Bloodbath!

There is no other word to describe the decimation this Coronavirus is having on the global economy and the markets. And this week still has one more day to go. I’m writing this on Thursday because I have to leave on Friday for the Metals Investor Forum on Saturday and Sunday. I should also mention that due to a death in the family as well as the marriage of our son, Scott, there will be no message next week. Life brings its joys and sorrows, and Teresa and I are experiencing both extremes over a period of a few days. But our ultimate trust is in the Creator of the Universe so we will be just fine and so will Teresa’s mother, who we say good-bye to this week.


Getting back to the markets this week, it’s a ridiculous understatement to say this is a risk off week. You can see for yourself the carnage above. Gold certainly provided some safety and depending on what moment you looked at its price it would have been positive this week. But the real winners, at least until the entire system blows up, were U.S. Treasuries and of course shorts against stocks. So for the first time in quite a while, both the S&P short and the High Yield short were positive and helped limit the downside of our Model Portfolio shown above, to a YTD loss of 2.94% compared to a 7.8% loss YTD for the S&P 500. This is actually not surprising, since the first go-to safe haven when markets melt down, as they have this week, is U.S. Treasuries. Once things stabilize, I’m confident you will see enormous upside breakouts for gold shares, as gold is hanging in there extremely well.

The Coronavirus is a very serious problem. Don’t let anyone tell you it isn’t. I think it pretty much guarantees a global recession before the end of the year, if it isn’t already in play. I would call your attention to the precipitous drop in the IDW over the last four trading days on my IDW. It lost $3.82, falling from 161.08 last Friday to 154.93 as of Feb. 27. That was enough to take it below the three-year moving average. The last time it plunged below that average, Powell threw in the towel and stopped contracting the Fed’s balance sheet. I suspect there is anticipation he will start pumping hugely again, which may explain why the dollar didn’t rally on Thursday.