By Pam Martens: March 9, 2020 ~ In early afternoon trading, West Texas Intermediate, the domestic crude oil in the U.S., had lost over 20 percent on the day, 39 percent in the last 18 calendar days and 48 percent from its peak this year. The panic selling resulted from a failed OPEC meeting with its allies last week when Russia refused to go along with crude oil production cuts proposed by OPEC to shore up the price of crude. Following the failed meeting, Saudi Arabia began to dramatically discount its oil prices to customers to grab market share. It reminded me of an earlier Saudi oil price war in 1986 – without the coronavirus to add to the panic. In 1986 I was working at Shearson with newly acquired stock and commodity licenses. I had the good fortune of sitting next to a very savvy female oil trader who … Continue reading →

By Pam Martens and Russ Martens: March 9, 2020 ~ We knew Fed Chair Jerome (Jay) Powell was not on solid footing last Tuesday when he answered a question at his press conference from Washington Post reporter, Heather Long. She wanted to know how he felt about “rising concern about credit markets and possible insolvencies and defaults either from businesses or individuals from the coronavirus.” Powell answered Long with this: “financial markets are functioning in an orderly manner and all that sort of thing.” That wasn’t true then and it certainly isn’t true as of noon today. The Fed Chair neglected to mention to Long that beginning on September 17, 2019, as a result of disorderly market functioning, it had started pumping out hundreds of billions of dollars in super-cheap loans each week to trading houses on Wall Street – the first time it had made such repo loans since … Continue reading →

By Pam Martens and Russ Martens: March 9, 2020 ~ There are now so many Black Swans circling in the sky against darkening clouds that it’s starting to feel like news on steroids. Here’s what we woke up to this morning: Futures on the Dow Jones Industrial Average contract had fallen 5 percent overnight so they are now locked, limit-down in the futures market in Chicago. We can get a pretty good idea, however, of just how far the stock market will fall when it opens at 9:30 a.m. in New York from the SPDR Dow ETF, which at 9:03 a.m. suggested an opening loss of about 1,681 points or 6.5 percent from its close on Friday. Those projected losses, of course, could be stemmed before the market opens by news of liquidity injections. For example, the New York Fed announced before the market opened that it will increase its … Continue reading →

By Pam Martens and Russ Martens: March 6, 2020 ~ Yesterday, the Dow Jones Industrial Average of 30 large cap companies closed with a loss of 969.5 points or 3.58 percent. That was bad enough but the losses among the biggest Wall Street banks outpaced the Dow losses by a significant margin. Typically, JPMorgan Chase is one of the better performers among the Wall Street banks in the midst of a big selloff. But not yesterday. It closed with a loss of 4.91 percent – a loss larger than Goldman Sachs (- 4.77 percent), which has a large criminal fine hanging over its head. The news that Jamie Dimon, Chairman and CEO of JPMorgan Chase, had heart surgery on Thursday was not reported until after the stock market had closed. The losses among the other mega banks on Wall Street yesterday were equally unsettling. Morgan Stanley lost 5.86 percent; Citigroup … Continue reading →

By Pam Martens and Russ Martens: March 4, 2020 ~ We write this with some trepidation that after this appears in print Federal Reserve Chairman Jerome Powell will stop taking questions at his press conferences or that all media questions will have to be routed through Vice President Mike Pence’s press office, as is now occurring with matters pertaining to the coronavirus. (We say that with only some facetiousness.) However, in this age of spin, facts matter more than ever. First, a little background. After losing 3600 points the prior week, the Dow Jones Industrial Average staged a monster rally (more likely a short squeeze) on Monday, climbing 1293 points to close at 26,703. At 1:34 a.m. (the wee hours of Tuesday morning) President Donald Trump posted a tweet to his Twitter page stating, among other things, that the Fed should ease and “cut rate big” adding that “Powell led … Continue reading →

By Pam Martens and Russ Martens: March 3, 2020 ~ There is a time for scientists and carefully vetted facts and a time for men who tell the public that everything is great, nothing to see here. It’s clearly a time for the former and less delusional chatter from the latter. The latest magical thinking is that if Fed Chairman Jerome Powell and U.S. Treasury Secretary Steve Mnuchin get on a phone call this morning with the other G7 finance ministers and central bank governors, they can seduce or strongarm the group to announce rate cuts or fiscal stimulus to keep stock markets from further steep declines and GDP from contracting. (For how this played out previously, we recommend Nomi Prins’ brilliant book, Collusion: How Central Bankers Rigged the World.) Unfortunately, the Fed Chair and the U.S. Treasury Secretary are fighting the last war, the financial crisis of 2008, when … Continue reading →

By Pam Martens and Russ Martens: March 2, 2020 ~ The Dow Jones Industrial Average closed with a whopping 1293 points in the green today, after losing 3600 points last week. (It looked like a classic short squeeze driving up the market today.) But despite the monster move up in stocks, two of the major airline stocks closed in the red today: American Airlines and United Airlines. Delta and Southwest closed in the green. All four airlines, however, have been on a serious losing streak of late as fears over the coronavirus have spread. From their close on Wednesday, February 19, through last week, the four airlines have lost over $22 billion of their share value during those seven trading sessions. The biggest loser in percentage terms was American Airlines. It lost 34 percent of its market value or $4 billion. United Airlines lost 24.8 percent or $4.88 billion while … Continue reading →

By Pam Martens and Russ Martens: March 2, 2020 ~ Ettore Palazzo, M.D., Chief Medical and Quality Officer for EvergreenHealth in Kirkland, Washington, announced that a total of six patients diagnosed with coronavirus COVID-19 have now died of the virus. One of the deaths had been reported on Saturday and a second death was reported on Sunday. Four more have now died since then. Five of the deaths were in King County with one additional death in Snohomish County. The King County Executive, Dow Constantine, said the county was in final negotiations to buy a motel to care for patients in need of isolation and recovery. He said the county was also going to be using modular housing in several locations around the county, including Seattle. Dr. Jeff Duchin, a Health Officer for Public Health in King County, spoke at the press conference and said the county now has 17 … Continue reading →

By Pam Martens and Russ Martens: March 2, 2020 ~ The Organization for Economic Co-operation and Development (OECD) has released a dire outlook for global economic growth this year as a result of the spread of the coronavirus Covid-19. Its latest Interim Economic Outlook provides both a best-case scenario, where the virus is broadly contained, as well as a scenario in which contagion spreads. The best-case scenario, which factors in limited spread outside China, will bring little cheer to world leaders. It projects global economic growth falling to 2.4 percent this year compared to an anemic global growth of just 2.9 percent last year. If there is wider spread of the virus around the globe, the OECD says global growth could be cut to as low as 1.5 percent – which would be just half of what the OECD was forecasting last November. The OECD also projected that some countries, … Continue reading →