June 22, 2020
As the Virus Spreads: Death Is in the Air
In the U.S., the COVID-19 virus continues its spread… particularly in California, Arizona, and Florida…
But my conversations with contacts around the world – particularly in Brazil and India – show that Americans are nowhere close to experiencing as bad as it could get.
That’s one reason why, if you have any money invested in the stock market, I strongly encourage you to listen as my friend Dr. Steve Sjuggerud talks about an asset OUTSIDE the market that can provide just as much upside, with far less volatility.
As I wrote a few weeks ago when speaking with Ronan McMahon about international real estate investment…
If stock markets are a Formula 1 McLaren-Mercedes… for example, the seven-week journey of the S&P 500 Index – down 34% and then up 31%… then real estate markets are a snail race. In real estate, the pace of price movements is measured in months, and algorithmic traders have no edge.
Of course, that doesn’t mean “buying at the bottom” is any easier. But at least with real estate, prices take longer to hit bottom and to recover. That slower pace gives regular investors more of an opportunity… as long as they understand both the risks and rewards…
You can hear the latest from Ronan this week as he joins Steve to talk about where they see the biggest opportunities with the most upside and least risk.
Personally, investing in real estate makes a ton of sense right now for a lot of reasons.
In fact, my wife and I are looking to buy for our family soon… we’re moving to Ireland and are eager to take advantage of rock-bottom interest rates and what might be a pullback in property prices.
That’s why I’ll be listening intently this Wednesday. Over the years, I’ve seen some of Steve’s most successful real estate investments, and I’m excited to learn more about what he’s doing now. Click here to reserve your seat for Wednesday’s special event.
Now Back to Disaster: First, Brazil…
And as I said earlier, two developing nations are overshadowing the U.S. when it comes to coronavirus…
In Brazil, you know things are bad when the notary is busy…
A notary certifies legal paperwork like contracts, deeds, and wills. Usually it’s a slow but steady line of work.
Recently, though, for the notary in Dourados – a city with 200,000 people in the Brazilian state of Mato Grosso do Sul, where my American friend Ernie McCrary is living in quarantine – business is brisk. People are in a rush to “put their affairs in order.”
A local notary there says that she’s preparing double the number of wills a month compared with pre-COVID times. And she’s seen a 50% jump in requests to formalize so-called “stable unions” – that is, putting a ring on it for couples who live together but have never tied the knot.
Why the sudden surge of interest for notary services? Death is in the air. And people in Dourados want to settle their paperwork just in case the coronavirus reaper knocks.
With almost a million cases of the coronavirus, Brazil trails only the U.S. (at 2.2 million). According to University of Washington forecasts, Brazil could overtake the U.S. by late July in terms of both cases and deaths – even though it has just two-thirds the population. That looks increasingly likely, in part because the government doesn’t have a health minister. The previous two left within a month of each other after the country’s president, Jair Bolsonaro, refused to listen to science.
Last month, my friend Ernie left his home in São Paulo, the money (and now, coronavirus) capital of Brazil. He drove 600 miles west to join his wife at her family’s farmhouse near Dourados.
Like for many Americans, home-improvement projects are on the self-quarantine agenda in Brazil, too. Ernie told me this week that he’s spending most his time visiting the hardware store buying cement, sand, and tools for landscaping projects on the farm.
He also went to the local barbershop for a $6 haircut. That’s around 30% cheaper (in U.S. dollar terms) than it would have been in January, due to the decline in the country’s currency so far this year.
Ernie, who’s lived much of his adult life in South America, isn’t planning on leaving Dourados anytime soon. Despite being the state’s coronavirus hot spot, it’s still a lot safer than São Paulo.
Earlier this month, Brazil’s health ministry stopped publishing figures showing the number of coronavirus infections and deaths. They resumed only after a ruling by the country’s supreme courts to make the data available.
This “ignore it, and it will go away” strategy of Bolsonaro is dooming millions of Brazilians.
But that number may pale with the disaster in India…
As if the Entire Eastern Seaboard Was Unemployed
In India, the number of coronavirus cases is accelerating, despite what Bloomberg called “the world’s toughest stay-at-home restrictions.”
In late March, Indian Prime Minister Narendra Modi gave the country’s 1.3 billion people less than four hours’ warning before the lockdown started. For millions of migrant workers in India, that triggered the start of a long, desperate journey home.
In one particularly horrible incident, 16 migrant workers in the western state of Maharashtra were killed when a freight train ran over them as they slept on the train tracks. As BBC explained…
The dead… [were] attempting to walk to a station, from where they were hoping to get a train home… After walking for 22 miles, they were exhausted and decided to rest. According to local reports, the workers assumed that trains would not be running because of the lockdown, and therefore slept on the tracks. Images on social media show pieces of roti (Indian bread) strewn near the tracks.
Around 122 million people in India lost their jobs in April. That’s more than the population of the entire eastern seaboard of the U.S.
Since most people in India work in the informal, untaxed economy, total unemployment is probably a lot higher than the 27% reported in May. The government’s economic relief package, in the words of my investment-analyst friend Rahul Goel in Mumbai, is “tiny.”
In a country where the average person earns less than $6 a day, no job and pocket change for public support means for many people the equation is simple… If you don’t work, you don’t eat. And with the economy forecast to shrink by 4% this year, there’s a lot less work to go around.
“Offices, malls, and stores are opening, with some conditions,” Rahul told me earlier this week. “There’s a level of desperation to work because people have to be able to make money.”
So for all that, at least India is flattening the curve, right?
Not at all… As I wrote in March, India is still a country you really don’t want to visit.
India’s lockdown was “squandered,” says Bloomberg. It “failed in its basic objective of boosting capacity in an overstretched health system,” said the Nikkei Asian Review.
The country’s total number of cases of coronavirus is now growing at more than 12,000 per day. That’s more than the total number of new cases reported in California, Texas, and Florida combined on any given day this week. India now has the fourth-most cases in the world, after recently overtaking the U.K. and Spain. And in a case of “the fireman is on fire,” India’s latest coronavirus figures include the health minister of the state government of Delhi, who tested positive and was hospitalized earlier this week.
In terms of total cases per million people, India is at just 4% the infection rate of the U.S. That’s partly a function of much lower testing rates… For every 20 people tested in the U.S., India tests one person.
And it could get much worse there…
If the infection rate in India was just half that of the U.S., India would have 4.7 million cases (more than double the total number of coronavirus cases in the U.S.). If deaths per million people in India were the same as in the U.S. – which would be miraculous, given the weak state of India’s health care infrastructure – around 500,000 Indians would die.
The Nikkei Asian Review warns of a “lost decade” for the region…
COVID-19 has laid bare the underlying weakness of its economies, from poor public finances and patchy state infrastructure to reliance on migrant labor and remittances.
There will be no rapid return to sustained fast growth, and far fewer resources to manage the pressing challenges the region must soon navigate, from agricultural reform and urbanization to the climate crisis.
I’m guessing the notaries in India are busy, too…
Now here are some of the stories we’re reading…
Did you miss my conversation with Ronan? It’s right here… Read This Before You EVER Buy International Real Estate
If you’re suffering from the fear of missing out (or “FOMO,” as the kids say) on the whiplash recovery in many of the world’s stock markets, don’t worry. If history is any guide, most real estate markets will have a more delayed Wile E. Coyote runs-off-a-cliff kind of reaction.
Outrage after Bolivian TV broadcasts COVID-19 death
The “No Lies” program said it took the decision to show a COVID-19 patient’s death in a hospital in the eastern city of Santa Cruz to jolt into action authorities who had neglected the health services.
There’s a one-in-three chance of a ‘massive’ disaster that could be worse than COVID-19, says Deutsche Bank
At least one of four major tail risks will occur within the next decade: a major influenza pandemic killing more than two million people; a globally catastrophic volcanic eruption; a major solar flare; or a global war.
World’s ultra-wealthy go for gold amid stimulus bonanza
While gold prices have already risen 14% since the start of the year to $1,730 an ounce, many private bankers bet that gold – a hedge for both inflation and deflation – has further to run.
Wealthy buyers reportedly in ‘mad rush’ to leave San Francisco
Amid the depths of a global pandemic and financial downturn, the demand for real estate is unexpectedly rocketing in wealthy regions…
And let us know what you’re reading at [email protected].
May you find your way through the chaos,
Chaos Chronicles editor, American Consequences
With P.J. O’Rourke and the Editorial Staff
June 22, 2020