(1/n) One more time so my position is clear, here is something I shared earlier this morning:
"Certainly, I had no idea of the magnitude or timing of this virus news. So, I didn't know/couldn't know we'd lose 1,900 Dow points in two days!"
"Certainly, I had no idea of the magnitude or timing of this virus news. So, I didn't know/couldn't know we'd lose 1,900 Dow points in two days!"
(2/n) "But I think the swift, severe, virus-related reaction shouldn't blind us to the broader, longer-term issues facing this market/economy. In other words, while virus news is driving the short-term action, much more is going on here and has been for a few quarters now."
"A few observations supporting this: Interest rates didn't just start falling the last few weeks. They've been dropping since Q4 2018. The curve (3-month/10-year) didn't just invert due to virus news. It flattened, then inverted, for ~18 months in 2018 and 2019."
(4/n) "CCC spreads didn't just start widening. They've been widening since early 2019. Defensive, "pre-recession" sectors like utilities and REITs didn't just start outperforming. They've been doing so for approximately two years."
(5/n) "Bottom line? The virus news is amplifying/accelerating trends that were ALREADY in place vs. creating those trends. I was generally expecting the Federal Reserve to have to lower the FF target range another 2-3 times in 2020 anyway …"
(6/n) "...as I believed the economic news would gradually deteriorate this year. Now, that is all but guaranteed/priced in by the rate futures market. Cuts could be even more aggressive if this virus really spirals out of control (which, of course, I hope it doesn't!)"
Bottom line? Maybe it makes sense to acknowledge that these trends in #interestrates, sector performance, #gold, etc. have been in place for TWO YEARS NOT TWO WEEKS! Investors had ample time to prepare/adapt using point-in-cycle-appropriate #SafeMoney strategies
