International Forecaster Weekly


Fed money does NOT kill corona virus. Fed money does NOT make people go shopping. So the Fed’s know this, and they wonder “do we shoot our ammunition at this thing, knowing it won’t do jack squat??” I think their answer is no.

Bob Rinear | February 26, 2020

Not two weeks ago, the CDC and the WHO were telling us that this virus was nothing to be concerned about. Now, the tune has changed in a big big way. How big? This big:


On Tuesday afternoon the CDC did a live broadcast telling everyone that it wasn’t an “if” that this bug will be invading us, but when. They also went on to say that it’s going to last longer than just one season. So, they expect this bug to linger with us.

Why the big change of heart? I have a feeling that they were trying to HIDE the severity of this thing, hoping and praying it started to become contained, and when it was evident that there’s NO HOPE of containing it, they folded their hand and laid down their cards.

I’ve talked several times about preparing for this thing, and I’ll just briefly mention them again. The single most important thing you can do is ISOLATE yourself from as many people as possible. I mentioned shopping at night at 24 hour grocers. I mentioned staying away from large groups of people such as sporting events, etc. Naturally you want to continually wash your hands. You have to make a conscious effort to keep your hands away from your face.

The bug can only get into you via your mouth, nose and eyes. Keeping those areas away from people, and “things” such as fingers, will help. The one problem with this damn thing, is that it is indeed airborne. Meaning that it can travel through air ducts in big buildings. So technically, even if you had a bio-hazrd mask on when out in public, when you got to work in your high rise building and took it off, someone infected on the floor below you, could infect you via the A/C system.

It also survived on solid material for up to 12 days. So, if someone infected, sneezes in his hand, and then uses that hand to pull a 5 dollar bill out and hands it to you, it’s now possibly on your hand. If you don’t wash it and happen to rub your eyes, well… you probably have it now.

Isolation and cleanliness is paramount here. Even then however, there’s a lot of chances this thing can get you. I’m not spreading fear, I’m simply saying that we are woefully short of testing in the US. There’s only 3 states that have the amount of test equipment to check on the population. That means it is POSSIBLE that you’ve already been in contact with someone that has this thing, but they weren’t symptomatic yet. I’m sure that’s what happened in Italy. They have no idea who the person was that was “ground zero.”

Now, I’m not in any form of panic here. I’m simply trying to look at this with an eye toward caution. But I do want to change gears and talk about the markets for a minute.

You all probably know what’s happened Monday and Tuesday. We dumped 1000 points Monday and After a lackluster attempt at a bounce Tuesday, it rolled over and we dumped another 900. Which brings up a plethora of questions.

First question is this: I’m on record saying that I think the Feds are HAPPY about the virus taking down stocks. The Fed’s pushed this market into the biggest bubble in the history of man kind and this bug gives them the chance to let some of that steam off, They can come on TV and says something like “hey, we were doing wonderful, but this damn virus hit and there’s not much we can do about that!”

However, you can bet a pocketful of Benjamin’s that Trump and his cabinet are on the phone with Powell screaming “Cut rates! Cut rates! Print money! Save this market!!!” So it begs the question, which one wins?

Right now the S&P is off about 6+% from the highs. I think the Feds would like to see it peel off about 10 – 12 percent, before they make a move.

Now this is just my silly opinion. But I think that if I was a Fed head, and I know that I’m responsible for the market to be trading at nosebleed levels, and something rattles the market that “technically” can’t be solved by rate cuts and money printing, I’d let it fall a bit too.

See that is the actual problem in a nutshell. Everyone’s going to be screaming for an emergency rate cut, but let me ask the silly question. Is another half percent off your interest rate going to get you out to the movies if the virus is in your town? Will it get you to a baseball game with 20K other people? Will it get you to go buy another car? No, of course not. Look at China. Stores are CLOSED, companies are closed. The only thing they can do with their printed money, is keep the companies from going belly up. That’s it.

Fed money does NOT kill corona virus. Fed money does NOT make people go shopping. So the Fed’s know this, and they wonder “do we shoot our ammunition at this thing, knowing it won’t do jack squat??” I think their answer is no.

I have mentioned and I’ll mention again that I could see them buying stocks outright. I have also mentioned that I believe they could literally “freeze” the market. Yeah you read that right. Just halt all trading, and come out with the statement that “Our companies are fine, our economy is fine, but the virus has stopped production and consumption. Thus, we’re halting the stock markets until the virus threats have passed.”

Conspiracy theory? Not really. At the start of WWI they closed the markets for FOUR months. After 9/11 they closed it for a week. I could easily see them halting things in place if this bug ravages the US.

So my guess is that this market has lower to go. Then at some point the Feds will react. What ever they react with, which is probably a rate cut, will bounce the market for a short time. But then it very well might fade more. That’s when they’ll have to make the decision to actually buy stocks and futures on a daily basis, or halt trading.

Right now, none of that is in play. Yes we peeled off about 2K points in two days, but it was so bloated, it’s a non event. The real questions will hit when it is found that the bug is found all around the country. The CDC has stated it will close down schools and movie theatres. Curfews will be implemented. Sports events canceled. Not exactly the kind of things that make stocks go higher.

Will the bug be found all around the country? I have to believe the answer is yes. But someone else could get horrifically sick.

What if tons and tons of people “get” this, but for “some” reason, it’s no worse than a bad cold? Then of course markets will roar higher.

My guess right now is that there’s more downside to come. There will be bounces higher, but the game has changed. The Fed’s are going to hold off from doing any “emergency” action, and probably enjoy seeing the market work off the froth. Then if things continue to deteriorate, they’ll act. But again, there’s really nothing they can do against this.

Buckle up folks, the ride has become more interesting.