by Shane Ormond
On May 21, 2020
Target reported that online sales on an average day in April exceeded last year’s Cyber-Monday sale, because if you’re not going to buy a Cuisinart Perfectemp 14 Cup Programmable Coffee Maker at the end of the world, when are you gunna buy one?
- Fed Offers Drastic Measures & Portents of Doom
- Cisco Commits Almost a Quarter of a Billion to Fighting Coronavirus
- Trump Activates the National Guard in 3 States
- Signs of What’s to Come
Fed Offers Drastic Measures & Portents of Doom
The Fed has officially pulled out all the stops to halt the comical spurt of money shooting out of the economy like a neck wound in a low budget horror movie.
The central bank announced a fresh barrage of programs aimed at curbing the damage done by the coronavirus, including an open-ended commitment to keep buying assets indefinitely. (Not to be confused with the “open-ended commitment” you tried to fix your first marriage with.)
“The Fed officially crossed the Rubicon,” says Money Crisis editor Graham Summers. “The Fed announced it would make its QE program “open ended.” Meaning it would buy Treasuries and mortgage-backed securities as needed.
“Put another way, the Fed announced unlimited QE. And to top it off, the Fed ALSO added that it was expanding its QE mandate to buy corporate debt (for the first time in history). The Fed has announced it is going to effectively monetize “everything” – Treasuries, mortgage-backed securities, municipal debt, corporate debt, etc.
“The only debt assets left are student debt, auto loans, and credit card debt. In simple terms, the Everything Bubble burst… and now the Fed is dealing with it by buying EVERYTHING.”
The central bank broke its proud tradition of mostly communicating in vague signals and weighted jargon with an unusually explicit warning about how donked up everything is about to get.
“It has become clear that our economy will face severe disruptions,” the Fed said in a statement this morning. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”
If that doesn’t salt your watermelon, it’s worth noting that the Fed has already moved further and faster than the actions it took during the 2008 financial crisis. (Which was caused by a virus called “bankers.”)
More on that and Graham’s predictions for what comes next in today’s one last thing.
Cisco Commits Almost a Quarter of a Billion to Fighting Coronavirus
Global telecommunications company Cisco Systems has committed $225 million to fighting coronavirus as Silicon Valley realizes that if everyone dies and the global economy collapses, no one will buy all their stupid, unnecessary junk.
The investment will include $8 million in cash and $210 million in products, according to a blog post by Cisco CEO Chuck Robbins.
It sounds like the package will largely be comprised of Cisco telecommunication products. (And I, for one, can’t wait to see little Timmy’s eyes light up when I give him this rack-mountable, 48-port LAN base.)
“People who were already vulnerable are facing even more risks to their health, stability, housing, and well-being,” wrote Robbins.
“Nonprofits are struggling to serve their populations as the number of volunteers declines due to social distancing practices and donations are at-risk due to financial concerns.”
To put it another way: “What the world needs now is teleconferencing, sweet, sweet teleconferencing.”
Robbins says part of this response will go to the United Nations Foundation’s COVID-19 Solidarity Response Fund, supporting the World Health Organization’s (WHO) worldwide efforts to help prevent, detect, and manage the spread of COVID-19. (And if any of those organizations want to continue to use those Cisco products after the crisis is over, I’m sure the company will be more than happy to sign them up.)
Cisco’s announcement follows a call with Silicon Valley’s highest profile business leaders to discuss how to use their considerable resources to help fend off the virus, hosted by Robbins.
CEOs and executives from Facebook, Google, Apple, Twitter, and Netflix were all invited to take part. (Maybe Netflix could stop recommending weird horny Japanese cartoons where all the high-school students are animals, for a start. I’m in quarantine. Not on a journey of sexual discovery.)
Facebook has since announced it will offer $100 million in cash grants and ad credits for small businesses and give $1,000 bonuses to all its employees. While Apple CEO Tim Cook tweeted on Saturday that his company was “donating millions of masks for health professionals in the U.S. and Europe.”
Trump Activates the National Guard in 3 States
President Trump has called in the National Guard to aid in the effort against coronavirus in New York, Washington state, and California.
The move has stoked fears in those states of a full medical quarantine, enforced by troops. But for now, these dudes are just disinfecting Legos and unloading pancake mix off the trucks. (Hollywood never shows you the bit in the global pandemic where you get pancakes.)
President Trump said the federal government would 100% fund the National Guard’s mission in approved states, including building emergency hospitals and cleaning Legos in a Jewish community center.
(If it sounds like I’m hung up on the whole Lego thing, it’s because I 100% am. These heroes are out there washing, wiping, and disinfecting every individual Lego. This is what the inevitable COVID-19 movie should be about. Terry, who has to dissemble the entire 7,541-piece Millennium Falcon, disinfect it, and put it back together.)
“We’re dealing also with other states. These states have been hit the hardest,” Trump said at a news briefing, pointing to page 50 of the Millennium Falcon build instructions.
This is the culmination of all your training, soldier. I want that tiny space toilet so clean, I can eat my tiny space breakfast off of it.
Chief of the National Guard Bureau, General Lengyel, took to Twitter to dispel rumors that the national Guard would be enforcing draconian quarantine measures rather than supplying aid.
Usually, Lengyel’s Twitter is exclusively a fan account for The Bachelor, but he’s making an exception to talk about National Guard stuff in this time of crisis.
Once Chewbacca’s co-pilot seat has been thoroughly scrubbed, the National Guard will set about building temporary medical facilities with thousands of additional beds in New York, California, and Washington state.
In Other News
ONE LAST THING
Signs of What’s to Come
As we reported in today’s issue, the Fed is blasting this crisis with everything it’s got.
Clearly Powell and his buds at the central bank are freaking out a little bit. But what does indefinite quantitative easing (QE) mean for us? And where do the markets go from here?
Graham Summers makes his bold prediction in today’s one last thing:
Signs of What’s to Come
By Graham Summers
Whether or not this will work remains to be seen. But this is the NUCLEAR option. And if it doesn’t work, there is nothing left for the Fed to do.
Remember, technically the Fed isn’t supposed to be able to buy municipal debt or corporate debt. So it is moving FAR beyond its mandate with these actions.
Here’s the even bigger issue…
If this works too well, and with the Fed pumping trillions into the financial system and the federal government launching helicopter money, we begin to see roaring inflation.
The key chart to watch is the credit spread on Junk Bonds. While stocks tried to bounce time and again in the last few weeks, credit had continued to break down, warning that there was no bottom in sight.
If this chart breaks out to the upside, then we will finally get a bounce.
Bond yields have begun rising, suggesting the bond market is beginning to discount inflation hitting the financial system.
Moreover, the ratio between commodities and stocks has broken out of a multi-year falling wedge, which suggests commodities will be dramatically outperforming stocks going forward.
This too is signaling higher inflation is coming.
This is telling us that the first round of the crisis, the deflationary collapse, will be ending. But the second round, the INFLATIONARY tidal wave, is only just beginning.
P.S. We all know that the Fed has recently injected $1.5 trillion into the markets. But I have a special message for you that the mainstream media isn’t telling you. According to my research, there’s an opportunity here with the potential to collect massive market gains from big central bank moves. I made a brief video getting more into detail. Click here to see what the media hasn’t been telling you.
Closing Data for Today
|S&P Index 500||2,207.88||↓ 3.47%|
- German Chancellor Angela Merkel barred groups of more than two people from gathering (except for families) as she also goes into isolation.
- PG&E pled guilty to felony involuntary manslaughter charges for its role in starting California’s deadliest wildfire on record.
- The International Olympic Committee is considering postponing the Tokyo 2020 Games.
Editor, One Last Thing