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Covid-19: Global Retrenchment Will Obliterate Sales, Profits and Yes, Big Tech

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“Covid-19: Global Retrenchment Will 
Obliterate Sales, Profits and Yes, Big Tech”
by Charles Hugh Smith
“If you think global demand will rebound as global debt and confidence implode, you better not be making consequential decisions based on Euphorestra-addled magical thinking. Even before the Covid-19 pandemic, the global economy was slowing for two reasons: 1) everybody who can afford it already has it and 2) overcapacity. One word captures the end-of-the-cycle stagnation: saturation.
Everyone who can afford a smartphone (or can borrow to buy one) already has one. Everyone who can afford an auto loan already has a car. Everyone who could afford an overpriced house already bought one. Everyone who can afford a tablet or laptop already has one. And so on.
This saturation isn’t just in the consumer market – the corporate market is equally saturated. Corporations leased too much space, bought more cloud services than needed, increased headcount willy-nilly, and increased capacity just as the market for their goods and services stagnated from global saturation of markets and debt.
Paint-daubed members of the Keynesian Cargo Cult (paging Chief Humba-Humba Paul Krugman) love to claim that “debt doesn’t matter” but in their frenzied dance around the campfire they ignore one little feature of debt: interest. In a world in which money is borrowed into existence, all new money issuance and all new debt (the same thing) accrues interest. And as Japan has proven, even if the interest rate is near-zero, if you borrow relentlessly enough, the interest due even on near-zero interest rates soon dominates your entire income.
The Keynesian Cargo Cult, busy with their rock radios (the dials are painted on), ignore the sad reality that marginal borrowers default because they can’t afford to make the principal payments, never mind the interest, and the inevitable result is cascading defaults throughout the financial system. It’s not just marginal borrowers who blow up; marginal lenders also blow up as all the loans they issued to marginal borrowers blow up.
Then there’s overcapacity. Yes there are shortages such as pork in China due to the spread of Swine Fever, but in one manufactured commodity after another, there is more capacity than customer demand. This is a permanent feature of a globalized economy awash in cheap money. On my first visit to China in 2000, TVs were is massive oversupply as production had ramped up just as every household already had a TV.
Two other features of a globalized economy awash in cheap money are 1) too much debt and 2) complete destruction of discipline. Consumers, governments and corporations have all borrowed and spent on a grand scale, abandoning financial prudence in favor of a euphoric fantasy (encouraged by central banks) that the cycle of expansion would never end.
This global hubris was begging for a comeuppance, and Covid-19 has toppled the world’s precarious dominoes. A retrenchment that was long overdue has started, and everyone who works for a company or lives in a nation that does business with China–either relying on China for parts, manufactured goods, tourists, students, etc., or as buyers of imported goods and services–is about to retrench whether they want to or not.
As I explained earlier, desire is a much shakier motivation than need. Aspirational desire for a higher-status good or service to replace the one you already have is a manifestation of confidence and certainty. When certainty dissolves into uncertainty and confidence in the near future melts into air, spending arising from the wispy fantasies of aspirational desire dries up. The number of people who can’t live without a new smartphone, vehicle, tablet, subscription to content, etc. is far, far smaller than pre-pandemic sales. And since profits flow from the marginal buyers of goods and services, profits are about to implode across the global economy.
Big Tech will not be immune to this implosion of profits. Corporate leadership runs in herds just like consumers, and so corporations hired too many people, signed too many leases, rushed into cloud services and borrowed too much money to buy back shares, a.k.a. “create shareholder value.”
Just as everyone who can afford a car already has one, every company that wanted cloud services already has cloud services. All the Big Tech giants that have been soaring on expectations of endless 20% quarter-over-quarter growth in their cloud services will find growth crash to 1% or even go negative: as corporate sales and profits plummet, so does the need for more cloud services.
The fat in bloated household and corporate budgets will have to be trimmed, and fast. Headcounts will have to be slashed, marketing budgets burned to the ground, leases on empty space dumped and so on. Does all that online marketing actually work? Well, actually, no, not when consumers retrench.
Households will soon be grabbing their iPhones to delete all subscriptions: settings -> your name -> subscriptions -> cancel, cancel, cancel. People will look at the hundreds of dollars they’re blowing on streaming content they rarely use and cancel Netflix et al. en masse. Even sacrosanct Amazon Prime and Costco memberships will be cancelled as people share accounts.
The global economy based on 20% quarter-over-quarter growth in everything will implode as growth slows to signal noise levels (1%) or goes negative. Valuations based on 20% quarter-over-quarter growth forever will flame out and crash to Earth.
Everyone expecting 20% quarter-over-quarter growth to return in the second quarter is going to find that the crash from the crazy high of Hopium and Euphorestra is devastating. Phones last a long time and so do vehicles. Profits that vanished like mist in Death Valley do not start gushing again as the entire world retrenches.
The dominoes have just started to fall: economies dependent on tourists from China are imploding, companies dependent on components made in China are imploding, companies dependent on sales made to Chinese households and enterprises are imploding, and so on.
Do you really think Amazon fulfillment warehouses have 12 weeks of every item in inventory? Are you joking, or just delirious from a high-ball of Hopium and Euphorestra? The global supply chain has been disrupted four layers deep: you think that assembly plant in Vietnam is unaffected, when 50% of the parts being assembled are sourced from China?
If you’re confident the containers from China will soon be offloading at Long Beach in two weeks, you better check your meds. And if you think global demand will rebound as global debt and confidence implode, you better not be making consequential decisions based on Euphorestra-addled magical thinking.”
In other words, what these always forget…
is where this delicacy comes from…
They’ll find out, soon enough… at a horrific price.



Source: http://coyoteprime-runningcauseicantfly.blogspot.com/2020/02/covid-19-global-retrenchment-will.html

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    • Anonymous

      Its Just ….. Same Old Same Old Rinse & Repeat FEAR PORN PROPAGANDA PLAYBOOK – IN PLAY – YET AGAIN

      AND according to experts -vs- the 2000 deaths and 75,000 infected HYPED PROPAGANDA SIDE
      ….There are probably >>> 10X as many
      ie >>> 3/4 MILLION >>> that will have been infected

      - BUT – the symptoms …. ARE QUOTE >>>>> “SO MILD – THAT NOBODY NOTICED”

      Read some FACTS with links to the SOURCED EXPERTS !!
      …………………………………………………………………….

      EMPHASIS >>> ITS SO INSIGNIFICANT AS A VIRUS… THAT

      Real Experts state – there are probably…. 10X as many people infected – that have symptoms >> TOO MILD TO EVEN NOTICE
      - than those…. that are being recorded

      SO THAT’s >>> 3/4 of a MILLION infected – but – THEIR SYMPTOMS ARE TOO MILD….. TO EVEN NOTICE !!!
      …………………………………………………………….

      LETS GET INITIAL OFFICIAL GOVERNMENT CONFIRMATION (Fuller Details Lower Down on THE ACTUAL NUMBERS)
      CANADIAN GOVERNMENT / HEALTH CANADA

      QUOTE “coronaviruses are common …..and are typically associated ….with mild illnesses,
      similar to the common cold. (Unquote)

      QUOTE >>> Those who are infected with COVID-19 may >>>>have little to >>> NO symptoms.

      You may… NOT KNOW ……you have symptoms ….of COVID-19

      because they are similar to …. a COLD or flu. (UNQUOTE)

      https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/symptoms.html
      …………………………………………………………………………………………………

      >>> BREAKING >>> MUST READ >>> BREAKING >>> MUST READ !!
      UK GOVERNMENT >>> OUTS >>> POPEYE – PRATTchett & LISA HAVEN >>> As FEAR MONGERORS – SPREADING FEAR PORN !!
      QUOTE “For those who are in contact …. with a suspected case ….in a childcare or educational setting, >>>> no restrictions…. or special control measures ….. are required (Unquote)

      …………………………………………………………………………………………………………………………………………….
      FULL QUOTE 17 Feb Public Health England and the Department for Education
      have…… issued headteachers and childcare providers …with fresh guidance

      Schools and nurseries ….do not need to close…. or send pupils home

      …. in the event of…. contact with someone …. suspected of having … the coronavirus,

      according to new guidelines to be issued to schools across the UK this week.

      For those who are in contact …. with a suspected case ….in a childcare or educational setting,

      >>>> no restrictions…. or special control measures ….. are required

      https://www.theguardian.com/world/2020/feb/16/headteachers-are-told-to-stay-calm-and-keep-schools-open

      For most – THE Actual Symptoms are JUST ….

      - A RUNNY NOSE
      - A COUGH
      - A SORE THROAT / Fever (high temperature).

      The vast majority of patients – at least 97 per cent, – will recover from these >>>> without any issues…. or medical help.
      ……………………………………………….
      LOS ANGELES TIMES

      Thousands of people in China and elsewhere ….have been infected ….. but have had…

      >>>> such mild reactions that >>>> no one even noticed,

      - said Dr. Tom Inglesby, director of the Center for Health Security at the Johns Hopkins Bloomberg School of Public Health.

      https://www.latimes.com/science/story/2020-01-24/china-coronavirus-panic

      The UK’s BBC News COMMENTS – Re INFECTED – HAVING SUCH MILD REACTIONS >>> NO ONE NOTICED >>> FROM THE LARGEST STUDY TO DATE (The paper by the CCDC, released on Monday and published in the Chinese Journal of Epidemiology, looked at more than 44,000 confirmed cases of Covid-19 in China as of 11 February
      ………………………………….
      – So Known Infections 72,436 x 10 = 724,000 Who Will Have Had Symptoms – Too Mild – To Notice – YES >> ¾ Million
      …………………………………..
      QUOTE >>> Re The Known 72,436 infections
      - Scientists have estimated there could be …..10 times as many people infected ….. as are ending up in the official statistics.

      That ALSO means the….. overall death rate IN THE REST OF CHINA (Outside Hubei) is likely to be
      >>> lower than the 0.4% (rest of China) reported in this study (ie 10X LOWER – Making the death rate potentially ONLY 0.04)

      https://www.bbc.co.uk/news/world-asia-china-51540981

      Its a lightweight WIMP in Viral Terms
      ………………………….……………………………..
      AND ALSO

      EXPERT OPINION FROM – HEALTHLINE.COM
      The bottom line

      Extensive news coverage of the new coronavirus outbreak …. can make the situation
      >>> seem much worse …. than it actually is.

      >>> Influenza virus …. still causes>>>> far more >>> illness and death worldwide.

      EXPERTS also emphasize – that this outbreak >>>> is significantly …… less dangerous
      >>>> than previous….. coronavirus epidemics…. . like SARS and MERS.

      https://www.healthline.com/health-news/dont-freak-out-about-the-coronavirus-just-yet#The-bottom-line
      …………………………………………………………………………………………………………………………………..

      THE NATIONAL POST
      A recent article by University of Hong scientists published >>>>> by the journal Lancet states …..

      Based on the number of reported deaths when the paper was published Friday,
      Coronavirus would actually produce….. a mortality rate of >>>> just 0.2 per cent — akin to that >>> of regular influenzas.

      “We don’t freak out about seasonal flu, …..we experience it every year,”
      said Matthew Miller, a microbiologist who studies viruses at McMaster University.

      “The people most likely to die from seasonal flu are …….the elderly and the very young
      … The same is very likely to be true …….with this …… new coronavirus outbreak.
      The people who are at highest risk …..are the people at the highest risk >>>> for any type of infection.”

      There seems to be so much…. active disinformation spread,” said Falzarano.
      “Things coming out …. >>>> are just nonsense, ….. and then are picked up ….by the media.”

      https://nationalpost.com/health/new-coronavirus-may-be-no-more-dangerous-than-the-flu-despite-worldwide-alarm-experts

      Experts DAILY MAIL NATIONAL NEWSPAPER 10th Feb 2020

      What does the virus do to you? …… What are the symptoms?

      Once someone has caught the COVID-19 virus it may take between two and 14 days, or even longer, for them to show any symptoms.

      IF … and when …they do become ill, …. typical signs include

      - A RUNNY NOSE
      - A COUGH
      - A SORE THROAT / Fever (high temperature).

      The vast majority of patients – at least 97 per cent, ….. based on available data – will recover from these >>>> without any issues or medical help.

      https://www.dailymail.co.uk/health/article-7987001/Death-toll-killer-coronavirus-10-TIMES-higher-average-Chinas-Hubei-province.html

      SYMPTOMS A Runny Nose, Sore Throat, A Cough & A Raised Temperature & OVER 97% Fully Recover With NO Medical Help.

      So There You Have It – CoronaVirus – Ranks the lowest of the low, the bottom of the bottom
      in a weakest of the weak league of it’s own – when it comes to viral threat & dangers

      The REST is Just CLICK BAIT & FEAR PORN PROPAGANDA

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