COVID-08 — Not COVID-19 — Is the Real Virus Affecting Stock Markets

Dear Reader,

See markets got hit hard again last night?’ said the always upbeat owner of my favourite coffee haunt.

Yes. How come?’ was my baited reply.

Mate, don’t you read the news? Coronavirus is spreading outside China. It’s a pandemic. Got ‘em sh*t scared. Want the usual?.

Yes please.

Contrary to popular belief, it’s not COVID-19 that’s causing stock markets grief.

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While coronavirus has captured worldwide headlines and attention, we need a little perspective.

This is from the United States Centers for Disease Control and Prevention (CDC):

According to new estimates published today [December 2017], between 291,000 and 646,000 people worldwide die from seasonal influenza-related respiratory illnesses each year, higher than a previous estimate of 250,000 to 500,000 and based on a robust, multinational survey.

The new estimate, from a collaborative study by CDC and global health partners, appears today in The Lancet. The estimate excludes deaths during pandemics.

These findings remind us of the seriousness of flu and that flu prevention should really be a global priority,’ says Joe Bresee, M.D., associate director for global health in CDC’s Influenza Division and a study co-author.

Here’s the latest comparison between coronavirus and seasonal flu deaths:

Money Morning

Source: Worldometer

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When taken in context, COVID-19 is nowhere near as deadly as seasonal flu or for that matter, motor vehicle accidents or heart failure.

Yet, it’s being blamed for wiping trillions off global share markets.

How is that possible?

The answer to that question lies in another virus…COVID-08.

The Real Virus Affecting the Markets

This man-made virus was released into the community more than a decade ago.

COVID (Creation of Virtually Infinite Dollars) began in late 2008.

The infection rate was slow at first, but has accelerated in recent years.

COVID-08 virus was conceived and developed in central bank laboratories.

Earlier batches of the ‘virus’ met with initial success, but they failed in 2000 and 2008/09.

From the ashes of these spectacular failures rose CODIV-08, the super virus.

Was the new and improved compound radically different from those previous attempts?

No and yes.

The base ingredients of the compound were the same.

But the quantities applied were beyond anything tried before…unless of course you count an isolated experiment in Zimbabwe…oh, and also Japan.

For the record, neither of these ended well. One with hyperinflation, the other is mired in deflation.

Even though the science has been settled on this virus, the mad professors in charge of the experiment believe they know better.

To ensure there are no dissenting voices — pointing out the glaring failure of previous batches of COVID — all central bank lab workers must partake in a daily incantation…

It’s cash we hate

Let’s lower the interest rate

More debt is what we need

Appealing to basic human greed

The more they borrow

The more we bring forward from tomorrow

Economic growth is a given

So long as it’s perpetually debt driven

Altogether now…

Keep the rates at zero or below

Never let the money printers slow

Who cares what they owe

So long as they borrow, borrow, borrow.

Central bank zealots — the ones who believe their own BS — have played a critical role in spreading COVID-08.

The deranged/misguided/clueless academics in charge know the success of their virus-spreading experiment hinges on unquestioned belief…a complete buy in.

And it’s worked.

They’ve convinced almost all and sundry that the solution to a debt problem is…of course, more (much more) debt. Pure genius.

COVID-08 directly attacks the neural pathway…impairing or in more acute cases, completely destroying all rational thought process.

Receptors that would normally reference historical precedents, identify cyclical behavioural patterns or apply good old fashioned common sense are immobilised. Totally shut down.

The infected persons display symptoms of…

  • Irrational spending impulses.
  • A tightening in the chest when credit cards are maxed out.
  • A compulsion to borrow and buy over-overpriced assets.
  • Chronic delusion…often they can be heard repeating incessantly…‘it’s different this time, IT REALLY, REALLY IS’.

COVID-08 is a global pandemic. Since 2008, it’s spread to nearly all corners of the world.

Developed, developing emerging markets — all are infected.

The virtually infinite dollars/yen/euros/renminbis and trillions of borrowed funds have coursed through the veins of the global economy.

Everything has been infected…well, nearly everything.

Share markets. Capital city property prices. Bond markets. Anything that has an association with ‘blockchain’.

COVID-08 has made people take leave of their senses and convince themselves these assets represent fair value…and there’s more upside to come.

The effectiveness of COVID-08 in impairing neural pathways, was evident in The Financial Times on 18 February 2020 (emphasis added):

Italy and Greece have experienced red-hot demand for their bonds during the coronavirus outbreak, underscoring their transformation from high-risk debt markets to unlikely havens.

Both countries’ borrowing costs have tumbled so far this year, as investors have sought alternatives to deeply negative- yielding German debt.

Italian and Greek bonds ‘are trading like Bunds [German bonds] on steroids: safe bonds but with a bit more yield,’ said Antoine Bouvet, a senior rates strategist at Netherlands- based bank ING.

Are you convinced now of the potency of COVID-08?

The I & G in the once-maligned PIGS, are now seen as ‘safe bonds’.

I’m pausing here to stifle my laughter. Heads are turning in the coffee shop. Give me a minute…

That’s better. Where was I?

As you can see, COVID-08 is even more lethal than we suspected.

But central banks couldn’t do all the ‘heavy lifting’ on their own.

Super-spreaders (better known as, financial institutions) were recruited for COVID-08.

The promise of countless billions of profits had them falling over themselves to sign up.

The dumbing down effect of COVID-08 made the super spreaders task relatively easy.

Keeping the messaging simple and it’ll be like stealing candy from a baby…

Can’t afford it today? Don’t worry, there’s Afterpay.

No savings for a holiday? Don’t moan. Take out a home equity loan.

Love a new set of wheels? Check out these finance deals.

Wanna spend it before a ride in the hearse? Here’s a mortgage that works in reverse.

The share market’s a one-way bet. How about some margin debt?

These instruments of debt are many and varied. But they’ve all served one purpose, creating an economy wholly dependent upon greater levels of unfunded consumption and uninterrupted growth.

COVID-08 is all about quantity not quality.

The central bank virus has brought/dragged/sucked forward years and years of future consumption.

Barely a thought is given to what happens when that already consumed future eventually arrives. You can see I haven’t been doing my daily incantation.

Satisfying this excessive level of (credit-fuelled) demand has required a gearing up (literally and figuratively) of manufacturing and transportation capacity.

Which brings us to China…the hub of global supply and demand AND as it happens, the Coronavirus…or, COVID-19.

This headline from the 21 February 2020 edition of The New York Times, helps paint the picture:

Money Morning

Source: The New York Times

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For a little more detail, here’s an extract (emphasis added):

A loss of $29 billion in airline revenue. China auto sales down by 92 percent. Interruptions for Procter & Gamble’s 387 suppliers in China.

As the coronavirus outbreak rattles the global economy and disrupts supply chains, international companies across nearly every industry are confronting a stark reality: Business will not go on as usual.

Thanks to the global spread of COVID-08, corporations (many of dubious credit quality) have borrowed (truckloads) on an unwavering belief in ‘business continuing as usual’.

And there’s another symptom of COVID-08…impaired vision. The debt virus has blinded people to the compounding risks within the system.

Keep borrowing and keep building…mines, factories, planes, ships, trucks.

While people continue to be infected by COVID-08 you can keep all this digging, shipping, manufacturing, transporting, selling and servicing of debt in play.

Delusions of endless growth and the irrationality of paying 30, 40 or 50 times for earnings (that have been artificially boosted by COVID-08 and accounting trickery) are possible while the impairment capacity of COVID-08 remains active.

But then along comes a disruptor…COVID-19…that threatens to derail the central banker’s grand experiment.

Markets are falling because COVID-08 pushed them well beyond all historical markers of fair value.

Don’t blame COVID-19 for the carnage on markets, this was all the handiwork of central bankers, their super spreaders and a gullible public.

You have to marvel at the irony in the workings of the universe.

All those clever PhD academics and their well-heeled Wall Street backers who manufactured and distributed COVID-08, look like being outplayed by a virus sourced from an animal.


Vern Gowdie,
Editor, The Rum Rebellion

PS: The RBA is now considering negative interest rates.’ Watch this interview with US economist and gold expert Jim Rickards. Click here to watch the video.

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion