(Chart source, google finance)
This obviously defies all common sense and rationality, but that is unfortunately the world that we now live in, an artificial world, where the markets are driven purely by wild speculation and grotesquely negligent money printing.
Although there is a "recovery" story to be had, we are far from it and the strength of the current state of affairs in the markets is nothing more than an illusion, like so many other parts of our economy.
The stark truth of the matter is that the world is a mess at the moment, with political strife, upheaval and chaos coming from all directions, and of which we have come no where close to peak boiling temperatures.
COVID-19 Continues to Accelerate Worldwide
One such form of disruption and arguable the biggest problem that the world is immediately facing is the coronavirus pandemic, that although is far less deadly then at first predicted, continues to spike across the globe, with the world suffering from the third straight record jump in new cases of COVID-19.
(Chart Source, Bloomberg)
Although many nations have gotten a stranglehold on the pandemic for the time being, many others, who originally thought to have had the pandemic in check, are finding out that cases are beginning to re-surge once again, as restrictions have been steadily lifted over the last month to two months, depending on the location.
However, there are a few key nations that have never truly gotten COVID-19 in check and are now seeing a drastic rise in both daily deaths and daily new cases of the coronavirus, such as the United States, Hong Kong, Italy, Philippines and India to name just a few.
The United States is most heavily being affected in four big states, including Texas, Florida, California and Arizona, with other states also adding to the total number of new cases in a lesser, but still meaningful way.
This comes at a time when the campaign cycle for the 2020 U.S. elections begins to enter into full swing and as people scrutinize every action or inaction on both the political left, or right.
Businesses Continue to Collapse
The preceding lock-downs and the continued strain that COVID-19 has placed on the economic system has already taken a heavy toll on businesses and of which is only going to get much worse before this crisis fully resolves itself.
We are now beginning to see the first true COVID-19 damages being reflected in large business earning reports and as expected, they are severe.
Besides those who have already fallen victim to the economic disaster, such as Hertz and many other businesses as I previously reported on, Walgreens has indicated the damage that has been inflicted upon their earnings over the last few months, missing estimates wildly.
As reported by Zerohedge;
Unfortunately, we should expect a tidal wave of horrendous earnings coming our way, especially when you take into consideration that Walgreens as a business is much better positioned to weather a virus pandemic than other businesses, whose goods would be deemed much less vital during the same period of uncertainty.
(Chart source, Trepp)
As Trepp's recent CMBS (Commercial mortgage-backed securities) remittance report indicates, we have a major, major problem on our hands, as the percentage of CMBS who are now considered delinquent in payment has exploded higher.
This is a level that was not last seen since 2012 and of which paints a very bleak picture of the future for businesses, of which were already under heavy pressure due to the highly competitive and rapidly accelerating online business model prior to the additional stressors of 2020.
In their latest report, Coresight Research estimates that a staggering, additional 25,000 stores may shutter in the remainder of 2020 alone.
Likely, as we head into 2021, things will only get worse, especially if the lockdowns resume come this fall, as the expected "second wave" of COVID-19 begins to accelerate across the United States and other parts of the world, placing the final nail in the coffin for those businesses who were just barely getting by.
Intervention is the Name of the Game
Governments are stuck between a rock and a hard place and many people already believe that they have no choice, other than to let COVID-19 run its course, lest the coming economic fall out result in more deaths than the virus itself. Fortunately, this is not a decision I have to make and I do not envy anyone who has to make this choice, as it is a lose lose situation.
However, all of this negative news is heading us into the direction of more intervention, more money printing, more collapses and rapidly increasing debt creation the world over.
(Chart source, goldprice.org)
These are just a few of the many reasons why we are seeing gold and silver bullion rally higher once again, as people seek safe haven assets to help whether the current storm and the future tsunami that is coming.
Future gains are likely to continue, with a "great reset" higher in prices eventually unfolding in rapid succession, as the masses begin to finally realize the situation the world economy finds itself in.
Until then, stay safe and keep stacking.
- Source, Nathan McDonald via Sprott Money Blog
