Its Over

John Hussman via Twitter: Why is the market falling so much?

Answer: A market plunge is nothing more than risk-aversion coming into a market that's priced for zero risk. The source of the risk-aversion matters only by affecting the magnitude and duration.

Market participants ought to know what the magnitude of the coming Bear and how protracted it can be (see my post below) and decide if they are ready for what is likely to come:

https://hotcopper.com.au/threads/its-over.4002109/page-1946?post_id=42387796#.XmavVHIzapq

Most observers say a market crash can't happen under Trump's watch and in an election year - well it did, Expect the Unexpected.

Most market observers have written off the Democrats and that Trump is impenetrable, well Expect the Unexpected.

If the market is not doing well in an election, what chance has the market once either (i) Trump loses (market crash!) or (ii) Trump wins - no more need to prop up the market.

...and with record high global debts at every levels - enterprise, household (consumer) and government, what are the chances more debts and liquidity that central bankers can throw will ensure that foundations of the ponzi debt scheme can remain intact when CONFIDENCE , the glue that holds all together, has now been shattered with the events of the last few days?

Households: the household with the highest propensity to consume is the household with lower average earnings and the less wealthy - they will be worried not about not going out to consume because of the virus (that too) but if the virus will affect their jobs and/or ability to go to work and earn their wages they need to sustain themselves. Confidence shattered

Enterprise: We know credit crunch can hurt enterprises, COVID-19 will hurt small and medium enterprises globally and they collectively contribute significantly to jobs and the economy more than large companies. Business disruption due to the virus impacts them, large (and small) companies start conserving cash, make more layoffs and cut back their share buybacks and may even be impacted by supply chain shocks. Companies especially zombie ones on life support and those in the travel and leisure industry as well as oil companies face sectoral downturn like no other. And banks start to become more stringent in their treatment of their corporate clienteles. Confidence shattered

Government: Already before COVID-19, many countries are having a weak economy outlook , and Debt as % of GDP at all time high. Print more money and employ MMT (modern monetary theory) of spending like no tomorrow to stimulate the economy is last options they have - but will this finally unlock the inflation genie that the Fed has been working so tirelessly except not at the time appropriate to welcome it? Will we see sovereign debt defaults as time progresses ? Confidence shattered

Be Ahead of the Curve.