What can not remotely describe the markets.  Implosion.  Cataclysmic.  Tectonic.  Paralyzing.

What makes today different is the speed of the unrelenting decline where a liquidity issue is perhaps morphing into a solvency issue.  The Federal Reserve threw everything in including the kitchen sink to perhaps to no avail.

In my view the total domination of the markets by technology has ended any human rationality.  It is SkyNet gone amuck.

When the history is written about today, I am certain much blame will be placed upon levered algorithmic trading, a leverage that no one remotely thought existed, an unwinding at a velocity thought impossible.  Corporate bond ETFs have failed miserably which will again usher in a different fixed income trading structure.

Equity derivative liquidity is also imploding.

Many are now starting to question as whether the cost is worth the cure?  Society and the economy have been shuttered.  Bloomberg reports over $26 trillion have evaporated from equity markets since mid-February.  This does not include the carnage in the fixed income markets or overall economic costs.

In my view society is about 7-10 days away from fear morphing into anger.  If anger becomes the dominant emotion, the past two weeks may be viewed as just a walk in the park.

Perhaps the only certainty to write is that today is indeed historic and life and the economy has forever changed.

I pray and adamantly believe that today will make all stronger and create a better tomorrow.  Once I and all else lose this belief, then society is toast as the opposite of hope is despair.

I do not think despair will occur for we are Americans and we have overcome every other insurmountable obstacle through hard work, perseverance and belief in a higher power that will guide our actions.

What will happen today?

Last night the foreign markets were up.  London was up 4.12%, Paris up 4.73% and Frankfurt up 6.17%.  China was up 2.34%, Japan up 7.13% and Hang Sang up 4.46%

The Dow should open sharply higher as the stock futures hit limit up on optimism the US will pass a stimulus package.  As indicated above, the foreign markets surged because of announced stimulus programs, measures that are necessary as we are facing the greatest economic challenge in at least two generations.

A rhetorical question to ask will today’s extreme measures sow the seeds for the next crisis.  Probably but at this juncture we first have to save the patient so we could then start to worry about the side effects.  If the patient dies, naturally there will be no side effects.

The 10-year is off 6/32 to yield 0.82%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.