A Staggering Number of Businesses Are Set to Collapse as COVID-19 Continues to Accelerate – Nathan McDonald

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by Nathan McDonald, Sprott Money:

Despite the chaos of the world around us, despite spiking COVID-19 cases, and despite a record number of businesses shuttering their doors (many never to re-open again), markets remain relatively healthy.

This obviously defies all common sense and rationality, but that is unfortunately the world we live in now—an artificial world, where the markets are driven purely by wild speculation and grotesquely negligent money printing.

Although there is a “recovery” story to be had, we are far from it. And the current state of affairs in the markets is nothing more than an illusion, like so many other parts of our economy.

The stark truth of the matter is that the world is a mess at the moment, with political strife, upheaval, and chaos coming from all directions. And we have come nowhere close to peak boiling temperatures.

COVID-19 Continues to Accelerate Worldwide

One such form of disruption and arguably the world’s biggest immediate problem is the coronavirus pandemic. Although far less deadly than at first predicted, it continues to spike across the globe, as the world suffers from the third straight record jump in new cases of COVID-19.

(Chart Source, Bloomberg)

Although many nations have gotten a handle on the pandemic for the time being, many others who originally thought to have had it in check are finding out that cases are surging once again, as restrictions have been steadily lifted over the last couple of months depending on the location.

However, there are a few key nations that have never truly gotten COVID-19 under control, and they are now seeing a drastic rise in both daily deaths and daily new cases. The United States, Hong Kong, Italy, Philippines, and India are just a few.

The United States is most heavily affected in four big states, including Texas, Florida, California, and Arizona. Other states are also adding to the total number of new cases in a lesser, but still meaningful way.

This comes at a time when the campaign cycle for the 2020 U.S. elections begins to enter full swing and people scrutinize every action or inaction on both the political left or right.

Businesses Continue to Collapse

The preceding lock-downs and the continued strain that COVID-19 has placed on the economic system has already taken a heavy toll on businesses, and it’s only going to get much worse before this crisis fully resolves itself.

We are now beginning to see the first true COVID-19 damages being reflected in large business earning reports, and as expected, they are severe.

Walgreens recently joined those businesses— such as Hertz and many others I previously reported on—who have already fallen victim to the economic disaster. The pharmacy chain recently revealed the damage that has been inflicted upon their earnings over the last few months, missing estimates wildly.

As reported by Zerohedge:

“Adjusted earnings for Walgreens third fiscal quarter (comprising the three months ending in May) came in at 83 cents per share, down 43.5% YoY. That was well shy of the Wall Street consensus estimate of $1.18 per share. Group revenues rose 0.1% to $34.6 billion, just below analysts’ projections for $34.35 billion.”

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