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What Crisis is the Stock Market Living In? And You?

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By Giulio Benzina @ Shutterstock.com

Coronavirus Infects Stock Market: Part LX

You really need to follow the bouncing ball in this time of crisis. Looking at the way stocks are trading, you have to wonder: what crisis is the stock market living in? Seems to me like no one has a clue.

You and I know there’s a crisis. Go downtown and look around. How many businesses are struggling or will never be the same? Who do we have to thank for this? China.

The China virus traveled to the U.S. via Europe, and now Europe wants to keep us out—yet is opening flights from China. You really can’t make this stuff up. No one has a clue.

There has never been more money created out of thin air by a clueless Federal Reserve—one that refuses to stand up for free-market principles. In other words, the idea that nothing is free.

Silly me, of course money is free.

How is it free? Well, let’s travel back in time to January, and read BlackRock CEO Larry Fink’s letter to shareholders. Here’s the meat of it (bold emphasis is his).

Climate change has become a defining factor in companies’ long-term prospects. Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.

And because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself. In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.

OK, and here’s the announcement back in March by the N.Y. Fed of its selection of BlackRock to allocate free-money:

On March 24, 2020, the New York Fed retained BlackRock Financial Markets Advisory as a third-party vendor to serve as the investment manager for this facility. BlackRock was selected for this role after considering its expertise with purchasing large amounts of all relevant types of corporate debt issuance and corporate bonds in the secondary market, deep knowledge and substantial experience in the corporate debt markets, and robust operational and technological capabilities. Additional information regarding the terms of this relationship is available here.

Guess the pet projects will get their money after all, while Main Street struggles to survive. Your tax dollars hard at work for Mr. Fink. Clueless.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com