What I think I know.
#Covid_19 is clearly fast spreading and packs a punch. Not debating how we're choosing to fight it, but the world is committed now to "social distancing" and economic aid.
1/
#Covid_19 is clearly fast spreading and packs a punch. Not debating how we're choosing to fight it, but the world is committed now to "social distancing" and economic aid.
1/
2/ The bright side is apparently the China model, 45 days in Wuhan and the numbers peaked, now virtually free of new cases!!
The world is projecting a similar 30 day period (flatten the curve) and we're BBQing in the spring.
The world is projecting a similar 30 day period (flatten the curve) and we're BBQing in the spring.
3/ Problem is, the West is not disciplined like China...far from it. They were able to contain this b/c of draconian measured imposed on all residents.
Do you think the Chinese fought #corona like this?
Do you think the Chinese fought #corona like this?
Even in the most desperate of places, Italy...the Chinese who are there to help claim they are NOT doing anything remotely close.
Watch:
Watch:
So what does this mean?
Mostly the 30-day model and back to normal is likely to be wrong. The response will change to everyone into FULL lock-down mode, so we could be looking at a 60-90 day impact. Economically, this would be devastating, and has a $5T impact in US alone.
Mostly the 30-day model and back to normal is likely to be wrong. The response will change to everyone into FULL lock-down mode, so we could be looking at a 60-90 day impact. Economically, this would be devastating, and has a $5T impact in US alone.
What does it mean for markets? Mostly, another surprise.
Also, a sharp V like recession/recovery off the table. We could be looking at 4 to 6 qrts recession, with valuations coming off historically rich levels.
In such environments, 50-60% declines in #stocks not unheard of.
Also, a sharp V like recession/recovery off the table. We could be looking at 4 to 6 qrts recession, with valuations coming off historically rich levels.
In such environments, 50-60% declines in #stocks not unheard of.
It also means further, MASSIVE central bank intervention and government deficits that balloon. (Not that both are not already occurring).
Barring another liquidity shock as a result, owning #GOLD #Bitcoin #UStreasuries and being in cash are likely the best places to be parked.
Barring another liquidity shock as a result, owning #GOLD #Bitcoin #UStreasuries and being in cash are likely the best places to be parked.
Until that realization comes, we could easily see #stocks rally back 20% or crude oil back into the $30's. Counter trend moves in bear markets can be savage.
But I see that as opportunity to de-lever and de-risk. If I'm wrong, you will have opportunity later to get exposure.
But I see that as opportunity to de-lever and de-risk. If I'm wrong, you will have opportunity later to get exposure.
Most of all, being patient and defensive first should be one's priority.
If you're a long term investor, be very patient in formulating value based investment ideas, it will take a lot of time to unfold and develop.
If you're a long term investor, be very patient in formulating value based investment ideas, it will take a lot of time to unfold and develop.
