127 says:

        The thing I find puzzling is that ARDS (the extremely dangerous end state of flu/C19 triggered pneumonia) *does* in fact have more than a few *proposed* less-ventilator-intensive treatments (drug-based…including some very common drugs), per Pubmed. Same squared, for ECMO (because it is much scarcer, much more resource intensive).

        Shit, there are even mere physical patient *positioning* options that may yield superior outcomes.

        In a time of true crisis, when the ventilator supply might fall far short (and why no crash program to build ventilators…which have been around for 60 yrs?) and things are so prospectively bad that public discussion has already begun on triaging patients to death…these alternative treatment modalities are not being publicly discussed.

        Medicine has known it has had an ARDS problem for decades.

        That is why the alternative modalities were researched and achieved at least some preliminary level of success – although apparently not enough to become the “accepted” treatment – although the med biz can be yrs/decades slow in adopting new consensus treatments.

        If Italy is truly leaving low probability ARDS sufferers to die in the hallways, why not try the alternative modalities (all less resource intensive) in a systematic way?

        Those hallway patients have *nothing* to lose.

        I encourage everyone to bone up on the use of Pubmed online, which has high quality cross-linking and keyword searching via the MESH cataloging system.

        PubMed is the worldwide database of medical research papers and very easy to search…the abstracts tend to be at least 50 – 75 pct comprehensible even to the layperson, and a worldwide, crowdsourced research effort focused on ARDS might turn up things that a small group of medical researchers might have overlooked over the years.

        An organization like Google could scale up a crowdsourced effort worldwide very quickly.

        And again, ARDS has proven so dangerous and intractable to traditional methods that in a time of potentially extreme resource constraints, I don’t know how much there is to lose by trying non-traditional methods once the resource (ventilator) limits are reached.

      • Happy1 says:

        Thanks for correcting our Italian friend on the original of ECMO.

        It’s not just ventilators we need, it’s the ICU care teams that are the linchpin. You can make ventilators but the training in the management of critically ill patients, nursing, technical, and physician, is expensive and scarce in all countries.

        But ICU care in the US is more available per capital than almost anywhere in the world and is much more available than in Italy. In a pandemic situation, it may not be enough even in the US.

        ECMO is a niche therapy that has major mortality and morbidity issues and cannot be used to support ventilator dependent adults except in a few unusual circumstances. And there has been vast research to find a better way to deal with ARDS, it’s not a simple problem.

        There are some experiments in Lombardi right now using immune suppressant therapy for COVID-19, we’ll see what comes of it.

        • cas127 says:

          “You can make ventilators but the training in the management of critically ill patients, nursing, technical, and physician, is expensive and scarce in all countries.”

          Don’t disagree, but in an emergency situation, a crash program to educate some subset of nurses (3 million in US I vaguely recall), exclusively focused on oxygen support/ventilator support – distributed via internet video – could greatly increase the supply of focally trained personnel in relatively short order. The full array of ICU training may not be needed as much as a subset focused upon oxygen/ventilator mgt.

          In turn, similar focused video training could be provided to ancillary medical personnel/civilians so they could fill some of the slots left by the newly trained oxy/ven ICU nurses.

          Perfect, no, far from it. Risky, yes, to an extent. But we are being told by medical personnel that they may be over-run. If that is in fact the case, then the traditional strictures are going to have to be relaxed – and riskier immediate prep training need never be employed if unneeded.

          A lot of the ICU work appears to be monitoring the machines from a central location. From personal experience, I know that daytime staffing in the ICU was one ICU nurse for two patients…but that ratio was significantly relaxed overnight…when noticeably fewer nurses were monitoring (vs. tending) from a central location. Presumably, that is a common, acceptable practice.

          The machines are alarmed, in addition to providing remote telemetry. I assume this is the case because manufacturers know that ICU staffing ratios in practice may not live up to the myths cultivated by the media.

      • Gandalf says:

        ARDS is really a garbage dump term denoting a severe lung failure where the fluid and cellular elements are filling the lungs. The term does not speak to etiology, of which there are many, and that is the main reason that treatment of ARDS has not really advanced.

        Often, the etiology is known or strongly suspected but the patient is just not responding and the lungs continue to fill up with fluid and cells. So the goal is usually to treat the suspected etiology aggressively while providing supportive care – ventilators, ECMO. Even if the treatment of the underlying disease eventually succeeds, the lung usually suffers irreparable damage.

        ARDS is pretty much an end stage lung disease, like end stage kidney disease. Tough to bring back dead tissue. The Night King can do it on GOT, but not in the real world

        Whatever sounds promising in the laboratory or a few clinical trials probably is not big enough of a result for somebody to try to do the expensive clinical trials for FDA approval.

  46. QQQBall says:


    How could you leave 50% on the table like that on the shale driller? :)

    Well done.

  47. Francesco says:

    Also, there is a study on THE LANCET where it’s clearly written that if at least 70% of the population is not severely confined for all the time needed the infection will not be contained. So, the chinese were not crazy and the italians are not crazy (but late), the other nations had a lot of time that was wasted. Crazy and criminal to say the least.

  48. RD Blakeslee says:

    “As me for me, I’m going to stay out of this market for now, because this is just too crazy for me. And I’m going to watch it from a safe distance.” – Wolf

    Me, too. But not just lately. Ever since I saw Mom and Dad endure the ten years after the great crash of 1929.

    • Paulo says:

      I like Vintage Vets take on this one, RD. “I’m in dirt”, he said.

      Next week will be a doozy, not just the market, but the illness rate. Stay safe, all.

      Father in law went to hospital this morning as old age and a broken heart valve finally met up. I don’t think he’ll get out. Anyway, was working at his place yesterday setting up a hospital bed, shower chair, moving furniture, etc and just stopped and contemplated all his ‘stuff’ that is now meaningless. This market panic means nothing. Everyone on WS knows it was unsustainable. It is no surprise beyond the finishing details and the finger pointing as this unfolds. Numbers, ones and zeros. Talking heads, lying politicians, psychopath 1%ers, all scum of the earth as far as I’m concerned. Time to move on. Too bad the little guys will get hurt, but then that’s always the way, isn’t it?

      Does anyone think enforced social isolation will promote introspection and a change in priorities? I hope it does.

  49. Iamafan says:

    So, what does this mean?

    What Bloomberg Intelligence Says

    “There is a massive flight to cash with volatility having rarely been so expensive and the lack of liquidity killing markets. A Fed QE bazooka and global fiscal action is on the cards to fight off a global recession. Markets will remain highly volatile but indiscriminate selling sees opportunities emerging for medium-term investors.”

    Can someone here volunteer what opportunities they are seeing and please explain further.

  50. Bobber says:

    I wonder who had sold put options before the market tanked 20% the last couple weeks? I know plenty of people were buying put options to hedge stocks, but what about the people on the other end?

    I talked with a guy several years ago who said he selling puts against a stock that he owned. I said, “don’t you mean to say you are buying puts as a hedge?”. And he replied, “no, I sell puts to juice the return”. This particular guy won’t go bankrupt, but I suppose he’ll lose a sizeable chunk in a market like this.

    I wonder how many people were doing that, under the assumption there was an effective Fed Put was in place?

  51. Andre says:

    Made 400% on JDST 1 week call options in 3 days. If I had held until expiry on the 13th my profit would have been astronomical 4000%. It was one of those once in a lifetime trades that come around crisis time that I managed to screw up again by over rationalizing. A 10k bet with a calculated 800k profit was my initial plan. I bet way less. Still won, but not enough for early retirement.

  52. Unamused says:

    It is a mistake for them to be using the expanded Fed facility to manipulate the markets in the attempt to recover their losses. It only makes matters worse, but they may have figured conditions were expected to deteriorate so significantly that their analyses favored this course of action.

    An early estimate is that between four and six million people in the US already have cov-19. Another estimate is that lockdowns have already reduced US economic activity by three to six percent. Effective containment is expected to take at least another four to six weeks. Naturally there is a great deal of disagreement about these numbers, with no clear data or definitive argument either way.

    Unfortunately the relevant US government projections are virtually certain to be subject to political motivation and significant errors in methodology. Under the circumstances, which are far from ideal and themselves politically motivated, reliably actionable projections cannot be expected to be forthcoming. Not knowing what the true risks may be will make them impossible to price in and not amenable to effective management. The administration has been winging it pretty badly.

    In the old days certain issues were worked out in smoke-filled back rooms. Nowadays there’s concern about second-hand smoke, but the rooms are still there.

  53. Bobber says:

    With the stock price drop, the bailout line just got a lot longer:

    People impacted by the virus
    Illinois and other states with pension issues
    Unemployed persons
    Corporations in oil & gas
    Corporations in travel and entertainment
    Auto companies
    Insurance companies
    Recent home buyers

    Does anybody doubt they will be printing money like crazy to paper over the problems?

  54. John says:

    I get what you are saying. Can’t for the life of me, figure this out with the liquidity, or no cash, or no dealer participation. Bank regs, now with Dodd Frank? Bp getting hammered and I’m like are you paying attention? I figure capital cuts. Low and behold Looney comes out on Instagram and says we know what we are doing, and says cap ex cuts. Virus and Saudi’s double punch. Too far under and will never sell. Corps have way more money, what are we to invest in? Rates lower for longer. I did get three financial stocks, to me yields are way too high. They are up double digits. I can’t time it but having capped my entry I can add.Thanks again for sharing you knowledge .

  55. breamrod says:

    knew a guy who sold naked pits right before the 87 crash. Lost everything. Knew another guy who sold his Lucent stock in 98 and then financial advisers talked him in to buying it back and he rode it all the way down to 2. Died a few years later a broken man. Wolf is start! Stay the hell away from this market.

    • Iamafan says:

      Him and many others who worked for phone companies.

      Other than Lucent (formerly Bell, AT&T Tech.) and MCI-Worldcom and Nortel, etc. etc.

  56. OutWest says:

    Is it true that owning US treasuries is the safest place to park cash right now?

    • Andre says:

      treasuries have been in a multi-decade long bull market. if you aren’t a very nimble investor you will get grilled somewhere down the road. the sh## will hit the fan when government debt starts to disintegrate.

      • Iamafan says:

        if you aren’t a very nimble TRADER.

        Unfortunately, I don’t believe in buy and hold.
        Based on you life circumstances (i.e. health, age, family, etc) you may need CASH. And the market does not care about YOU. So it’s difficult to time your liquidity needs and the direction of the markets.

        I keep Treasuries NOT for their earning ability (which is close to zero now) but for their RELATIVE safety and liquidity.

        March 12, 2020

        Oil: -53%
        Bitcoin: -46%
        Delta Airlines: -46%
        Tesla: -42%
        Goldman: -40%
        JP Morgan: -38%
        Transports: -36%
        Russell 2000: -35%
        FANGs: -28%
        S&P 500: -27%
        Nasdaq 100: -25%
        Amazon: -23%
        Consumer Staples: -19%
        Gold: -7%
        Cash: 0%

        • Cas127 says:

          Nice…that 0 pct at the end has never looked so good/wise.

          The losses will be recovered, but it may take years…it did in 2001 and 2009.

          That is why older people, who may need their savings sooner, have to be risk-adverse…they cannot wait out multi yr recoveries.

          And that is why G created ZIRP illusions, and saver crucifictions, are so toxic.

    • Wolf Richter says:


      Yes but only for T-bills. If you buy a 10-year Treasury with a 0.98% yield, and then a year or two later when the yield is 2%, and you’re trying to sell it, you’re going to lose money (bond prices fall when yields rise). This is not a significant issue with 1-3-month T-bills.

      • Iamafan says:

        Agree now.

        But even as late as April 2019, the 2Y had a 2-1/4% coupon.
        In 23-Oct-18, they auctioned a 2-7/8% coupon. Personally, I go as far as 2 years only.

        Today, extra cash only in 28-day which only gave me 0.4% annualized for a month. Yuck.

        I know it’s not big but it’s relatively secure if FDIC max can’t cover you.

  57. John says:

    Bream rod
    I remember meeting a guy on the midnight train out of Newark N.J. talking about Lucent. I believe it was 90 bucks then. Too expensive for me. Money begets money. I need cash flow. A good traders market if you have the speed. I remember dot.com. Was ‘t in the market then, but saying to myself something is wrong here it crashed of coarse. Fed meets this week. The other thing is credit I forgot to mention. Turning it over is a problem and could be the liquidity shortage for dollars. Dividends do help. Sec10k’s too.

  58. Iamafan says:

    It’s the debt (stoopid)

    Year Treasuries Gross Issues (in Billions)
    2000 1,874.5
    2001 2,493.8
    2002 3,492.6
    2003 3,884.5
    2004 4,270.6
    2005 3,972.6
    2006 4,124.8
    2007 4,132.7
    2008 6,083.3
    2009 7,895.2
    2010 7,648.9
    2011 6,929.8
    2012 7,289.4
    2013 7,187.9
    2014 6,366.3
    2015 6,330.5
    2016 7,643.3
    2017 8,057.0
    2018 9,640.1
    2019 12,070.9


    • Unamused says:


      A clear sign that tax cuts for the billionaire class, military adventurism, corporate welfare, and paying US companies to move to China do not pay for themselves.

      Where did all those trillions go? The firefighter unions don’t have it. Maybe it went to the Caymans.

      • polecat says:

        We need moarr infrastructure ….

        Let’s build those lamposts !

      • Cas127 says:

        “The firefighter unions don’t have it.”

        How about including multi-million member public teacher/school administrator unions?

        Or government worker unions? (There is a reason why FF Union head is surgically attached to Dem Prez nominees)

        Or industries that have for decades received about 50 pct of their revenues from the G (looking at you, ventilator short med industrial complex) – that is 10 pct of all US GDP right there.

        For decades on end.

        Villify “corporatists” all you want…but it is asinine to ignore the millions of “socialists” that have gamed the system as well.

        In the end, which group has counter-productively extracted more from the system? I think it would be a close run thing…you seem to believe waste/theft is okay so long as it is sufficiently spread around to favored groups (judged by their mouthed promises much more so than their actual results).

      • Happy1 says:

        As of 2019

        59% entitlement programs, and rapidly growing

        15% defense

        7% interest

        Pretty hard to make those numbers work without cutting from 59% of the budget.

        Even harder when that part keeps growing.

        • MJ says:

          Issue with term “entitlememt” unless as in “you are entitled to get back your money plus interest after paying in” (for 35+ years)!
          And why exactly aren’t SSA taxes paid on earnings over $125,000?

  59. Pl’n’l says:

    Get out before the mutual funds are shuttered! Oh, wait, can’t happen here, right!

  60. Money is disappearing. Deleveraging won’t erase the mountains of excess monetary stimulus however. For one thing they will never allow it to unwind. What this suggests is zero money velocity, as money leaves the economy, the system freezes. The money is still there, but unable to reconnect with the complex flow of funds that was circling the globe, it pushes up prices in basic goods and services. Massive inflation then destroys what was left of these currencies. Stagflation on steroids. Those currencies which are cleanest dirty shirts will be bid up the sky. Back your currency with gold, same benefit. Economic system fails, barter returns, and bitcoin is electronic barter.

    • Unamused says:

      barter returns

      Any one who has been in prison, or the military, knows that tobacco makes for an excellent medium of exchange. So does peanut butter.

      CDC’s ‘worst-case scenario’ estimates for coronavirus spread in US have been obtained by the New York Times, which is frequently reliable, in case anybody’s interested. One of the girls read it to me for practice while I made potato bread today, leavened, just to see if I remembered the recipe correctly. It’s very nice to see a young person overcome her lack of confidence like that, with a little coaching and encouragement.

      • Iamafan says:

        Hey I have lived in a country known for typhoons, earthquakes, volcano eruptions, tsunamis, dengue, malaria, poverty, crime, drugs, unvaccinated dogs, etc.

        In a nice day, the beaches are awesome.

        It’s relative.

  61. Newbie here, with a question: A couple days ago the Occupant did a press conference just before closing bell in which he announced ‘topping off’ the Strategic Petroleum Reserve (SPR). The market then bounced.

    He had a cadre of fossil fuel execs lined up on the dais with him, and we know how shale oil drillers & frackers have been getting pounded. Did this cause – or partially cause – the closing bounce?

    • Iamafan says:

      My assumption is they are buying “expensive” fracking oil and filling up the SPR to save the domestic producers because they know that the refiners will be buying cheap foreign oil unless someone puts tariffs or quotas on oil. How long will this last? Max 6 months? Who knows?

  62. noname says:

    “Historic Crash”. I’ve watched you explain your verbiages for several months now—but please explain further “crash”. Dow is down 25% if I remember my calculations correctly—how much further?? I’ve been watching my “emergency fund” closely…losses are half of Dow’s…

    • Wolf Richter says:


      Sorry you cannot read and comprehend more than two words at a time. The title says “…in the Middle of an Equally Historic Crash”; the text says, “…in the middle of possibly a historic crash,” and “…we’re already in a historic crash, in terms of volatility.” In other words, the decline so far looks to me not like the end of a drop, but somewhere in the middle of a crash.

      I’m also sorry that you lost money. That wasn’t necessary, if you read this site.

      • noname says:

        I was seriously asking, not questioning your choice of words.
        If you read closely, you will see I asked you to explain FURTHER. Because I’ve seen you explain your words before.
        I didn’t recall you using CRASH, so wanted to know your rationale in %ages.
        You will see I understood that we are IN THE MIDDLE of a crash, which is why I listed the losses thus far. I wanted to know your thoughts on how much further.

        • Wolf Richter says:

          OK, apologies. Every one of the three crashes I’ve been through as holder of a brokerage account with stocks, starting with Black Monday in 1987, was different.

          This looks like my #4 to me. But we’re now in completely uncharted waters, with a lot of things that came together, of which the coronavirus is one of them, and they hit stocks at the most inflated levels I’d ever seen. So there is more air underneath.

          I have no idea how far this might be going, or how long it will do its thing. Look at the long-term charts of indices in countries with stable currencies, such as the Shanghai SE, the Nikkei 225, the DAXK, and other major stock indices. They all had their peaks over a decade ago, and are now far below their peaks. This is the thing I worry about. The US has been one of the few the exceptions. And being that exception is, I think, at risk here.

        • Gandalf says:

          A few historical points to guide you:

          1. Bottom of the worst ever US stock market crashes ever would be when the SP500 Shiller PE crashed to around 5 in 1922 and 1932 and around 7 in 1982. This was in the Before Greenspan Era (BGE). In 1987, during that stock market crash, the Shiller PE merely went down 20% from 10 to 8. Greenspan immediately flooded the US with money. He congratulated himself later for having saved the US from a recession. That however, established the current dreadful precedent for the Fed to immediately open the money spigots whenever the stock market dropped. Greenspan did this again during the Dot-com Crash, which led to the easy money speculation in Real Estate that led to the GFC of 2008.

          2. As a result of the Fed constantly inflating the money supply to prop up the economy and stock market, at the worst of the Dot Com crash, the Shiller PE only dropped to 23! At the bottom of the GFC , on March 31, 2009, it was only 15! So you see how successful the Fed has been at keeping the stock market inflated.

          3. The last two crashes both began as mild normal business recessions which quickly accelerated due to the gigantic debt/margin bubble created by the Fed itself with its no-risk, we will print more money policies. This is almost certainly what will happen again this time.

          4. The Fed quickly went to ZIRP and QE, which Bernanke congratulated himself on for saving the US from a Great Depression. Whatever, these policies were continued for far too long. While they had a decent immediate effect to prevent the economy from cratering further, this prolonged period of easy money inflated a vast asset bubble of corporate debt. The stock market became hooked on this easy money worse than a heroin addict. When Powell started doing QT and raising rates to try to dial back the easy money, the stock market began to plunge in late 2018.

          5. So Powell chickened out and spent most of 2019 kowtowing to Wall Street and doing rate cuts, repo QE, etc., DURING AN ECONOMIC BOOM. That explains the insane levels of gains of the stock market through January 2020. The Fed was now clearly Wall Street’s Submissive B—ch, and stock investors now could be assured that the Fed would be obedient and make sure that stock prices only went UP no matter what

          6. This insane rate suppression by the Fed during a period of economic expansion had the effect of allowing companies to rack up huge debt loads to do all sorts of crazy things, stock buybacks, pay dividends, pay for all kinds of expensive whatever and start all sorts of projects with zero hope of getting return on investment.

          7. The game became one of counting on the Fed to keep rates low so investors would have no choice but to buy these stinky corporate bonds at slightly higher yields. Even if the debt was never paid off, it could be rolled over and over into more debt which investors had to snap up because of interest yield suppression.

          8. Key factors that have allowed the Fed to do what it has done to successfully manipulate the US stock market (which other countries have not been able to do) have been

          a. The USD is the world reserve currency, everybody needs it to trade with and buy stuff. Other countries that do too much of this get their currencies squashed

          b. Inflation, primarily of durable goods, has been super low due to globalization and automation, with China being tops in making globalization reduce prices

          A global pandemic of COVID-19 is ideally poised to derail anything the Fed does to try to save the economy and stock market in the US. In fact, few things have been able to fight the Fed over the last ten years except a global viral pandemic

          Worldwide a number of countries were already showing signs of slowdown over the last year. The US, fueled by easy Fed money and debt out the wazoo continued to do great with its service and consumer economy.

          COVID-19 has already seriously cut into this service and consumer economy in the most affected areas of the US. If, or when it goes nationwide, it will devastate the US economy

          It’s highly doubtful that the highly leveraged companies will be able to roll over their debt in the midst of a global pandemic. Investors will hunker down into super safe investments, even with super low interest rates. Right now that’s US Treasuries, not gold

          The question is if the pandemic in the US gets botched, as it seems to be, and the US ends up being the LAST of the major industrial countries to emerge from the pandemic. Look for the USD to lose its status as the #1 world reserve currency if that happens

          Will China get re-infected? If so, look for inflation to rise as a prolonged supply side economic shock develops

          Even WORSE is if China succeeds in stopping COVID-19 as it claims to have. China is already angry at us and wants global domination. A healthy China and sick US means the end of the USD as the #1 world reserve currency, which means no more low interest US Treasuries, no more free money printing by the Fed without severe inflationary consequences

          All of these worst case scenarios are likely to cause the Shiller PE to drop well below the AGE (After Greenspan Era) lows of the Dot Com Crash and the GFC of 22 and 15, down to the BGE lows of 5-7

          P.S. the SP 500 Shiller PE was around 19 on Thursday, and 25.71 at the end of Friday

  63. baldski says:

    Just saw an article on Market Watch calling for the Fed to start buying Corporate bonds. So, they sell bonds to finance their stock buybacks and now they want the taxpayers to bail them out. Have we heard this song before? Let’s do something for main street this time instead of Wall street.

    • BobbyDents says:

      They can’t buy corporate bonds. The Fed itself is overrated. It doesn’t create money. Just swaps assets. The fact is the last repo was a bust. The banks didn’t want to offload their assets for such a low rate of interest. Pretty telling the difference between now and 2008.

      • cb says:

        @BobbyDents “The Fed itself is overrated. It doesn’t create money.”

        They are overrated, but the rate lots and lots of money. Count yourself as one of the few who do not know this.

    • Wolf Richter says:


      The Fed is not allowed to buy corporate bonds at this point. Congress would have to change the law. Also investment-grade corporate bond yields are very low. There is no need for the Fed to buy them. The financial world is awash in liquidity. Last thing it needs is more liquidity.

      What companies need are emergency loans to get them over the collapse of their revenues during the coronavirus outbreak (see for example, airlines). And they’re likely to get those.

    • Andre says:

      the taxpayers will become less solvent at record speed very soon. The printing press will bail them out instead. The justification will be ‘prevent systemic meltdown’.

      (the taxpayers will have to be bailed out themselves, actually, see hong kong throwing money from helicopters)

  64. Gandalf says:

    Great thread commentary for putting the gold bugs in their place! (squashed flat, guts out, under a large rock)

    Saw Gundlach 2 weeks ago recommending gold on CNBC – geez – apart from his gold fever the vapidity of his other comments made me wonder why people listen to him at all

    Oh where, oh where, have all the gold bugs gone, oh where oh where can they be?

    P.S. I posted this before, but the reason that silver is NOT an investable precious metal is that 78% of silver production comes as a BYPRODUCT of mining for copper, lead, and zinc. Silver has this nasty tendency to keep bad company with those metals as an alloy called electrum, and so voila, lots of silver gets produced whether anybody intends to or not – it is NOT a rare precious metal! It’s a nice and shiny and very useful commodity (although NOT for curing COVID-19 no matter what ex-con Jimmy Baker says)

    • WES says:


      By your standards, there are lots of gold bugs on Wolfe Street.

      However we bought gold mainly as insurance, not to get rich.

      Gold and silver have their place in the world. They reduce counter party risks.

      Quite frankly, this is one insurance policy I hope I never need!

    • Tinky says:


      You are nothing if not consistent in your complete misunderstanding of gold.

      Not only does it remain at, or near all-time highs in many currencies, including the EURO, but the recent selling, which also occurred in the early stages of the last crisis, is fairly easy to explain.

      Even in terms of USD, only someone with an agenda, seeking confirmation bias, would rant about it having been squashed when it went down 8.7%, while the DOW is down 20%.

    • Sadasivan says:

      Gold in Indian Rupees is sill a winner.Silver is OK but seems a BUY now.The trick is accumulate Gold but TRADE in Silver.There is going to be a Festival called Akshay Tritiya [ meaning Ever Strong Third(date)],when Indians will be buying up Gold.When Gold is low[comparatively] Jewelry Stocks go up.This is how I play the two.

    • cb says:

      I recognize the emotional disdain you express for goldbugs. I can’t help but fell that same disdain for apologists of the FED

  65. Iamafan says:

    Wife came back from grocery store (Stop and Shop). Shelves are empty. No Meats.

    • Zantetsu says:

      This is annoying. I don’t panic buy and have not gone to the grocery store for a couple of days. Sunday is my normal shopping day. If I go to buy my normal week’s supply and everything is bought up by hoarders I’m going to be very irritated.

    • Wolf Richter says:


      In San Francisco: Last night was the first time we’d walked into a nearly empty grocery store: Trader Joe’s. We’d avoided all the Costco mayhem. Now it has filtered down to the grocery stores. Safeway still had plenty of stuff, but some shelves (tissue, disinfectant, etc.) were empty. Other shelves were picked over but still had stuff, such as coffee. All the pasta was gone. All the frozen raw shrimp was gone. But lots of produce was left (beets, radicchio, turnips, squash, all kinds of cabbage, etc. and tons of apples). And quite a bit of meat. And lots of craft brews, including my favorites.

      I just walked by the cable car terminus at Taylor and Bay Street. Saturday at noon, this place is usually packed with a huge line of tourists winding all the way around the black metal guard pipe. Today, there was no one. Even during the worst part of the Financial Crisis, it wasn’t this way:

      • Iamafan says:

        I live near the NY drive through virus testing facility. People here are really in a panic shopping mood. My son works in Hartford. He told me the shelves are empty. My other son who is Brooklyn, just told me they might be quarantined because his wife works in a hospital that may have been exposed. Schools, churches, senior centers all shut down. Stores are open but no stock.

        I think i will bring back my Don’t Panic button which I had in ’87 when I worked for Fedex who made that pin.

      • polecat says:

        What you’re seeing is the result of loss of confidence in our vaunted leaders, all – across- the -board ! The public are getting conflicting comments/assessments on how this crisis, on top of an already seething stack of other putrescent crises, will play out. Honestly, I can’t blame them. Their ‘leadership’ in all way, are to be found wanting.

      • michael says:

        That is brutal. San Francisco businesses that cater to tourists are going to be in trouble. We are already seeing a similar slow down south on the peninsula

      • Iamafan says:

        The Fed should immediately increase the shortest term rate to 5-10 percent, maybe even more. We will see the return lines full of toilet paper in Costco and others. Hoarding must cost people ot else they will hoard.

      • MJ says:

        Wolf, I hope you have provisions. Thank you so much for your work, from a newer reader and admirer.

        Here in Providence, RI we are newly in shutdown/lockdown with food still reasonably available as of yesterday.

        What about those from SF to NYC who depend on soup kitchens and food banks in all of this? We can think of them, too.

    • Mike G says:

      The local Trader Joe’s is halfway to cleaned out. Clerk said they are fully stocked every morning, people are waiting in line before they open and inventory is gone fast.

      • Lisa_Hooker says:

        “…people are waiting in line before they open..”

        Much more worrying will be lines at the Dollar stores.

  66. Marc D. says:

    I don’t think this will be an historic crash. This is all about the coronavirus. Assuming it runs its course without causing a major economic depression, I think the markets will eventually rebound, and head back to their all-time highs and beyond.

    But it may take months for the economy to recover, due to the big hits to several major economic sectors, like travel, tourism and energy.

    • BobbyDents says:

      I doubt they head back to highs. Debt expansion in the corporate sector had stopped. Interest rates on subprime debt was surging. This just sped a 3rd quarter crash into a 1st quarter one when actual economic activity fell.

    • Unamused says:

      I don’t think this will be an historic crash.

      It’s already an historic crash.

      Let us avoid making assumptions, good or bad, and instead seek honest information. Hope for the best, prepare for the worst, and prioritise properly. Maintain social distance, avoid touching your eyes, nose, or mouth until you have washed your hands, and seek medical care promptly if you have fever, cough, and difficulty breathing.

      The movement you need is on your shoulder.

      • Iamafan says:

        It’s historic all right. I never run out of toilet paper to buy. Cheaper to use dollar bills.

        • WES says:


          I have to confess that I am the one whose’s butterfly wings started the panic run on toilet paper!

          Last fall, when toilet paper was on sale, I bought about twenty 24 roll packs, enough to fill up my car!

          At the time, I had no idea this would evolved into a massive run on toilet paper!

          My Bad!

        • Cas127 says:

          “Cheaper to use dollar bills.”

          It was a plan all along!!!!

          And now we see the meshing of the gears, the evil genius of the system!!!



    • unit472 says:

      “I don’t think this will be an historic crash. This is all about the coronavirus. Assuming it runs its course without causing a major economic depression”

      You might be right IF you could tell me how a ‘major economic depression’ can be avoided with the centers of global GDP in various forms of lockdown, quarantine and medical emergency.e

      We are only six weeks into this since China locked down Wuhan and there is neither a ‘vaccine’ ( unlikely given how effective those obligatory annual ‘flu shots’ are) nor even a ‘treatment’ for this global pandemic.

      Consider the Diamond Princess! It had 3500 people aboard many of them elderly passengers. The Japanese government ‘quarantined’ the ship and did daily checks of passengers for symptoms. If you had them and tested positive you were taken off ship and put in good hospitals. Still at least 1% of the infected have died.

      That’s the best case scenario. An identified population under close scrutiny given access to the best medical care and 1 out of 5 became sick and 1% have died. The implications of this are beyond serious.

    • Happy1 says:

      It is already historic in that it is the fastest time from a market peak to a 20% decline.

      But also not yet historic in that a 20% decline isn’t remotely as bad as the worst crashes (so far).


    Am I the only one that saw the rigging of yesterdays 3PMET that actually started at 1231 and was perfectly timed to use the “Oil Purchase” comments to ramp the marketup and hold till the 4PMET close????

    Trump does not care about anyone except himself and the market !!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  68. Liah says:

    Dude, great job. I also flipped out of puts and added to my calls, okay – But missed that last 8 minutes due to stupidity. Got bored and sold the calls to soon…
    Next few days should be fun. I think, anyway…
    Profitably Yours, Liah

  69. Bobber says:

    I just heard from a private equity player that lots of companies are being advised to draw down their revolvers, so they have the money in their bank account. Boeing just did this to prevent the banks from cutting off the revolver. Many other companies are doing this too.

    Perhaps the Fed is seeing this too, and that’s why they jacked up the repo facility.

    • Iamafan says:

      I actually did the same for my kids’ bank accounts. Everyone wants to be more liquid.

  70. Iamafan says:

    NY Fed 3/13

    Today, the Desk will conduct purchases in each of five maturity sectors below at the times indicated, subject to reasonable prices.

    20 to 30 year sector at 10:30 – 10:45 am and 2:15 to 2:45 pm for around $4 billion each
    7 to 20 year sector at 11:15 – 11:30 am for around $5 billion
    4.5 to 7 year sector at 12:00 – 12:15 pm for around $8 billion
    2.25 to 4.5 year sector at 12:45 – 1:00 pm for around $8 billion
    0 to 2.25 year sector at 1:30 – 1:45 pm for around $8 billion

    So 4+5+8+8+8=33

    They bought 33 out of 60 billion in one day. Took one day more than half they budgeted for a month! Remember this used to be the T bill purchase now QE4.

    • Iamafan says:

      They actually purchased $ 37.004 billion out of $ 101.365 B submitted on the 13th.
      Huge day for Q.E.4

      • The Fed used REPO to put an already extended stock market into hyperdrive (and crash it). Now they want to buy the top in the Bond bubble? This is insane.

  71. Augusto says:

    I agree, just stand back and don’t try to out guess what will happen. I am amazed the number of people who think all this stimulus is great, V-shaped recovery coming, buy, buy, buy..etc….All these emergency measures are because our society is going to be less productive, staying at home, doing less. These measures are redistributions of wealth, creating more debt, giving away free, made up money along with draw downs or dilutions of real savings. I don’t see a boom in the cards in the future, just a lot of rebuilding. Stay safe everyone.

  72. No Expert says:

    Is it fair to say this recession (presuming it emerges/continues) is different by nature of its timing? I see a lot of mention of 1929, 1987, 2008, 202x. 2008 was only 12 yrs ago (!), crashes/’booms’ are getting bigger and closer together. Going out on a limb one might draw parallels to the fluctuations in the current market its self? (see Wolf graph at top of article). Death throws comes to mind, a little conspiracyish maybe but I learnt the hard way to not disregard everything conspiracy theorists say when one recommended I buy bitcoin at less than a cent each (from memory).

  73. WES says:

    Went out to my local Walmart, just north of Toronto’s airport.

    Shelves stripped bare!

    I joked with the greeter, So you took a nap, and when you woke up the store was empty!”

    He told me yeah, it started Wednesday evening, picked up steam Thursday, and by Friday people were running from their cars into the store!

    Ontario has opened a couple of assessment centers but you cannot get tested unless you meet their criteria, which no one can!

    Even if you have the coronavirus, they still will not test you because they don’t have enough test kits. They will just send you home to self isolate!

    Ontario has clearly lost the containment battle!

    Clearly the people of Ontario finally figured it out and panicked!

  74. Joe in LA says:

    In his efforts to make the markets rise, Powell has done everything except fellate hedge fund managers on live television. Yet, Trump was still kicking the old boy today.

    Am I correct in assuming that there was no point to this, other than that Trump really likes to demean people who put themselves in demeaning positions?

  75. Jdog says:

    As I see it, there will be 2 stages in the deleveraging process. The early deleveraging that you are seeing now to preserve capital, and the later stage deleveraging that will be forced by people running out of cash and who must sell whatever they can to survive this.
    People are usually reluctant to sell at a loss, often choosing to sell assets first in which they have either profits or the least amount of loss, in hope of riding out the storm. As this crisis plays out, many people will run into serious cash flow problems, especially small business owners, and will likely be put in the position of forced sales at whatever they can get. I believe this second wave of selling will be much worse, and longer than the first, as it will be necessitated by desperation and the final capitulation of the market.

  76. RD Blakeslee says:

    Fed just cut interest rates to ZERO.

    Save your fiat money, boys – the Dow will rise again!

  77. Les says:

    21-day volatility for the SPX closed at 79. It’s just a tad under the low 80’s recorded in late October and November of 2008.

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