Thread by @BobLoukas

1/. Stock markets are surging on “Corona news is better than modelled”.

The amount of deaths is irrelevant to a pricing system, only the perceived economic impact.

2/. This “Hope” that we can get back to normal sooner will likely last a while longer, as we are still early in the Cycle. (Recent March lows marked new cycle).

3/. Going further out though, recurrences of #coronavirus popping up in the US and throughout the world will lead to rather shutdowns and slowdowns. The cumulative disruptions will cause a real drag on economies and therefore, earnings.

4/. In an a efficent market that is priced somewhat fairly, the disruption would be smoothed better. But in this case, markets were (and continue to be) already significantly overpriced and assume accelerated economic growth.

5/. The initial price crash was shock response related. It’s the (economic reality) piece that has not been priced in. Mostly because we just don’t to what extent.
Once Corona mostly behind us, earning will continue to struggle, and a 2nd move lower in markets will occur.

But does that just become a cyclical bear market within a much bigger secular bull market?

The #FED and all central banks need to keep the show going. Governments already talking infrastructure and spending.

Presidents only metric of success is the stock market.

My money is on buying quality assets (once dust settles) in an easy money/liquidity environment.

Financial discipline of old and free-market economics are just theories students read in text books.

We’re in a cycle of asset inflation. Our goal is to navigate the bumps.