GDP Getting Crushed by at Least 25%. (And the Stock Market Likes This?!)

Martin here with an urgent update.

I hope you’re sitting down.

Because Sunday night’s Wall Street Journal headline about the economy is the biggest shocker we’ve seen so far …

That’s right.

The state shutdowns have already lopped off at least 25% of U.S. economy — an instant Great Depression.

And despite this, the stock market is rallying this morning?!

Here’s what they’re missing: The hit to the economy we’ve seen so far fails to reflect three GDP-killing chain reactions that are already in the works ...

Chain Reaction #1. Consumer Spending Strike

Until now, the main impact on the economy stems from the simple fact that closed businesses cannot sell their products.

But that’s just the first link in the chain of events.

The second link is mass layoffs and terminations — 10 million just in the last two weeks.

Next, you will see the impact on the economy as the masses of newly unemployed workers stop spending.

And soon thereafter, an even bigger impact when consumers, who still have jobs, snap shut their wallets.

Chain Reaction #2. The Great Default

Even as I write these words, millions of households and hundreds of thousands of businesses are going delinquent or defaulting on trillions of dollars in payments.

A tenant fails to make the April rent payment to the landlord.

The landlord fails to meet the April mortgage payment to the bank.

The bank defaults on its obligations to other lenders.

The other lenders default on debts coming due with their counterparties.

And before you know it, what used to be called a “systemic risk” threatens to become a systemic wreck.

We witness wave after wave of personal and corporate bankruptcies.

Credit vanishes.

And the economy sinks into an even deeper depression.

Chain reaction #3. The Great Confidence Crisis

The fundamental reason most stock investors are still holding on (or even jumping back in) is not their hopes about an end to the coronavirus crisis.

Rather, it still from their continuing faith in the power of governments and central banks to save the global economy.

But the fact is, this crisis did not begin with the coronavirus.

It began a long time ago with years of government manipulations, bad investment advice and dishonest Wall Street ratings.

This pack of lies lured millions of homeowners into debt …

Spurred millions of investors to throw caution to the wind, and …

Drove nearly everyone to take unprecedented risks with their hard-earned money.

Just since the last debt crisis, America’s companies had piled up debt like there’s not tomorrow — nearly $7 trillion dollars’ worth.

And the biggest surge was in the riskiest kind of corporate debt, Covenant-Lite Loans. This kind of debt is up roughly eight-fold since 2010 and now represents more than 75% of all leveraged loans.

The government cannot wave magic want to make all this risk-taking go away.

The government cannot bail out every small business and every big corporation in America.

It cannot bail out every city and state in trouble.

It cannot bail out all the banks that go broke.

So, you cannot — you MUST not — rely on the government to bail you out either!

Only you can truly protect your finances. You’re the only one that can take your destiny into your own hands to save yourself and your family from financial disaster.

Here’s what to do …

First, don’t underestimate the power of cash in a crisis like this. You will need cash for safety, for emergencies, and later, to pick up some amazing bargains on very valuable assets when a true recovery is about to begin.

So, reduce your exposure to your most vulnerable assets and stash the cash away.

Second, the safest place to put your cash is in short-term U.S. Treasuries or equivalent. You can buy them via a Treasury-only money market fund. Or you can buy 13-week Treasury bills directly from the U.S. Treasury Department at Treasury.gov.

Good luck and God bless!
Martin