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The global economy of 2019 had clogged arteries and atrial fibrillation.
Now it’s suffering a massive heart attack, and there’s no miracle cure.
Last year’s economic disease started in China, the same place where it started this year. China’s auto sales, for example, sunk by about 8%.
Now they’re down 80%, the biggest decline. Ever!
Japan also started to slump last year. In the fourth quarter, its GDP contracted by an annual rate of 7.1%. That was already severe.
This morning, the Bank of Japan warned it’s going to get worse, a lot worse!
In Europe, the most vulnerable large economy has long been Italy. Its banks are in shambles. Its federal deficit is off the charts. That was already true last year and the year before.
Now, sadly, Italy is also the European economy suffering the worst cardiac arrest. Its biggest industrial region is shut down. Its government is in turmoil. Its citizens are in panic.
What Next?
The most timely indictor of what’s ahead is global stock markets, and they’re crashing this morning. Tokyo is down over 1,000 points, while New York on the brink of Black Monday trading halt.
But stocks alone don’t tell the full story. They’re too subject to panic selling when the psychology is paranoid and panic buying when it’s blissful jubilation.
For a more reliable — and revealing — early warning sign of what’s to come, take a hard, not-so-fast look at the Purchasing Manager’s Index (PMI).
The PMI tells gives you a solid heads up about production in each major country around the world. And it comes straight from the horse’s mouth — company executives who tell us whether their orders rose or fell in the prior month.
So look at what the China PMI chart (from the National Bureau of Statistics) is showing so far:
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China’s manufacturing PMI (violet line) has plunged to its lowest level in history.
China’s non-manufacturing PMI (black line) is down even further.
Both are now deep, deep below the expansion/contraction line (blue).
Europe, meanwhile, is already heading in exactly the same direction, led by the shutdowns in Italy with similar impacts now expected in France, Germany and Spain.
So, now the urgent, heart-burning question is …
What About the U.S. Economy?
The answer is one of the most distressing Catch-22 dilemmas of our lifetime — and the lifetime of our leaders.
Do we overreact to the crisis NOW, do our utmost to contain the contagion … and kill the economy in the process?
Or do we underreact to the crisis, let the economy continue humming as best we can … but let the contagion kill more of our citizens, especially the elderly?
Unfortunately, finding the “happy medium” is not easy. Nor is the word “happy” appropriate.
Let’s Pray for the Best but
Prepare for the Worst. Here’s How …
Step 1. Build cash. No matter what happens in the days ahead, cash will be king.
Step 2. Use any quick rallies in the market to move from high-risk investments to low-risk investments, especially the world’s safe-haven assets. Three of the most liquid are …
• U.S. Treasury bonds, now selling at their highest price levels of all time …
• Gold, which has jumped by nearly $100 per ounce since Feb. 27, and …
• Bitcoin, already in a new bull market and gearing up for a major new surge.
In these turbulent times, all three are great hedges.
Plus, to be sure, all three are subject to sharp price fluctuations, both up and down.
But don’t let dissuade you. Use any downdrafts as buying opportunities.
And for truly blow-out profit potential, no asset class on the planet can beat Bitcoin — plus other cryptocurrencies that merit our highest Weiss Crypto Ratings.
Indeed, just weeks from now, a rare, but powerful trigger event will kick off the next big phase of their bull market.
The Last Time This Event Was
Triggered, Bitcoin Surged 3,000%.
Meanwhile, Litecoin rose 8,000%. Ethereum catapulted 12,000% higher. And other lesser-known coins surged even more.
We’re covering all of this in a special emergency briefing tomorrow at 2 p.m. Eastern (6 p.m. in London).
So, if you want to secure your free seat, you can do so now with a single click here.
Then be sure to check your inbox (or your other email folders) for our confirmation and instructions for attending.
But you only have a few hours left to do so!
Good luck and God bless!
Martin
