Tag: news

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market rally stalls at resistance, is the “bear market rally over?”

That’s the question we have been discussing over the last few weeks. So far, most of it has played out exactly as expected by turning previous “selling panic” into a “buying rush,” and convincing a vast majority of investors the “bull market is back.” 

I get it. The market has rallied 27% from its lows after falling by 35%. From sheer “panic” to unadulterated “exuberance” in four weeks. However, investors are still down 12% for the year.

The Revenant

As we discussed in “The Revenant,” this is what you should have expected:

“Bob Farrell, a legendary investor, is famous for his 10-Investment Rules to follow. Rule #8 states:

Bear markets have three stages – sharp down, reflexive rebound and a drawn-out fundamental downtrend

1. Bear markets often START with a sharp and swift decline.

2. After this decline, there is an oversold bounce that retraces a portion of that decline.

3. The longer-term decline then continues, at a slower and more grinding pace, as the fundamentals deteriorate.

Dow Theory also suggests that bear markets consist of three down legs with reflexive rebounds in between.”

As would be expected, the “Phase 1” sell-off was brutal and set up the “reflexive bounce.” 

“For many individuals, they will ‘feel like’ they are ‘safe.’ Such is how ‘bear market rallies’ lure investors back in just before they are mauled again in ‘Phase 3.’” – March 14th.

Note the date, which was well before the March 23rd lows.

A month later, and I am overwhelmed with emails telling me the “bull market is back.”

Maybe, it is.

But I tend to agree with Victor Adair of Polar Trading on this point:

“Massive monetary and fiscal stimulus in March and April will ‘counter’ the deflationary surge to some extent, but it’s not a one-for-one ‘offset.’ The deflationary impulse will continue and will be pervasive and enduring. While equity speculators have been BTD lately, the bond market, commodities, and FX have been skeptical.
 
I agree with folks who say that the Fed kept monetary policy way too easy for way too long. It encouraged way too much leverage everywhere. Now leverage is being punished, and the Fed is riding to the rescue. I guess that leverage keeps getting punished, and reduced, despite the Fed’s best efforts.
 
We’ve seen a bear market rally in the major stock indices since the March 23rd lows. However, the economic damage is underestimated at this point, and as it becomes more evident we will see a test of the lows.”

Short-Term Overbought

Regardless, in the short-term, the markets remain incredibly overbought and extended after the run from the lows. As noted last week:

“On a very short-term basis, the previous ‘deep oversold’ condition that provided the ‘fuel’ for the rally has been reversed. Also, all primary ‘overbought/sold’ indicators are now fully extended into overbought territory.”

The rally has run into key downtrend resistance, and remains close to triggering a short-term “sell signal” from overbought levels.

If the markets can rally more on Monday and break above the downtrend, the 61.8% retracement level becomes a viable target. Above that resides the 200-day moving average. Both levels are going to provide formidable resistance to a move higher.

Such is particularly the case considering the avalanche of exceedingly negative data coming over the next several weeks from earnings to economics.

Speaking Of Earnings

On Tuesday, I did a deep dive into S&P earnings:

“More importantly, the chart below shows the comparison of the original and latest estimates for April. In our first analysis, earnings were to decline from Q4-2019 levels of $139.47 to $136.18 and $131.09, respectively, in Q1 and Q2 of 2020. That is a decline of -2.3% in Q1 and a total decline of -6% in Q2.

Those numbers are now revised for a decline of -4.4% in Q1, and a total decline of 10.2% in Q2.”

So, with the entire U.S. economy shut down, 15-20% unemployment, and -20% GDP, earnings are only expected to decline by 10%?

But if you are chasing the market currently, this is what you are “buying into.”

Ingredients For A Bull Market Still Missing

As I discussed with our RIAPro Subscribers (30-day Risk-Free Trial) last week, the ingredients for a bull market are still missing.

“Bear market rally: It’s a big bounce, indeed, but that is what it is. A rally in the context of a bear market that began on February 19th. The fact that we are coming off the best two weeks for the Dow (+15.2%) since 1938 (a huge recession within the Great Depression) just about tells you all you need to know.

The market has certainly ‘ripped’ off the March lows, but there is still quite a bit of pain out there. The Russell 2000 index has only recouped one-third of its loss and is down 28% from the peak.” – David Rosenberg

The ratio of the Russell 2000 to the S&P 500 tells you all you need to know.

Also, the advance-decline line and the number of stocks trading below their 50- and 200-day moving averages are still incredibly weak.

As David concluded:

“The bear market is intact, even after the S&P 500 equal-weight index has staged a half-way comeback, it is down 21% from the February highs.

I recommend a read of the FT column titled Mind the Gap Between the Markets and the Real Economy. That’s the view from the stock market lens. A very bipolar market with several key segments still deeply injured. There is no durable rally you can count on without the banks participating, that much I do know. With small-caps being the true leading economic indicator, they remain entangled in a bear market; too many people are getting fooled by the mega-cap growth stocks (with a dominant 22% share of the market cap) carrying the S&P 500 on its shoulders.”

The Ranges Remain

What this all suggests is that “risk” still outweighs the potential “reward” of being aggressively invested in the markets currently.

It is worth remembering in January, and February, as the Fed was flooding the system with overnight liquidity via “repo operations,” we were recommending taking profits and reducing risks.

“When you sit down with your portfolio management team, and the first comment made is ‘this is nuts,’ it’s probably time to think about your overall portfolio risk. On Friday, that was how the investment committee both started and ended – ‘this is nuts.’  Such is why we took profits and reduced our risk.”

I remind you of this point as investors are chasing markets due to Fed liquidity, but as we saw in early March, the Fed’s “invisible hand” is not infallible.

The risk/reward ranges remain unchanged for the week as the market didn’t change much.

“Friday’s close brings the 61.8% retracement level AND the 200-dma into focus as the next resistance levels. The upside in the market remains limited to 4.5% to 7% currently. (This is certainly nothing to sneeze at, considering such would be regarded as a decent year’s worth of returns. That just shows how skewed things are currently.)

The downside risk ranges are a bit more disappointing.

• -4.7% to the previous 50% retracement level:  risk/reward equally balanced.

• -12.5% to the previous higher low: risk/reward is mildly out of favor.

• -20.5% to the March 23rd low: risk/reward extremely out of favor.

From an optimistic view, a reopening of the economy, a virus vaccine, and an immediate return to low single-digit unemployment rates would greatly expand the bullish ranges for the market.

However, even a cursory review of the data suggests a more “realistic” view. The economic damage is going to be with us for a while. Until earnings estimates are revised substantially lower to reflect the ‘actual economy,’ I have to presume the relevant risks outweigh the current reward.”

We continue to remain long our reduced equity exposure and have been buying undervalued opportunities over the last few weeks. However, we are also balancing that equity exposure with offsetting hedges and a larger than average level of cash. We also have been increasing our duration in our bond portfolios as well as interest rates will continue to head toward ZERO this summer.

Just remember, when the market does bottom, there will be no one wanting to “buy.” 

We aren’t there yet.

France has banned the online sale of nicotine products after a new study suggests the highly addictive stimulant could lower the transmission risk of COVID-19, reported BBC News. 

The French government on Friday issued the new rule preventing online retailers from selling nicotine patches or other forms of nicotine products and requested all pharmacies to limit physical sales. 

Limitations on nicotine sales came after a new study last week via the Pitié-Salpêtrière University Hospital in Paris examined 343 COVID-19 patients along with 139 people with moderate symptoms. The result of the study was a low number of vrius patients were smokers, considering at least 35% of the population smokes cigarettes and uses nicotine products. 

“Among these patients, only five percent were smokers,” said Zahir Amoura, the study’s lead scientist. 

The research concluded similar findings in the New England Journal of Medicine that said 12.6% of 1,000 people infected in China were smokers.

According to neurobiologist Jean-Pierre Changeux from France’s Pasteur Institut, who co-lead the study, the theory behind the research is that nicotine could adhere to cell receptors and block the virus from entering cells and possibly prevent replication through the body. 

Researchers are waiting on regulatory approval to conduct a study that will place nicotine patches on doctors and nurses at Pitié-Salpêtrière hospital to see if it shields them from the virus. The patches will also be used on patients in the hospitals to see if it helps to reduce symptoms. Researchers claim nicotine could thwart “cytokine storms,” which is an overreaction of the immune system, and scientists believe it plays a crucial role in fatal COVID-19 cases. 

However, further research is needed, and there is nothing conclusive at the moment that nicotine patches reduce transmission risk. 

The US Food and Drug Administration (FDA) said last week that smokers “may be at increased risk” of COVID-19 infection and could suffer more severe symptoms. 

The World Health Organization on Friday said the French findings were “not consistent with what we see in other countries.”

Search trend “nicotine coronavirus” has erupted across the US in the last several days. 

It remains to be seen if nicotine products can be effective against the virus. But we’re assuming, as per France’s measure to limit sales, panic-hoarding could be develop across the world if more promising results are released. 

The rumor mill over the fate of Kim Jong Un has gone into overdrive, as the North Korean leader hasn’t been seen since April 11 – over two weeks ago. And as the New York Times notes in a Sunday morning report, North Korea’s recent silence on Kim is highly unusual, considering that rumors are flying that their leader is either dead or in a vegetative state after a botched heart surgery.

“North Korea is still sending letters and gifts to foreign leaders and domestic workers in the name of its leader, Kim Jong-un. Its news media brims, as usual, with panegyric propaganda extolling Mr. Kim’s leadership,” reports the Times.

North Korea’s cover story through state-controlled media was that Kim was simply ‘evacuated’ from Pyongyang to the coast in order to better isolate against the spread of coronavirus.

But this official line (or at least one of many official lines) – along with several leaks, including one allegedly from a Chinese medical official with direct knowledge of what happened – has only served to fuel speculation and rumors. In recent days the hashtag #KIMJONGUNDEAD has begun to trend globally.

Here’s a brief rundown on the significant conflicting reports so far:

First, let’s not forget that MSNBC‘s Katie Tur tweeted last Monday – nearly one week ago – that “Kim Jong Un is brain dead,” and that both NBC and CNN had confirmed his status. She quickly deleted the tweet “out of an abundance of caution.”

Pretty big deleted tweet there @KatyTurNBC pic.twitter.com/zBQi1drcZS

— Stephen L. Miller (@redsteeze) April 21, 2020

Japanese media: Kim is in a Vegetative State  

Rumors claim that Kim Jong-un is in “grave danger” or a “vegetative state” after a heart-valve operation. North Korea’s silence has only deepened speculation and driven the rumor mill to a frenzy. https://t.co/m7bYQQGvUE

— New York Times World (@nytimesworld) April 26, 2020

Reuters: China sent Medical Team

Japan’s Shukan Gendai reports that North Korea’s Kim is in a vegetative state.
Reuters reports that China has sent a high level medical delegation to check himhttps://t.co/WTO2NQbLpxhttps://t.co/Gnr358y0qW

— Frida Ghitis (@FridaGhitis) April 25, 2020

South Korea Government: Nothing unusual

South Korea’s Blue House says on the record that it has detected no unusual signals from #DPRK amid some media reports about Kim Jong Un’s failing health. https://t.co/KT3IKSRUV6

— Chico Harlan (@chicoharlan) April 21, 2020

US intelligence: Maybe Gravely ill while Seoul says can’t corroborate

South Korea says it can’t corroborate reports that North Korean leader Kim Jong Un is gravely ill https://t.co/LW2NNGnxEf pic.twitter.com/oWSk8UXMCy

— CNN Politics (@CNNPolitics) April 22, 2020

Trump: “I think the report was incorrect.”

“I think the report was incorrect.”

Trump says he thinks the report on Kim Jong Un’s health was not accurate pic.twitter.com/4AXLcbwGyp

— QuickTake by Bloomberg (@QuickTake) April 23, 2020

Satellite images: He’s outside of compound

Satellite imagery finds likely Kim train amid health rumors https://t.co/fke0OMCvW6

— The Boston Globe (@BostonGlobe) April 26, 2020

Vice Director of Hong Kong Satellite Television (HKSTV): “Very solid source” says Dead

#BREAKING: Beijing-backed satellite TV channel’s vice director, also a niece of a chinese foreign minister, has claimed that Kim Jong Un is dead. She says that she got told this from a «very solid source». She also has over 15 million followers on Weibo pic.twitter.com/v8HnTYZw4c

— Dwain Jude D’silva (@JudeDwain) April 24, 2020

South Korean presidential aide: “Alive and well”

South Korean presidential aide says North Korean leader Kim Jong Un is “alive and well” https://t.co/Wiua6BB2Ba

— Newsweek (@Newsweek) April 26, 2020

Inside North Korea: Rumors beginning to cause panic as “something has happened”. 

The rumors about Kim Jong Un’s health aren’t confined to the outside world. Pyongyang is abuzz with talk that something has happened to the “Respected Comrade.” Helicopters have been flying low, people have been stocking up on supplies. My latest:https://t.co/sLHhbY3Y00

— Anna Fifield (@annafifield) April 26, 2020

Concerning this last report, the rumors have apparently begun to cause a stir among the domestic population. 

The Washington Post reports Sunday:

“There’s been panic buying in the capital, with locals stocking up on everything from laundry detergent and rice to electronics to liquor. They started snapping up all imported products first, but in the last few days there’s been a run on domestically produced items too, like canned fish and cigarettes.”

“Helicopters have been flying low over Pyongyang, trusted sources have told me, and trains within North Korea and also over the border in northern China have been disrupted,” WaPo notes, in what could be evidence the West is about to hear big news confirmed. 

In 2014 Kim disappeared for six weeks, sparking similar rumors. That said, a Chinese team wasn’t dispatched to assess his condition and/or try to save his life – at least not that we’re aware of.

Authored by Mac Slavo via SHTFplan.com,

The mainstream media and governments are losing control of people all over the globe.  Humans are finally standing up for their rights to live not as slaves, but as free sovereign people capable of making their own decisions without rulers and elitists calling the shots.

Never before have we seen global tyranny at this scale. But, never before have we seen a mass uprising against governments and their propaganda outlets (the mainstream media) either.  As more and more people get off their knees and stand up for their basic human right to live freely, governments and the elitists that control them lose power. We are at that point where power will return to the people and the elitists will be the ones living in fear. All we have to do, is be free.

The mainstream media is going to continue its smear campaign against anyone who dares to believe they have the right to live freely so long as they aren’t harming others and take life’s risk upon themselves. But as fewer people tune in to listen to their propaganda, fewer people will be brainwashed by it. A lot of people have lost everything in the tyrannical liberty-crushing demands put upon them, and now that they have nothing to lose, they are finally realizing their rights don’t come from the government or elitists.

And no smear campaign by government lapdogs will stop people from waking up at this point. The media has been enslaving our minds so the government won’t have to enslave our bodies.  But it’s out now and in broad daylight and people have had enough. The veil has been lifted.

People are realizing that we own ourselves. And we are finally standing together to let the “masters” know that we are not their slaves. The quote in the movie, a Bug’s Life can be applied today with a simple change of words. 

“It’s not about food. It’s about keeping those ants in line!”

We all know at this point, “it’s not about health. It’s about keeping those people in line!”

Take notice of the clips of this movie on YouTube.  The comments have been disabled, not by those posting the videos, but by YouTube.  It’s just another means to keep people “in line.”  They censor us, they brainwash us, and they expect us to obey their commands stay as their slaves. But people have had enough!

Mass civil disobedience, where people are going to cease to obey laws that control them is already happening. Governors who locked people in their homes and barked commands that some close their businesses will lose the power to dictate once enough people disobey, and that day is coming.  This horrific cycle of violence and slavery is ending and it’s panicking those who have had control of us for so long. You can read it in their headlines.

“Fear the second wave.”

“Anti-government extremists.”

“We can’t reopen or people will die.”

Well, guess what? You don’t own us. And your fear-mongering is falling on deaf ears.

Free platforms are rising up during the mass censorship and fear-mongering propaganda pushing:

Humanity is finally moving in the right direction.  The last step is to just live.  Protesting is begging the master to let you be free.  Just live free. Don’t ask permission. Conduct your life as the free, sovereign human being you were born as, and let the ruling class panic. If you don’t buy their fear, they cannot control you. The fact that humans are finally realizing they had this power all along is incredible. Live your life your way! That’s the biggest middle finger we can give to any tyrant, whether it be a cop, a governor, a politician, an elitist, or anyone else who wants our compliance and enslavement.

Freedom is not negotiable and rights are not gifts from governments or others.  We all have the basic human right to be free and live our life the way we see fit.  As more people realize this, our power grows and the mainstream media’s fear campaign fails. After all, if there are no order followers, there are no orders.

It’s about time we all stand together and abolish the last shred of modern-day slavery! I will not sit back and allow anyone to continue life as a slave if I can help it! I might not be able to do much, but I can promote peace, liberty, and the abolishment of all forms of slavery.

Some say the pen is mightier than the sword, maybe that’s true, maybe it’s not.  But I am tired of being told I have to give up my rights to live free for a false sense of security. I will no longer be owned or commanded. This is MY life and I am peacefully choosing to be free.

A significant concern that readers should have during an economic collapse and pandemic is food security. We’ve noted over April that troubling news is developing deep inside America’s food supply chain network, suggesting shortages and rapid food inflation could be ahead.

The reason behind the disruptions begins with meatpacking plants across the country are shuttering operations because of virus-related issues. At the moment, we’ve reported at least 10-12 large operations have gone offline in the last several weeks, which could result in pork shortages in the first or second week in May.

“Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away,” reported Bloomberg. 

We also highlighted additional risks to beef and poultry capacity at processing plants that were starting to develop.

Now, more specifically, diving into the world of poultry, new developments from Maryland, Delaware, and Virginia, a region known to be a top producer of chickens not just in the country but the world, is experiencing logistical issues due to coronavirus.

The Baltimore Sun is reporting that 2 million chickens are set to be culled across farms in Maryland and Delaware amid coronavirus-related staffing shortages at meatpacking plants.

We’ve heard the same story with pork, turkey, and beef processing plants across the country. Reducing operations or shutting down due to virus-related illnesses among staff. 

“With reduced staffing, many plants are not able to harvest chickens at the pace they planned for when placing those chicks in chicken houses several weeks ago,” before strict social distancing rules went into effect, trade group for the Delmarva poultry industry said in a statement.

The trade group said poultry plants across the Delmarva Peninsula, which includes parts of Delaware, Maryland, and Virginia, are struggling to keep plants operating as worker attendance plunges because of virus-related illnesses.

The group said a large farm on the peninsula has turned to “depopulation” this month after processing plants were unable to accept chickens because of reduced capacity. It said culling chickens are last-resort options.

“Depopulation has been done in the past on Delmarva and in the U.S. in response to cases of the infectious avian disease,” said James Fisher, a spokesman for Delmarva Poultry.

The American Veterinary Medical Association approved the extermination methods to cull the chickens on the peninsula.

The Sun notes farms on the peninsula are a major producer of poultry. The region grew 608 million birds last year, producing upwards of 4.3 billion pounds of processing meat.

The problem developing, is that reduced output at poultry processing plants and farmers culling flocks could trigger shortages of the meat.

Authored by Philipp Bagus via The Mises Institute,

The eurozone is a gigantic machine of monetary redistribution. Several independent governments can finance their expenditures through deficits that are monetized directly or indirectly by one printing press. More specifically, the European Central Bank (ECB) may buy eurozone government bonds directly from market participants or accept them as collateral in its lending operations, effectively increasing the monetary base.

Through this monetization, a government can externalize the costs of its deficit partially onto the citizens of other eurozone countries in the form of a lower purchasing power for the euro. The setup resembles a tragedy of the commons. The commonly owned resource is the purchasing power of the euro, which is exploited by several users. These users are the eurozone governments. They issue debts resulting in an increase in the money supply. By running comparatively higher deficits than their peers, eurozone governments can attempt to live at the expense of foreigners.

It cannot be surprising that most governments have ignored the new treaty instituted in the wake of the European debt crisis to bring down debts and deficits. During the last years of moderate economic growth, with interest rates at virtually zero, highly indebted governments did not take advantage of the situation to reduce their debts. Rather they took advantage of the higher tax revenues and reduced interest spending to boost government expenditures in other areas. Governments think that they will get away with it. The rationale for this irresponsible behavior was simple: when there was another crisis someday, these governments would just print more government bonds, have their banks buy them, and make others pay in form of a loss in the euro’s purchasing power.

These governments believe that no one will put an end to the monetization, because ending this mechanism would trigger a sovereign debt default, which would harm the other eurozone governments. European banks and especially the ECB are loaded with eurozone government bonds. A government default would imply losses not only in the defaulting country, but for all eurozone banks. It would lead to cascading bankruptcies, an immense banking, sovereign debt, and economic crisis. The confidence in the euro could be severely shaken by the risk of (hyper)inflation.

Although southern governments such as Italy, France, and Spain did not use the last years to reduce their deficits, Germany and other northern countries such as the Netherlands did reduce their debts, thereby increasing, ironically, the possibility of southern government relying on Germany and the north for bailouts.

Government Deficits and Surpluses in Percentage of GDP

Government Debts in Percentage of GDP

During the COVID-19 panic and resulting lockdowns, Italy, Spain, and France have vehemently demanded “solidarity” from Germany, bluffing about leaving the EU if their demands remain unfulfilled. In spite of their failure to reduce government spending and deficits in good times, they believe it to be their right to be bailed out. Their past excessive deficits can be explained by the prospect of European debt mutualization. Indeed, several bailout schemes have already been instituted during the corona panic. The ECB announced that it would buy €750 billion in bonds, and the EU has agreed upon a €540 billion bailout package.

Unfortunately, the moral hazard implied in the euro setup not only influenced excessive government spending before the corona crisis, but most likely is influencing government responses to the epidemic as well. The costs of lockdowns and government bailouts of citizens and companies are enormous. A government must carefully consider the decision to enforce a costly lockdown. But what if a government can externalize part of the lockdown costs on others through new debts or bailouts? If this possibility exists, as it does in the eurozone, it becomes more likely that a government will declare a lockdown and continue with it for longer. Instead of lifting the restrictions as fast as possible, southern governments maintain them, because they count on a bailout and the support of governments with better fiscal balance sheets. By ruining their own economies, southern governments actually increase the pressure for the institution of new redistribution schemes, and finally a European superstate.

The reasoning, as exemplified by infamous former Greece finance minister Yanis Varoufakis, is:

if you do not rescue us, we will default, leading to a European banking crisis, high losses for the ECB, and a severe depression. So, you better bail us out.

Thus, the setup of the euro may be responsible for suicidal lockdowns in some eurozone countries that will be longer than in other places, with all their detrimental social, political, health, and economic consequences. And it is possible that this crisis will lead to a final decision for the future of the euro and toward a European superstate.

As the coronavirus spreads rapidly around the world, Statista’s Katharina Buchholz notes that some European countries have begun flattening the curve of infections.

According to numbers by Johns Hopkins collected by the website Worldometers, the start to a flattening is especially visible in Germany, where a total of around 150,000 cases had been recorded most recently.

You will find more infographics at Statista

In Italy and France, where there are currently almost 190,000 and 160,000 cases respectively and public life has shut down, some progress has also been made. Spain has had the steepest curve despite also adhering to a strict lockdown. There are more than 210,000 known infections in the country.

The UK, where the outbreak started later, does not yet show any signs of infections slowing down. The same is true across the pond in the U.S., currently the country with most known infections and a curve that is still pointing upwards. Infections are nearing 850,000 stateside.

The countries’ collective aim is to “flatten the curve” of infections. While South Korea was able to (more or less) stabilize its outbreak at around 10,000 cases – due to widespread free testing (including the now infamous drive-thru testing), quarantine measures and the harnessing of mobile technology for public information – China has stabilized theirs at around 83,000 cases. South Korea hit 100 cases on February 20 and managed to leave the steep upward trajectory around 14 days later. In the case of China, more than 100 cases were first recorded on January 20, and quarantine and testing measure succeeded in breaking the upwards trajectory by February 12 – around three and a half weeks later. European countries and the U.S. are already three to five weeks into their respective outbreaks and are now beginning to level curves in some places.

Authored by Daisy Luther via The Organic Prepper blog,

It’s no secret that the Western World is dealing with an economic crisis of epic proportions right now due to the COVID-19 pandemic that is believed to have begun in Wuhan, China. Here in the US, businesses and families both are struggling to remain afloat, even as the government doles out trillions of dollars.

Our struggles may be just the opening China needs to advance the Made in China 2025 strategy, an attempt to become the world’s superpower in technology, manufacturing, and cybertechnology. Part of their strategy is to buy up Western businesses.

Foreign Policy reports that over the past few years, China has invested billions of dollars in Europe and North America, with most of that money going into mergers and acquisitions as opposed to starting new business ventures themselves.

And now our economic woes may give them the opportunity to snap up more businesses at bargain-basement prices.

This, of course, is a national security issue.

Our vulnerability was made all too clear recently when China threatened suggested on state-run media that they could easily halt the export of medications and medical supplies to the United States as we were on the cusp of dealing with the COVID-19 pandemic.

If China retaliates against the United States at this time, in addition to announcing a travel ban on the United States, it will also announce strategic control over medical products and ban exports to the United States. Then the United States will be caught in the ocean of new crown viruses.

According to the US CDC officials, most masks in the United States are made in China and imported from China. If China bans the export of masks to the United States, the United States will fall into the mask shortage, and the most basic measures to prevent the new crown virus are Can’t do it.

Also according to the US CDC officials, most of the drugs in the United States are imported, and some drugs are imported from Europe. However, Europe also places the production base of these drugs in China, so more than 90% of the US imported drugs are Related to China. The implication is that at this time, as long as China announces that its drugs are as domestic as possible and banned exports, the United States will fall into the hell of the new crown pneumonia epidemic. (source)

The jist of the article was that the US, if not the entire world, owed China an apology due to our media coverage of the outbreak in Wuhan and comments made about the outbreak by government officials. In fact, not only did the Chinese government feel the world should apologize to China but that they should thank China because they “made huge sacrifices, paid huge economic costs, and cut off the new crown virus.”

We rely heavily on China for not only medical imports but also food, electronics, mechanical parts, and many more essential products. You can see a more thorough list of what we currently import from China here.

Think about how reliant we are on a country with whom we have enmity. Who thought that was a good idea? At least the US has finally begun taking steps to put a halt to the discreet takeover.

In the United States, the government has woken up to the national security implications of losing sensitive capabilities to China; the Committee on Foreign Investment in the United States (CFIUS) now plays a very active role in screening potential takeovers on national security grounds. (Last year, it famously forced a Chinese company to reverse its acquisition of the gay dating app Grindr.) (source)

But now, due to the pandemic, the United States is currently facing shortages of many of the goods we used to regularly get from China. Meanwhile, we’re also on the verge of an economic collapse.

It’s perfect timing…for China, anyway.

So, will China take advantage of their head start on recovering from the virus? There’s little doubt that they will. In fact, there’s evidence they’ve already begun to do so.

Europe does not have a program like CFIUS, but they’re quickly seeing the need for one.

Bloomberg reports that China-based banks are already seeing a spike in requests from Chinese outfits interested in acquiring European companies.

Many Western governments have already passed business aid packages to make sure companies don’t go under. But that’s not enough. Margrethe Vestager, the European commissioner for competition, has just proposed that governments buy stakes in vital companies to prevent Chinese takeovers. They will also need to screen Chinese raiders taking advantage of the coronavirus.

As for the EU, Sven-Christer Nilsson, a former CEO of the Swedish telecommunications giant Ericsson, told Foreign Policy that “it absolutely has to establish a CFIUS, as do the individual member states. We can’t wait, or we will see the Chinese giving offers companies can’t refuse.” (source)

China is said to be particularly targeting Northern Europe, where many innovation-heavy smaller businesses are located.

We need to reconsider what industries are matters of national security.

Ruth Smeeth, who was until last November a member of the British Parliament’s Defense Committee, says we need to redefine what constitutes national security.

“If we have learned anything from the current crisis, it should be that the definition we have been using of national security has been insufficient…Our world has changed beyond recognition, and by default so have our core industries. Our mergers and acquisitions policies need to reflect that.” (source)

Even with CFIUS, Foreign Policy suggests that the US is not safe from Chinese investors.

The American CFIUS, in turn, needs to rethink what constitutes national security—ventilators clearly do. They must also ask if national security is the only criterion for rejection. Indeed, takeovers should be screened too for the damage they could do to the economy. (source)

It isn’t a stretch of the imagination to think that companies who are desperate to stay afloat would be willing – or even eager – to take Chinese investments to do so and it’s important to note that China has been buying up American tollways, ports, and property since the 2008 crash. In allowing that to happen, we could be opening the gates to an enemy that will take over from within, a bloodless coup that is only recognized when it’s too late. We absolutely can’t allow such a thing to happen.

If you think we’ve got problems now, just imagine what things would be like if China owned more of our economy than we do.

You have to wonder if striking while times are difficult was the plan all along.