Today market veteran, Bill Fleckenstein, noted that QE agains trumps sickening looting.
QE Again Trumps Sickening Looting
June 2 (King World News) – Bill Fleckenstein: Last night the rioting intensified in many cities, not the least of which was Manhattan. It should be obvious to anyone that legitimate protests mainly take place in the daytime, and while the majority of protestors have behaved as one would hope, there’s obviously a contingent of looters out and about that is not only causing great damage, but also muddying the waters of what the legitimate protestors are trying to accomplish.
It’s been rather mind-boggling to watch certain cities seemingly fall apart, as we saw in Minneapolis, where the police let the looters take over a precinct station. I bring this up because these sorts of activities can’t inspire confidence in the public at large and the consequences will make the economic dislocation even more severe. This is particularly true if we get a rebound in the virus in a couple of weeks and we see more overreactions in terms of shutting businesses down even longer.
The Costs of Not Doing Business
I would also argue that some of the looting and abhorrent behavior is a function of people having been locked down for so long and a lot of them becoming desperate. This is not to make excuses for anyone who did any rioting or looting, it’s to point out the unintended and damaging consequences of taking away people’s jobs and livelihood for months at a time, which likely will bankrupt enormous numbers.
So, to state that our economic prospects prospectively are bleak is an understatement. Granted, there will be some improvement in the data as the economy reopens, but the possibility of anything approaching normal in any sort of a discountable timeframe is about zero…
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All Quiet On the Wall Street Front
Turning to the market action, there was a bit of an undertow early on as the Nasdaq lost 1% while the Dow and S&P were not really impacted much through midday. In the afternoon, the market rallied and with an hour to go, when I had to leave, all three major indices were fractionally higher.
Away from stocks, green paper was a little weaker once again, as was fixed income, and the metals gave up ground with silver falling 2% compared to 0.75% for gold, while the miners were disproportionately weak.
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