This thread is about what is, and what the current policies are leading to. Not what should be.
The world set a new daily record yesterday.
2/6
Leading this record is the parabolic spike by Europe.
7-day quarantines are mandatory for positive cases.
3/6
And leading Europe to new records is the UK, Italy and Spain.
4/6
Many pointing to South Africa peaking. Remember this was after a 100x increase in 30 days. Maybe they hit testing limits after this massive rise? Consider:
The last two days SA cases are heading up again.
The rest of Africa is going vertical and also setting new records.
5/6
Asia, and especially China, has zero COVID, one case and everything closes.
Xi'an, a city of 13 million (>than NYC) is closed, because of 127 cases over one week!
6/6
Positive tests
US 10-day quarantine
Euro 7-days quarantine
Asia, zero policy (lockdowns!)
You think the global supply chain is "challenged" now, let's remove billions and billions of workdays from global production in the coming weeks and see what happens to it?
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Thoughts on market reaction to the Venezuela news.
tl:dr
The spigot in Venezuela waiting to be opened to flood the world with crude oil and lower its price has been broken for a while.
It will take several years to fix it.
2/5
Venezuela is a founding member of OPEC their official statistics show its production (blue) is down 71% from its 1998 peak.
Its sustainable capacity (max output in within 90 days and held for a year) is 1M barrels/day (orange).
Venezuela is at its maximum now.
3/5
Why the big production decline?
Socialist Hugo Chávez was elected in December 1998. He turned out to be a brutal dictator. Only to be replaced by an even more brutal dictator, Nicolás Maduro, when Chávez died in March 2013.
It is correct that the new home premium (green) above existing home prices (blue) has collapsed from 38% in 2013 to below zero today (the lowest in 54 years).
Why?
See new home prices (orange), they stalled.
3/7
Here is the average home price (orange) and the home's size (blue). The reason prices are falling is that builders are constructing smaller homes.
But as the bottom panel shows (green), the price per square foot is as high as ever.
I assume Marks is referring to the 1-year forward P/E ratio for the S&P 500, the standard Wall Street valuation metric (which is closer to 25 now, but was 23 a few weeks ago).
Here is a long-term proxy for that ... the Shiller Cyclically Adjusted Price/Earnings (CAPE) ratio back to 1881. It is a 10-year average of P/E/ ratios.
At 40, it is one of the highest readings ever, even higher than 1929.
It shows the NEXT (future) 1-year REAL (after inflation) return of the stock market on the y-axis.
The CAPE on the x-axis.
The red box is the returns when the CAPE is above 34. It's a mixed bag of positive and negative returns.
Restated, valuation is NOT a good timing tool.
3/4
But if the y-axis is extended to the NEXT (future) 5-year REAL (after inflation) return, then THERE IS NO EXAMPLE, OVER THE LAST 150 YEARS, OF THE STOCK MARKET BEATING INFLATION OVER THE NEXT 5-YEARS WHEN THE CAPE IS ABOVE 34.
Restated, valuation is an expectation tool. Unless one makes the case that corporate earnings are going to have their most significant surge in history, the stock market is destined to disappoint over the next several years.