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The Things That Matter Don't Change

Mar. 04, 2020 11:22 AM ET4 Comments
Financial Sense profile picture
Financial Sense


  • There is gravity to the coronavirus and the possibility to spread and infect populations around the globe.
  • The coronavirus points to the clear danger of concentrating manufacturing supply chains in one country.
  • As the U.S. downsizes its navy and withdraws from being the world's policeman, the transport of oil to where it's needed will become more perilous.

By James Puplava

Admit it. It's discomforting. It makes you ill at ease. It makes you question the world around you. In a matter of a few days, the markets have plunged into chaos and disorder. What changed? Gone is ebullience, replaced by fear and despair. Such is today's world of high frequency trading, financial concentration, and a massive index bubble. What used to take weeks, if not months, can now take place in just a few days. As shown in the graph below, in just one week the Dow fell over 4,000 points breaking through its 50-day and 200-day averages. Even if you are not an investor, you are aware of what is happening in the markets.

Source: Stockcharts.com, Financial Sense Wealth Management. Note: Past performance is no guarantee of future results. You cannot invest directly into an index.

The world is bracing for a possible pandemic. There is gravity to the coronavirus and the possibility to spread and infect populations around the globe. But if there is any country to best minimize its lethality, it is the U.S.

In the short term, it's impacting travel and global supply chains. Companies like Apple (AAPL), Hyundai (OTCPK:HYMLF), and Nissan (OTCPK:NSANY) are forced to close factories or cut production outside of China. The result is global manufacturing inventory levels have plunged to their lowest levels since 2012. While at the same time, rising orders could deplete these low levels of inventory even faster.

Even as the virus is spreading to other nations, the good news is that China is reporting a slowdown in the number of outbreaks and deaths. In the words of the late John Bogle, "this too, shall pass." When it does, which could be as soon as the end of the second, third, or fourth quarter of this year, economic activity will sharply pick up in order

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Financial Sense profile picture
Cited by Barron's as one of the top financial websites to visit on the weekend, Financial Sense (www.financialsense.com) provides educational resources to the broad public audience through a daily podcast, editorials, current news and resource links on salient financial market issues. Begun in 1985 as a local talk radio program, Financial Sense Newshour (www.financialsense.com/financial-sense-newshour) is a weekly webcast with host Jim Puplava and top financial thinkers. Writing staff of Financial Sense includes: Jim Puplava, Chris Puplava, Ryan Puplava, and Cris Sheridan.

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Comments (4)

Ex-Bingo Addict profile picture
Powerful information. The energy pendulum has been pulled very far. It's going to swing back the other way at some future point.
Thanks for the info. Have owned XOM since 1976, won’t be selling anytime soon!
The Freak profile picture
good piece. common sense stated sensibly. I own OXY and WMB newly since Q4 when i expected a turn into Q1... so your IBM reference is appreciated.
Oil will move higher with cuts to production.
Good commentary,thanks.
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