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“It’s Getting Worse” – Hoarding Panic Forces Supermarkets To Impose Buying-Limits

“It’s Getting Worse” – Hoarding Panic Forces Supermarkets To Impose Buying-Limits

Panic hoarding food and supplies by British and American shoppers has surged in recent weeks, as social distancing policies enforced by their respected governments to flatten the curve to slowdown infections are leading to mass quarantines.

Consumers are stocking up on food and supplies, as they have no idea when the quarantines will end. They see the fast-spreading virus leading to increased cases and deaths, and this has triggered fear about a pandemic, leading many to stockpile nonperishables, wiping store shelves clean, prompting supermarkets and pharmacies in both countries to impose buying-limits on goods.

On Wednesday, Prime Minister Boris Johnson said there was no reason for consumers to stockpile supplies. It has become evident that rising cases and deaths in the UK has led to mass panic.

Retailers call for ‘responsible shopping’ to quell panic buying

A source at the country’s top supermarket told Reuters, “it’s getting worse.”

Sainsbury’s, the second-largest chain of supermarkets in the UK, had to place restrictions on certain products to keep store shelves stocked. Tesco, another major supermarket in the country, told customers this week that they could only purchase two packs of dried pasta, toilet paper, and milk.

Sainsbury’s, Tesco, Asda, Morrisons, Aldi, and Lidl have all placed some form of buying restrictions on certain products while struggling to keep store shelves stocked.

“We are currently facing unprecedented challenges and uncertainty dealing with COVID-19,” Morrisons chairman Andrew Higginson, and its CEO David Potts said.

The same panic has swept across the Atlantic into the US for about a month. Supermarkets and pharmacies from coast to coast have placed purchase restrictions on water, toilet paper, hand sanitizer, medicine, and masks.

…click on the above link to read the rest of the article…

The U.S. Economy Is on a Sugar High

The U.S. Economy Is on a Sugar High

Many companies are rushing to secure products and materials before the trade war worsens

Across the U.S., companies are hitting the panic button. The Trump administration has levied 10 percent tariffs on $200 billion of Chinese goods, a charge that is expected to rise to 25 percent by 2019. This tops the tariffs on $50 billion of Chinese goods that were imposed in August, and is an effective tax on U.S. consumers, who will soon be paying more for everything from cosmetics to clothing to cars if they aren’t already.

Against that backdrop, it’s becoming clear that many companies are rushing to secure products and materials before prices rise regardless of current demand. You could say they are in panic-buying mode. The upside is that this behavior bolsters economic growth in the short term. The downside is that there is likely to be a nasty hangover. The noise in the economic data will be amplified by the rebuilding from Hurricane Florence. The estimates of the storm’s damage span from $20 billion to $50 billion.

Evidence that panic buying has set in was seen in the September Chicago Purchasing Managers Index report, which is a bellwether for the broader national manufacturing sector. While the results “disappointed,” with the index falling from 63.6 to a still high 60.4 and the new orders component sinking to a six-month low, the inventory component surged above the 60 mark. (In these diffusion indexes, readings above 50 denote expansion.) To put the stockpiling in context, inventories have only breached 60 twice this year. Such nosebleed readings are so rare that they rank in the 97th percentile over the last 30 years.

As per the Chicago PMI: “Firms continued to add to their stock levels, building on August’s marked rise. The scarce availability of inputs continued to encourage stockpiling while forecasts of higher future demand also contributed to the rise in inventories.”

…click on the above link to read the rest of the article…

During Every Market Crash There Are Big Ups, Big Downs And Giant Waves Of Momentum

During Every Market Crash There Are Big Ups, Big Downs And Giant Waves Of MomentumTsunami Tidal Wave - Public DomainThis is exactly the type of market behavior that we would expect to see during the early stages of a major financial crisis.  In every major market downturn throughout history there were big ups, big downs and giant waves of momentum, and this time around will not be any different.  As I have explained repeatedly, markets tend to go up when things are calm, and they tend to go down when things get really choppy.  During a market meltdown, we fully expect to see days when the stock market absolutely soars.  Waves of panic selling are often followed by waves of panic buying.  As you will see below, six of the ten best single day gains for the Dow Jones Industrial Average happened during the financial crisis of 2008 and 2009.  So don’t be fooled for a moment by a very positive day for stocks like we are seeing on Tuesday.  It is all part of the dance.

At one point on Tuesday, the Dow was up over 400 points, and many of the talking heads on television were proclaiming that the stock market had “recovered”.  This is something that I predicted would happen yesterday

And if stocks go up tomorrow (which they probably should), all of those same “experts” will be proclaiming that the “correction” is over and that everything is now fine.

No, everything is not “fine” now.  The extreme volatility that we are witnessing just tells us that more trouble is coming.  Early on Tuesday the market was “burning up energy” as short-term investors sought to “buy the dip”.  But now that wave of panic buying is subsiding and the Dow is only up 240 points as I write this.

Overall, the Dow is still down more than 2,200 points from the peak of the market.  Even though I specifically warned that a market crash was coming, I didn’t expect the Dow to be down this far in late August.  Even after the “rally” we witnessed today, we are still way ahead of schedule.

…click on the above link to read the rest of the article…

 

 

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