COVID-19 notes
The head of the World Health Organization warned Friday that humanity is facing "a new and dangerous phase" of the coronavirus crisis.
"The pandemic is accelerating," said WHO Director-General Tedros
Adhanom Ghebreyesus.
NYT: Florida
Coronavirus Map and Case Count
NOT because testing is going up: More Infectious
than COVID-19
number of tests has certainly increased over time. But it hasn’t increased much recently, if at all. It’s been nearly a month since a sizeable increase in the average daily testing. Most of those tests came back negative, which is why the graph of negative tests looks a lot like the graph of total tests
of course, its not just Florida:
Yaneer Bar-Yam: Good news: Canada has strong decline in Ontario, joining Quebec.
‘Recovered’
COVID-19 patients suffer major ongoing physical, cognitive problems
Memory loss, psychological issues, profound fatigue, phantom pain, along
with lungs that won’t heal, discovered months after recovery, even among those
who had only mild symptoms
New England Journal of Medicine: Challenges of
“Return to Work” in an Ongoing Pandemic
What lockdowns
do and what they don’t do
When Will Life
Return to Normal?
Today’s graphic uses data from New York Times’ interviews of 511
epidemiologists and infectious disease specialists from the U.S. and Canada, and
visualizes their opinions on when they might expect to resume a range of
typical activities. Specifically, this group of epidemiologists were asked when
they might personally begin engaging in 20 common daily activities again.
A warning from
South Korea: the ‘fantasy’ of returning to normal life
It is more than three months since South Korea’s coronavirus infection
rate peaked. In that time political leaders and health experts around
the world have credited the government of President Moon Jae-in for teaching
important lessons in the swift deployment of mass testing and aggressive
contact tracing to counter what was for a time the worst Covid-19 outbreak
outside of China.
Seoul’s continued difficulty in controlling new outbreaks demonstrates
that governments need a persistent state of vigilance and a willingness to
change tack as they attempt to reopen their societies — a state of affairs that
many people could find every bit as difficult as the lockdown itself.
Regular Related Fare:
8 Reasons Why
COVID-19 Damage To The Economy Will Be Deep And Lasting
Too many people who should know better are taking a big bounce in retail
sales as a sign that an economic recovery is well underway. It is, but only in
the sense that going from the ICU to a hospital bed could also be defined as a
recovery. In keeping, the Atlanta Fed’s GDPNow forecast for the second quarter
has improved from negative 52.8% to a sunny negative 45.5%.
Needless to say, a rebound from the lockdowns was inevitable. All sorts
of activities like dentist appointments on hold (and dentistry personnel
accounted for 10% of the job gains), and so there’s pent up demand for medical
procedures and treatments, as well as more mundane services that many regard as
critical, like haircuts.
Nevertheless, stock indices rising to new highs looks remarkably out of
touch in light of the baked-in and
certain-to-continue-for-long-enough-to-matter damage. The true believers are in
“Central banks are on the case and will save us” mode. Perhaps they need to
heed the warning, “Past results are no guarantee of future performance.”
Multiple factors are working together to bias
observers to underestimate the severity of Covid-19 economic damage. The first is that it has
hit parts of the economy that are relatively removed from media coverage: low
income service workers and small business owners….
(Worth reading the list at the link)
American
homeowners are struggling to make ends meet during the pandemic
More than half of American homeowners reached out to family or friends
for money in order to make mortgage payments and ease their financial burden in
the face of the COVID-19 pandemic, according to new research. The study, which
polled 2,000 American homeowners, found 35% of homeowners have
skipped or missed a mortgage payment. And the uncertainty that the COVID-19
pandemic has brought is only complicating things for financially insecure
homeowners, as 35% have worried about losing their home. The study conducted by
OnePoll in conjunction with the National Association of REALTORS® aimed to
uncover the financial struggles of current homeowners and discovered more than
8 out of 10 respondents - 81% - say the COVID-19 pandemic has caused them
unexpected financial distress.
Over half (56%) of those surveyed say they've had to cut back on
their expenses just to afford their mortgage.
Since the pandemic began, nearly half (47%) of homeowners have sought out
alternative ways of making money.
In an effort to generate additional income, almost two-thirds of
respondents (64%) started a side project while 53% sold personal items.
Given the financial impact of the COVID-19 pandemic, over half (52%) say
they are routinely concerned about making their mortgage payments and nearly half (47%) say they've considered selling their home because they're
unable to afford the mortgage payments.
James K. Galbraith: The Illusion of a Rapid US Recovery
now the second week in June! – at still an historic pace. Initial claims
have improved, certainly, as have continued claims. But “improve” is absolutely
a relative condition, a term of art being purposefully used to obfuscate this
particular situation. This is not meaningful improvement;
… Far more troubling, initial claims totaled just over 1.5 million for
the week of June 13 (last week). Only a slight drop from the previous week, and
while the trajectory looks good on the [1st] chart [below] you have
to truly appreciate that gigantic number in the wider context.
After three months of this, a full quarter (13 weeks), initial claims continue
to show up at unbelievable levels; so far above what has been experienced in
prior contractions, even compared to the previous worst periods, such as
1981-82 as well as 2008-09’s Great “Recession.” It demonstrates ongoing levels
of labor market undress for economic purposes that are so far out of line and
character that it’s difficult to process.
During the worst 13 weeks of the Great “Recession”, January to April
2009, 8.4 million Americans, former workers, filed initial unemployment claims.
In the last thirteen up to and including the latest one, more than five times
as many have. Five times as many as the worst since the Great Depression. The
latest week continues to be more than double the prior
record.
Federal Tax
Receipts Show A Record Plunge In May, Raising More Doubts About Employment Data
Accuracy
Household employment data is based on a sample of 60,000 households out
of a total household population of 125 million. Federal tax receipts are unambiguous. They
reflect withheld income taxes taken directly from 30 million business establishments
employing over 150 million workers before the pandemic. Which data series--reported household
employment or withheld taxes---do you think offers a more accurate picture of
the current employment situation
Millions of Job
Losses Are at Risk of Becoming Permanent
Freight Index
Has Little Improvement in May
Retail Sales
Bounce, But Consumers Are Tapped Out.
Something to consider for those who didn’t think ZIRP likely then and
don’t think NIRP likely now
Around the same time Lehman Brothers and AIG became headline news in the
middle of September 2008, none of the mainstream
econometric models thought it was possible for the US economy to suffer so
severe a shock that it would induce monetary policymakers to unleash ZIRP. Worse, the models all
predicted that it would be impossible for anything to force the Fed down to
zero and keep the central bank there for two years. … Trying to figure out what
had been missed, several of the Federal Reserve’s researchers wrote a paper
that instead perfectly demonstrates the absurdity of the entire discipline. The models, to put it bluntly, didn’t model reality. For one thing,
confirmation and recency bias was rampant. … most models incorporate only
static assumptions that are rarely revisited, and as a result they almost
always overstate the upside compared to any departures downward…. But it wasn’t
just underestimating the probability of reaching the ZLB, though. As the
authors also conclude, the major error was in how the US economy stayed in that
weak state for far longer than anyone had thought, and calculated, possible….
You aren’t supposed to be forced down to zero and get
stuck there. Japan was judged to be the outlier, not the base case.…
We are entering the window of gigantic positives – all of them leaving us
instead with an enormous economic disaster on our hands.…
And yet, all of these projections are being put together by the mainstream econometric models, those which we know for a fact are… overly
pessimistic? No. They are, time and again, proved to be wildly
over-optimistic.
As I’ve written too many times lately, the best case is downright atrocious.…
That’s nearly the same length of time as the Great “Recession” and its
false recovery, the very same one which had confounded the optimistic
projections the last time we did this. In other words, the current base case is
as long and much deeper than 2008-09. Let me repeat that: the best case is an economic hole as long and much deeper than the
economy of GFC1. And that’s assuming everything goes
perfectly, including 3.6% real GDP growth not just in 2021 but also 2022 and
into 2023. What are the chances of that happening?
Dear Investors: The US stock market should not be trading anywhere close
to the multiples it is today given the enormity of the macro events that have
already unfolded this year: …
Markets driven by euphoria never end well. The US stock market today is
in la-la land. It is discounting a new expansion phase of the economy at the
same time as a major recession has only just begun. Since the March lows,
investors have turned overwhelmingly bullish. They are trusting that central
banks’ liquidity will miraculously create economic growth rather than just
temporarily ease the pain of declining gross domestic incomes and crushing debt
burdens. This delusional thinking is induced by the intense but short acting
dopamine response to Fed money printing but completely ignores how business
cycles work. Government money printing has failed miserably, repeatedly,
throughout history at eliminating recessions and frequently coincides with some
of the worst downturns. Today, it is a major symptom of a severe recession if
not a depression.
Market Holds
200-DMA, Bulls Remain In Control…For Now 06-19-20
Our portfolio management meeting Friday morning started with “This is
nuts.” ….
As markets get overly bullish, extended, and exuberant, Wall Street tends
to come up with new ways to “sucker,” I mean “rationalize,” investors into
taking on additional risk. One thing I had hoped for in 2018-2019 is that we
would get a correction large enough to revert some of the excessive valuation
levels which existed. Such would provide higher future rates of return over the
next decade, allowing investors to reach their investment goals. Instead,
through the Fed’s actions, the correction was halted, and the “clearing
process” was not allowed to occur. The outcome has been even higher levels of
corporate leverage, and valuations remain grossly elevated on many different
levels.
So, how does Wall Street justify “buying stocks” in the current environment
of recessionary economic growth, high unemployment, and collapsing earnings?
Easy, you just tell uneducated investors to use earnings estimates 2-years in
the future. There are significant problems with this analysis. The first is
that even based on 24-month estimates, stocks are still historically expensive.
Secondly, Wall Street is terrible at estimating forward earnings. Historically,
forward estimates are about 33% too high before they are ratcheted sharply
lower.
From: Stocks only go up
and from: BofA: There Is
Just One Bull Market To Short … And The Fed Won’t Let You
Chris Whelan: Sizing The
Commercial Real Estate Bust
So how big is the impending commercial real estate bust in the US? Bigger
than the residential mortgage bust of the 2000s and also bigger than the
commercial real estate wipeout of the 1990s, including the aftermath of the
Texas oil boom of the late 1970s and 1980s.
…
This particular bust in commercial property is very different from the
1990s, but in common with that era also includes a large energy component. The
difference is that, due to COVID19 and the more recent looting in major cities,
the valuation of once solid urban commercial and residential properties held by
equity REITs is now very in much question.
…
The Scope of the Damage: The state of the equity
REITs casts a pall over the rest of the $5.2 trillion commercial mortgage
segment. Once seen as top commercial credits, these equity REITs now face an
enormous change in how businesses and consumers view urban commercial office
and multifamily residential assets. As usage falls, so too do valuations and
tax revenues for the localities. Projects that a year ago might have made sense
as long-term bets on the future of cities like New York have no economic
rationale today. And the loans and mortgage bonds that support these buildings
no longer make any financial sense.
Arthur Berman: U.S. Oil
Dominance Is Coming To An End
Berman: Expect oil
prices to move down, then up, then WAY up. Slide deck here.
Regular Fare:
I searched to dig up this post I read awhile ago and linked to earlier, for MK in particular: The incoherence of yield curve control
The Government
Can Afford Anything It Wants
Where does money come from, and what does it do? MMT argues that money is
a legal and political construct and that limits to government spending are not
monetary and only mildly economic; they are primarily political. “MMT clarifies
what is economically possible,” Kelton writes, “and thus shifts the terrain of
policy debates that get hamstrung over questions of financial feasibility.” The
book combats the limiting myths of economic reality, including the pervasive
idea of a tax-funded federal government that can or can’t “afford” things.
RealVision interview with Steve Keen: We need a private
debt jubilee.
QE Fare:
About
our team’s discussion about QE and how it translates to an equivalence in terms
of interest rate changes:
just because the size of the Fed’s balance sheet has gone up phenomenally
doesn’t necessarily mean that it is equivalent to 200 or 300 or x bps of
interest rate cuts… not if it is impotent in terms of impact on the real
economy; even rate cuts themselves may be less potent than in the past, but,
inarguably, lower rates throughout the economy, particularly a highly
debt-burdened economy, lowers debt-servicing costs throughout the economy, and
allows consumers/businesses to reduce debt service costs out of their income,
whatever that might be, and is thereby stimulative; QE may not have any such
impact, except to the extent that it too lowers interest rates, and its easily
arguable that interest rates are as low as they are simply because of economic
fundamentals (low growth and disinflation)… and, further, it is even arguable
that QE, through its presumptive impact on sentiment, has kept rates from
falling even lower (if market participants deem that QE will be helpful thru
whatever channel to the economy, they will be less bearish about the economic
outlook, and, as such, rates won’t fall as much as they might have otherwise)
One Bank
Explains Why QE No Longer Stimulates The Economy And Only Leads To Higher Stock
Prices
the marginal utility of every new QE is now declining
to the point where soon virtually none of the money created by the Fed out of
thin air will enter the economy and instead will be stuck in capital markets, resulting in
hyperinflation for asset prices even as the broader economy collapses.
Or, as BMO's Daniel Krieter writes, "QE has fed through to the real economy in a slower manner than previous
QE campaigns" and for each dollar the Fed's balance sheet has grown, M1 money
supply has increased about $0.32, compared to $0.96 and $0.74 in QE1 and QE2.
"The expansionary policy thus far has mostly resulted in increased asset
prices", BMO writes concluding what had been obvious to us since 2009.
Only now we are 10 years closer to what is the inevitable endgame, one
where the Fed has no impact on M1. …
Traditionally, as BMO explains, we analyze the business cycle from a
classical economic perspective where monetary authorities are more passive and
“the invisible hand” guides economies (this used to be the case before the Fed
went all Politburo on the USSA and decided to nationalize capital markets,
crushing any "signal" the bond market may have). In this context, we
look at interest rates, which can theoretically be defined as the rate that
makes the consumer indifferent between consumption today and consumption
tomorrow. R* is the (unknowable) natural rate of interest that
supports full employment and stable interest rates. In theory, if r<r*, then
consumption today is preferable and the economy is expanding. If r>r*,
consumption saving is preferable and the economy is contracting.
In an expansionary phase, prices and consumption are increasing. Because
prices and investment opportunities are high, demand for money among
consumers/businesses is high, and interest rates (r) increase alongside
borrowing. When r rises to the rate of r*, consumption slows,
earnings fall, and a recession ensues. R* falls as uncertainty and risk
aversion grow. This is a “business cycle” recession (and as long as the Fed is
around, we will never have one of those again as the Fed has now also killed
the business cycle).
However, a recession can also be caused by some
external shock to the economy that produced further declines in r*. This is
because r* is reactive to uncertainty with a strong negative correlation. The
greater the uncertainty, the lower r* falls.
In recession, r falls as consumption remains low as long as it is greater
than r*. Defaults accelerate the drop in r. With the passage of time, r* rises
slowly as the uncertainty/risk aversion surrounding the shock and/or end of
business cycle fades. However the longer firms go without earnings due to low
consumption, the more defaults are realized and the more r drops. At some point, the combination of falling r and rising r*
results in r <= r*. Once this happens,
consumption/ investment picks up and the economy enters recovery.
In addition to accelerating declines in r, defaults experienced during
recession also lower the cost of labor and capital goods as the resources of
failed companies are returned to the economy. In addition, barriers to entry in
certain industries fall as “old guard” firms go out of business. Thus, as the
economy enters recovery, this combination of cheaper labor/capital goods and
lower barriers to entry leads to strong business investment and increases
growth potential during the ensuing expansion.
This is how the world works in theory. Unfortunately,
since 1913, theory has not worked due to the intervention of the Fed. So now let’s look at how all this works in
reality, and introduce an active central bank with a wider range of monetary
policy tools at its disposal.
As the economy cools, the central bank lowers r in an
attempt to spur consumption by forcing r<r*. Consumption increases in
response, and recession/defaults are avoided. But business resources aren’t
returned to the economy. Recovery will be less robust due to fewer relative
attractive investment opportunities. As per Krieter, this was the experience of
2001.
Now in 2008, a shock in the form of subprime mortgages hits the economy
and uncertainty skyrockets. R* moves into negative
territory as shown in a recent San Francisco Fed study. The Fed moves rates lower,
but is constrained by the zero bound. In order to further “lower
r", the Fed embarks on asset purchases during QE and is successful in
spurring consumption, as evidenced by the strong correlation between increases
in excess reserves and increases in M1. M1 is the most basic measure of money
supply and includes essentially only cash and checking/demand bank accounts. The
theory is that for a good or service to be consumed, it must be paid for out of
M1. Therefore, the increase in M1 following QE is a measure of the
degree to which QE results in actual consumption.
Note "lower r" in quotation marks in the previous bullet
because r is at the zero bound and cannot (at least in the United States) be
lowered further. Therefore QE increases money supply which is meant to spur
consumption, which is the same desired effect of lower interest rates. In a sense, money supply increases are synthetic interest rate
decreases.
The combination of QE-driven consumption (r falling) and fading
uncertainty after a trillion dollar fiscal stimulus package (r* rising)
ultimately pulls the economy out of recession. However, the pace of response in
08/09 was slower. QE was not announced until late November 2008, after large
defaults were already experienced. Fiscal stimulus in the form of the ARRA
package didn’t arrive until February 2009 with an additional lag in
implementation that featured incremental defaults. In the end, almost a trillion
dollars’ worth of debt was affected by default in 2008/09, but QE certainly
prevented actual defaults from being likely exponentially greater. BMO notes
however that defaults avoided were once again economic resources that were not
returned to the economy and barriers to entry that are not lowered. This argues
that attractive investment opportunities following the financial crisis were
not as abundant as the depth of recession would suggest.
As a result, the recovery was slow, ultimately
prompting the Fed to embark on additional rounds of quantitative easing in an
attempt to spur increased consumption.
Which brings us to the seeds of the Fed's own
demise: the problem is that QE appears to be experiencing diminishing returns, as evidenced by a falling correlation between excess reserves and M1 in successive
episodes of QE following the financial crisis. As QE leads to a direct
increase in bank reserves, only a fraction is translated into money supply
growth, and thus potentially consumption and investment. QE1 was highly
effective and an important factor behind pulling the economy out of recession.
QE2 had a marginally lower, but still high, follow through of .735 indicating
that on average, $0.74 of each dollar of QE translated to increased money
supply. We observe elevated inflation and personal consumption rates during the
period of QE2 as evidence of its effectiveness. However, during Q3, the
correlation fell to just $0.28 and resulted in very little inflation of GDP
growth. Through this lens, the impact of QE on the real economy has diminished
over time.
How does BMO explain the diminishing impact of QE?
·
Diminishing marginal utility
of consumption: QE (and monetary policy) is often referred
to as "borrowing from the future". However, there is only a limited amount of future consumption that can be pulled
into the current period via monetary policy. This could apply to
consumption of durable goods: as rates have been relatively low for a long
period of time, demand for credit no longer increases at the same rate with
incrementally lower interest rates. At some point, consumption
does not bring sufficient to utility no matter how long prices or interest
rates are.
· Wealth disparity: Wealth disparity exacerbates the impact of
diminishing marginal utility of consumption. For reasons discussed in further
detail below, QE tends to inflate the price of financial assets, making those
who own the assets more wealthy. A large percentage of QE money ends up in the
hands of the wealthy, whose consumption patterns are unlikely to change in
response to a near term increase in wealth.
· Inflation expectations: Finally, the crux of monetary policy plays
on expectations. Inflation is self reinforcing as demonstrated by a very high
correlation between inflation and inflation expectations. Around the
introduction of QE, there was an expectation that it could spawn runaway
inflation. Having been through multiple rounds of QE without a large increase
in inflation, people have likely generally come to understand that
QE is not likely to result inflation, therefore there is marginally less
impetus to consume now.
Following five years of no QE in the United States, it appears the
utility of current QE has increased modestly in comparison to QE3. However, the
follow through to consumption still remains well below levels experienced
between Q1 and Q2. It is likely then that current QE is unlikely spurring
much consumption as r isn’t influenced lower (via money supply increase) as
much as in the past and likely remains well above r*.
Worse, as we discussed last week, one can argue that r* is
likely lower now than potentially any point in history, and according to
Deutsche Bank it is at an all time low of -1%.
Not only is uncertainty extremely high, but the impact of COVID-19 arguably directly lowers r*. Recall r can be defined as
the rate of interest that makes consumption today indifferent to consumption in
the future. In all economic models, r is assumed to be positive. But when
people are afraid to their leave their house for fear of infection, future
consumption actually is more attractive than current consumption. So r* is arguably negative for fundamental reasons for the first time.
Greatly heightened uncertainty only pushes it even further negative.
When money supply goes up, but consumption fails to be generated (because
r remains well above r*), then savings rates mathematically increase.
Therefore, the prices of financial assets increase generally.
During times of risk aversion, bond prices increase first, but supply of
safe assets is limited, especially as the Fed buys a substantial portion of the
Treasury market. Investors are therefore pushed into riskier assets. But as
long as r remains below r*, the more savings go up, the greater the mechanical
move in financial asset prices relative to real economic activity.
This, according to BMO, is what’s driving the paradoxical relationship
between bond and equity prices in recent weeks, and explains why stocks are
performing so well despite the outlook for the greater economy. Money supply that doesn't translate into consumption must result in
higher financial asset prices until defaults result in wealth destruction. What does this mean for the recovery? The central bank is displaying reduced capacity to further generate real
economic activity as a result of accommodative policy over the past twenty
years. This means that recovery is unlikely until r* increases significantly,
which only happens alongside fading virus uncertainty. This will take a long
time.
During that time, one of two things will happen. Either the government
will continue to assist companies in avoiding bankruptcy, or it will not. If it
does, confidence (and r*) will likely return relatively more quickly at a huge
cost to the government. However, there will not be a large return of economic
resources at the end of this recession and the ensuing recovery will be
disappointing given the degree of economic pain currently being felt.
If it does not, defaults could potentially reach historic proportions,
and the recession will be long and painful. However, using the "ripping
the bandaid" analogy, this scenario would result in likely the largest
return of economic resources in the history of the country and lead to a very
powerful economic expansion in the wake of the current recession.
Ultimately, the truth likely lies in the middle. The government will
continue to provide relief, though not likely in scale large enough to save all
businesses. Defaults and downgrades will be staggering, but this will increase
the capacity of growth in the ensuing economic recovery.
What does this mean for risk assets? It means that risk assets are being
technically supported by stimulus measures so far, particularly QE that is no
longer as effective as it was. However, a large wave of defaults is unavoidable
without an unlikely near-term (and complete) solution to COVID-19. Heavy
defaults, the kinds described in "Biblical" Wave Of Bankruptcies
Is About To Flood The US, will likely bring about another wave of risk
asset price weakness as wealth is destroyed and technical upward pressure on
financial asset prices and a higher percentage of savings demand is met with
safe haven assets (Figure 3).
This also explains why the Fed was compelled to enter the bond market, as
absent a direct intervention in the secondary market, bond prices would crater
and trigger a self-fulfilling doom-loop, where lower bond prices lead to higher
defaults, lead to even lower prices and so on. For now, the Fed has managed to delay this process but there is only so
much Powell can do to offset the collapse in fundamentals which will lead to
continued ratings erosion, and the eventual defaults of countless companies,
many of which the Fed will be directly invested in. At that point, the Fed's
action in the "market" will become the topic of non-stop
Congressional hearings, and will culminate with doubts emerging about the
viability of the dollar as a reserve currency.
Geopolitical (War)Fare:
With Stones and Iron Rods, India-China Border Clash Turns Deadly
Egypt & Ethiopia Are On Verge Of War Over Water As Nile Crisis Escalates
Sisi's 'Declaration Of War' Puts Egypt & Turkey On War Footing Over Libya
(not just) for the ESG crowd:
The Myth of
America’s Green Growth
In other words, what looks like “green growth” is really just an artifact
of globalization. Given how much the U.S. economy relies on offshored
production, McAfee’s data cannot be legitimately compared to U.S. GDP, and
cannot be used to make claims about dematerialization.
Can the World
Get Along Without Natural Resources?
… Take, as an example, the need to fight climate change. If you ask a
climate scientist, they’ll likely say that climate change poses a dire threat
to humanity. Their reasoning is simple. Climate change could potentially make
farming impossible in much of the world. So if we want to avoid mass
starvation, we’d best curb our fossil fuel habit.
In contrast, if you ask a neoclassical economist about fighting climate
change, you’ll get a very different answer. Climate change, they’ll likely say,
isn’t much of a problem. True, it may cause much of our arable land to become
barren … but don’t worry. Agriculture, they’ll observe, is a tiny part of GDP.
So even if we destroy our ability to farm, ‘economic output’ will remain
virtually unchanged.
Given its absurdity, you might think that I’m making this reasoning up.
But I’m not. William Nordhaus — whose work on the economics of climate change
has been enormously influential — uses the same reasoning to downplay the
impact of global warming. …
The stranded asset
write downs begin
COVID-19 is the
quiz, climate change the final exam
While coping with an ongoing pandemic and a coronavirus 'pop quiz,' the
lesson to 'listen to the scientists' looms large in an inevitable climate
change 'final exam.'
Quote(s) of the Week:
Jeremy Grantham: "this
is becoming the fourth real McCoy bubble of my career."
From: Investing Legend
Jeremy Grantham Is "Amazed" At This Unprecedented Stock Bubble
“The Covid-19 pandemic
“should have generated enhanced respect for risk and it hasn’t. It has caused
quite the reverse,” Grantham told the Financial Times. He noted that trailing
price-earnings multiples in the US stock market were “in the top 10 per cent of
its history” while the US economy “is in its worst 10 per cent, perhaps even
the worst 1 per cent”, echoing what he said in his quarterly letter.
Albert Edwards: “I am genuinely appalled at Powell in
Q&A saying The Fed is wilfully ignoring the financial bubbles they are
creating. I thought after the 2001 NASDAQ and 2008 housing debacle they would
have learnt that when these bubbles burst it makes the recession much worse.
Utter morons”
"I’m not trying to
scare anyone, but this is real and it spreads quickly and easily and people
need to know," said one person who knows some of the Phillies personnel who have
tested positive.
Tweet of the Week:
COVID 19 is the worst
disease process
I’ve ever worked with in my 8 years as an ICU nurse. When they say “recovered”
they don’t tell you that that means you may need a lung transplant. Or that you
may come back after d/c with a massive heart attack or stroke bc COVID makes your
blood thick as hell. Or that you may have to be on oxygen for the rest of your
life. COVID is designed to kill. It is a highly intelligent virus and it
attacks everything. We will run out of resources if we don’t continue to
flatten the curve.
Pic of the Week:
Outdoor yoga in a dome pop-up coming to Toronto
EXTRA (not exactly investment related) FARE:
Irrelevant Fun Fare:
Moose And Her Calves Decide To Spend A Day In This Family’s Backyard, Man Documents How It Went
(red pill) Political Fare:
(fun) Political Fare:
The New Yorker: Suggested slogans for the Biden campaign
Much more at the link
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