You are all probably wondering if I have some “wave” fetish. There are Elliott Waves, Cycle waves, and even Fourth Turning waves. It could make one seasick. Well, there are virus waves too, and now a fourth, more lethal wave is feared.
A few days back, I quoted German Chancellor Angela Merkel on the seriousness of the new virus strain coming from Great Britain in a so-called “fourth” virus waive. Now she warns Germany that they must ‘stop this BRITISH virus’ or the country ‘will see TEN TIMES as many cases by Easter’ – as coffins ALREADY pile up in virus hotspots. Angela is so upset that she seems to have forgotten her smug, elite, political correctness rules.
I guess Angela can say “British Virus” – just not “China Virus.” Perhaps the Germans are still a little sore about World War II. Or, maybe the Brits are not bribing as many politicians around the world as the Chinese. Anyway, Angela may find herself suspended from the next meeting of the “Great Reset.” The club has rules, right?
Flying through Germany (even with less than a two-hour layover) a week ago required a valid PC test – which takes three days to get results. That is not an easy test to time. What if you get to Germany after the test you took three days earlier comes back positive? Good luck with that. Where do you go? Quarantine anyone?
From personal experience, Greece is in complete lockdown – as is most of Europe. It makes you appreciate how bad it didn’t get in the U.S. – but the Dems weren’t in charge of the country then. Nothing is open in Greece; save a few essentials. You have to text and get a note from your mother to even be out on the streets, and you better have your papers.
To visit my father-in-law in the hospital, you have to have a valid PC test every three days. Only one person can visit at a time. By the way, even the best hospitals in Athens are absolutely disgusting. We even have him in a “private” hospital at a cost of roughly $5000 U.S. Dollars a day. I have pictures.
Recall that most of our medical terminology comes from Greece – arguably one of the most sophisticated societies in history. I am reminded, however, that this is where democracy first started and failed. If you want socialized medicine, take a look at it in full operation before you decide. You don’t know if you will die of your condition in the hospital – or the unsanitary conditions. We are witnessing both first hand. As my wife is an R.N. and nutritionist, she is literally coming unglued at the conditions. As someone with economic credentials, I can tell you that Europe is in serious, serious economic distress.
So now the new U.S. CDC director hit the meltdown panic button yesterday. Uncle Joe underscored the risks – vaccines for everyone, etc., etc. Naturally, this will be a convenient underpinning for another $4 to $5 trillion spending boondoggle putting us closer to bankrupting the country. You see, if the new boondoggle “infrastructure” bill is tied to the China Virus – it can pass by a simple majority – no filibuster. But there is no downside to the Dems – as this will all be Trump’s fault anyway, even though he is now golfing in Florida. In fact, for the lifetime of the youngest baby born this year, everything will still be Trump’s fault. That is true immortality for you!
Meanwhile, back at the markets, this may explain the surge in the relative strength of the Consumer Staples (XLP), Utilities (XLU), and Real Estate (XLRE) sectors of late. You see, we are told that interest rates and inflation are surging. Yet, utilities and real estate are extremely interest-sensitive and should be going down. The U.S. Dollar is supposed to be crashing, but it is going up. Gold, supposedly a harbinger of inflation, has also been going down and failed to break out yesterday. The NASDAQ 100, also supposedly interest-sensitive, still holds its own in a triangle pattern, indicating equal power between bulls and bears. The S&P 500 is a few ticks from new highs.
The logical explanation for these somewhat unusual Intermarket relationships could very well be that a fourth and more lethal virus strain is on the way. The NASDAQ 100 and Big Tech would benefit from another stay-at-home virus surge. This time, we have an authoritarian White House that won’t hesitate to dictate shutdowns from on high. Consumer Staples, Utilities, and Real Estate may be interested sensitive, but they are also the most defensive sectors in the equity universe. Their recent relative strength could indicate rotation into defense as virus fears grow – higher interest rates be damned. And cyclicals? Look out below.
But all in all, the markets held their own, at least for yesterday. They could have choked on the Bill Hwang’s Archegos hedge fund blow-up. The Financials, most vulnerable to systematic risk, held their own as well.
Today and tomorrow will be choppy regardless, as the first calendar quarter comes to an end. Then we go into April, typically the strongest month of the year for stocks.