We are living in some strange times. Weeks ago, a report from Stanford University said that the death rate from the Covid- 19 virus was likely 50-85 times less than reported because of an abundance of unreported cases based upon their test results. Last week Penn State came out with their research showing a likely 80 times more cases than reported.  This would mean that this disease is FAR less deadly than originally feared. This would also mean that it appears we have been misled by the mainstream media and our “leaders” all along.

To be fair- the data keeps changing and I had a fear of this in the beginning also but as the numbers have changed, as more data becomes available, I see no changes in the attitudes or actions of our “leaders” making me suspect that there is something more at play here.

According to a CDC report last Friday Covid-19 is close to losing its status as an epidemic based upon their numbers as reported deaths have been declining for 10 weeks now. This, even as the media is hyping up the increased cases, likely because of increased TESTING so we actually know who has, or has, had it!

In the beginning the CDC expected a death rate of a devastating 3.4%. In actuality, it appears to be 0.26. Quite a difference. Instead of 3400 deaths per 100,000 cases it would be 260. Keep in mind that 80% of deaths from this occurred in nursing homes (people aren’t there because they are healthy) while they comprise 1.5% of our population. If you are healthy, I have seen comparisons to getting struck by lightning being as likely as dying from this virus.

Still, I am currently seeing many people still scared to death of this virus. I see many changing their lifestyles because they are afraid of contracting this disease that many of us have possibly already had and didn’t even know it because of a lack of testing.

I am not saying people haven’t suffered and died but what I am saying is that the response was both irresponsible and reckless. Far more damage will be done long term because of the damage done to our economy than this virus could have ever produced.

This is important to us economically because there appears to be a real effort to continue shutdowns of businesses and enterprise even though the numbers appear to say we should be returning to a more normal stance.

What it also means is that to keep the economy from totally imploding and the stock and bond markets levitated and functioning the Fed and other central banks will need many more trillions to keep the illusion of normalcy going.

I believe that if the economy was free to open up completely right now the economic damage has been so devastating so far that it would take years to get back to where we were when 2020 began. Contrary to popular belief- we were not in that great of shape then as we were “printing” tons of money to buy a small increase in GDP growth and “printing and buying” trillions of assets to make up for a lack of economic activity and commerce since the last meltdown in 2008.

As I am writing this I see that nearly 50 MILLION people have filed new unemployment claims in the last 16 weeks. The sad part is, that after conjuring up trillions in new faux cash and debt, the US created 22.13 million jobs from 2010-2020. In just 16 weeks we not only lost ALL of those jobs but an additional 27.86 MILLION on top of that. There are also reports that many places, including California and New York are still having problems processing all of the claims which likely means more are still to come.

*Jobless numbers from Bloomberg

In an effort to keep the public unaware of how bad things are economically not only is the Fed, and virtually all other central banks, flooding the “markets” with unlimited “cash” and buying assets but the governments around the world are going deeper and deeper into debt.

Here in the USA our admitted national debt will be 26.5 TRILLION when you read this. That is up 3 TRILLION in 3 months. That is an additional debt of over $9000.00 for each individual in the United States. Men, women AND children!

If this “money” were being used for productive purposes it may have made sense but this “money” is being conjured up and funneled to Wall Street, banks and cronies while a few scraps are thrown to the folks who will be left with the debt when all is said and done.

And what are people doing with their $1200.00 stimulus checks or “extra” $600.00 unemployment checks? Here’s a clue. Instead of preparing for the likely worsening depression ahead they are spending the cash.

A friend of mine owns a few fireworks stores and he told me that business was up 300% over last year. He couldn’t believe it. More interesting to me though was he said many were taking Ubers and getting rides to pick up their fireworks. They were buying loads of fireworks but didn’t even have a car! There were many like that.

So retail sales are being propped up with the faux cash but just in JUNE alone the US budget deficit was $863 BILLION. That is more than any yearly deficit since 2013 and just shy of the entire 2019 deficit.

Even with the tens of trillions of currency units being conjured up across the globe the economies are still crashing- albeit a bit slower than what had been taking place in April and May.

Some headlines that shed some light on what is going on:

“Retail Apocalypse Accelerates- 8700 Stores Closing, Number Set To Rise”

My comment: The true economic damage is still hidden from most. Many malls and strip malls will likely become ghost towns until someone finds a way to reuse them for another purpose like housing or possibly manufacturing somehow.

“Rickards: Depression and the Great American Exodus” (Leaving cities for suburbs and the country)

I took my daughter back to Manhattan on Sunday. She had to return to work on Monday. The city was a ghost town- it WAS Sunday morning but on Thursday my daughter said she was the only one on her subway car on the way to work. Personally, I am glad there is no one there to catch anything from but it is also concerning that nobody else was around in case a maniac entered the car. Luckily, she will be fleeing NYC in just 2 weeks. By the way, there are PLENTY of boarded up buildings and graffiti all over that I saw first hand. I’m sorry to say that NYC will not be the same for a LONG time- if ever again.

“California ‘Utterly Failing’ As 2 Million residents Waiting For Unemployment Checks”

As I said- a lot more likely to come!

“Walgreens Drags Down Dow As Q2 Sales Slump; Company Cuts 4000 Jobs”

This pales in comparison to the layoffs in the airline and hospitality industries but is shows that nobody is immune from the economic fallout. As a matter of fact, 29 hospitals in the USA have filed for bankruptcy in 2020. Seems strange but it is true according to the Hospital CFO report. I was also surprised to hear of Registered Nurses getting laid off in the middle of a pandemic but I know a few personally.

“83% Of German Firms With International Exposure Warn Of Collapsing Revenues”

This is global. Economic activity continues to plummet while central banks give the illusion all is working while main street sees the real story. When the bankruptcies really pick up the illusion will be shattered. We are already setting records for personal and business bankruptcies and this crisis has barely just begun.

“California, Texas, Arizona Shatter Covid-19 Records As Global Case Total Nears 12 Million”

The disease DOES appear to be very communicable. This may give our “leaders” another excuse for more shutdowns and retard any hopes of a meaningful uptick anytime soon. As I said, any V shaped recovery in a best case scenario (all back to work right now) would be highly unlikely- more shutdowns and any recovery is unlikely.

Because of this I expect our national debt to continue to skyrocket and according to the Fed itself the balance sheet will likely be $10 trillion or more shortly.

This is a positive for stocks and bonds as they will use a lot of the faux cash to prop those assets up in the short-term. It could be positively explosive for gold, silver and the companies that mine them along with other commodities also as this faux cash is ultimately exposed as being virtually worthless when it can be conjured up in unlimited amounts. I believe the recent action in the gold and silver markets point to the fact that many who are paying attention to current events see that the future may look far different than our recent past. It also just may mean that the way we have invested for virtually our entire adult lives may make no sense in a short period of time. Personally, I don’t think it makes any sense right now because I have to ask what an asset is worth when it is being bought with a currency unit that was just created from nowhere and actually has no value until a real asset is purchased- which by the way distorts the price. There is NO connection anymore between markets and reality. Any price you see today- any price is an illusion- all created by “money” from nowhere.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.

Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.