Financial, Economic and Social Mood Update (April 2, 2020)
The subject of this month’s update is the worldwide coronavirus pandemic. I am re-sharing a Facebook video which I have found extremely informative and helpful: https://www.facebook.com/jojo.borromeo.56/videos/1598183023671819/
The video was made by a medical doctor in the Philippines who is working on the “front line” of this very important battle. He explains the need for quarantine, lock-down, social distancing and most especially the need to wear face masks. We can even make our own masks using cloth (such as a handkerchief) tied with string. The pluses of social distancing were proven 100 years ago during the worldwide Spanish influenza epidemic – political jurisdictions where social distancing was practiced significantly reduced the exponential growth rate of the pandemic. Another point the doctor raises is that any epidemic will have to infect virtually every person on earth (most people will carry a disease but not become ill with it) to reach what is called “herd immunity.” This is yet another reason for everyone to wear a face mask.
Stock markets all over the world have lost a cumulative 23 percent since this crisis began. The Dow Jones 30 Industrials Index has been down by as much as 39 percent from its record high nominal value 49 days ago. Safewealth Group of Switzerland (which uses Elliott Wave forecasting techniques) has an eventual crash target level for the Dow Jones 30 Industrials Index of around 12,000 to 13,000.
Many interest rates, including central bank key rates as well as some consumer CD savings rates (certificates of deposit) are now at zero or less. The price of crude oil has collapsed by 86 percent since oil’s high value was reached in 2007-2008, and now hovers around USD $20 per barrel. Some analysts believe that the price of crude oil may also turn to zero or less due to collapsed demand and too much supply. Real estate values in the strongest US coastal markets may already be down by as much as 25 percent. Official unemployment in the US job market has been pegged as high as 32 percent of the active labor force by some news outlets. Auto sales in the first quarter of 2020 are estimated to be down by 42 percent from the same period in 2019. Auto sales in China (which was by far the largest market on earth before the pandemic began) were down by 90 percent in February 2020 and by 59 percent in March 2020 compared to the same periods in 2019. As of today, as much as 71 percent of the world’s people are living under some sort of mandatory or recommended quarantine, lock-down or social distancing.
The Covid-19 virus has been identified in 218 countries and dependent territories all over the world, with just 28 political jurisdictions reporting no confirmed cases – mostly on very small and very isolated islands. 90 countries and territories have per capita infection rates above what has been reported in Mainland China. The highest rate of infection in the world has been recorded in the tiny country of San Marino, which is entirely surrounded by Italy. Italy has the highest infection rate among the larger countries. The infection rate in Italy is 32 times what is reported in China – the infection rate in San Marino is an astonishing 129 times the Chinese rate.
