04-24-2020: It's NEVER Just one Cockroach...

I hope you had a great week and are staying safe. No one knows how contagious the COVID-19 virus is. I would sure like to see some hard numbers on how contagious it is, so that we can estimate total deaths per thousand people infected. We need to know if the death-rate is not much worse than the flu or is it more like the plague. Without that number, everyone is just guessing about whether it is better to stay home and the economy shut down or expose everyone younger than 60 and in good health to the disease and get the herd fully immunized. What a tough, tough dilemma this puts us all in.


Has anyone answered the question, "When will people over the age of 60 be able to come out of lock-down?" Will that date only occur after a vaccine is found, when it is not a foregone conclusion that a vaccine will ever be found... that's a real conundrum.


Moving on... Let's dive a little into the market and what the heck is going on...


First, an analogy: I am confident that this analogy does not apply to your house, but this has bound to have happened to you at some point in your life in 'somebody's' house or apartment...


You're sitting down to dinner. Everyone is chatting amicably. The host/hostess are bringing the food to the table and you're having a wonderful time. Just then, out of the corner of your eye, you see a big, ugly cockroach crawl slowly under the dining room hutch. Do you say to yourself, "That's no big deal... I'm sure it's just one cockroach!" Or do you think, "Oh no... What else have these cockroaches been crawling on... the whole house is probably infested." And, just like magic, your appetite is suddenly gone and you begin thinking about how to leave the party early.


Well... I've seen a few big, ugly cockroaches in the economy this week. Just how many cockroaches have you seen? Let's look at a few:


  • With coronavirus severely affecting the potato supply chain, a farm in Idaho is giving away about 2 million potatoes so they don't go to waste. First come, first served.

  • The oil market is running out of storage space (less than 3 weeks before maximum capacity is reached) and production cuts loom.

  • The "demand-destruction" is well underway in more than one industry and there is no quick fix.

  • If the economy is a 500 ton freight train that is 10 miles long and was traveling at 100 miles per hour back in early February and comes to a dead stop, how long will it take to get that behemoth back up to 10 miles per hour, much less 100 miles per hour?

  • Bill Gates: "I wish i could say that we're halfway through the coronavirus".

  • Investors are discounting current earnings season.

  • El-Erian sees US economy contracting up to 14% this year when market is expecting less than half that amount.

  • Farmers are killing chickens because of lack of demand for eggs.

  • ONLY 4.4 million new job losses and the market moves higher.

  • Most investors think the economy completely recovers as soon as the virus issue is no longer a major factor.

Indeed, the above are just a few inklings of something is wrong. The market is seemingly blind to what could happen and is embracing the notion that only the best outcome is the most likely scenario. Well... if the market thinks the emperor is fully clothed, then I am going to have to go along, because the market is never wrong. But... just in case the market is being hoodwinked, I am content to wait until the 200-day moving average of the Turner Total Market Index starts showing signs of a flattening or reversing from its current bearish trend before I put on the rose-colored glasses and go merrily along with the crowd.


Before I see this weekend's results from our computer's number-crunching, I am quite a bit more bearish than bullish. Why? Because the overall trend of the market is still tracking from the upper left to the lower right. The trend is bearish and that is all I need to know when it comes to whether to be a bull or bear. But... that does not mean I am an all-out roaring bear. I'm still mostly cash and content, for now to stay 'mostly' that way.


I can't wait to see the computer results from this week's data. I'll get to see the reports right after tomorrow's 'Critical Update' webinar.


One more factoid... I am delighted that the top performing strategy today was the Diversified Income strategy. In this market, it is a major accomplishment to see the high-yielding holdings in this portfolio up an average of +5.28% in just one day. Getting high-yielding stocks to have strong capital gains, is a double positive.

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