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"Generational event"

edited April 2020 in Other Investing
This opinion piece is worth reading in its entirety. He is a good writer. Here are a few highlights from my second reading....
"Where to from here?" is a question no one can currently answer.

The oil story isn't merely a sideshow to the pandemic. The price war (narrowly construed) is tangential, but the potential for the collapse in prices (which fell the most in history during the first quarter) to make an already bad economic situation worse, is real indeed.

....This speaks to the irony of the Fed's multi-pronged corporate bond buying program announced late last month alongside a raft of additional measures. We are in no position to allow misallocated capital to be "purged."....In short, all of this has to be propped up, bailed out and otherwise inoculated. If it's not, the domino effect would be catastrophic, and although the cavalier among you may be inclined to bravely parrot the "let it all burn" line, I doubt you really want that.

Although there are, of course, limits to how much spending can be authorized without offsets, those limits are dictated by inflation. Quite obviously, inflation isn't something we need concern ourselves with in an environment characterized by the single largest demand shock of the past century.

In short, the mighty US services sector just disappeared in the space of four weeks. It's gone. That doesn't mean it's not coming back, but for the duration of the lockdown, it basically doesn't exist.

... there is absolutely no way to know what earnings are going to look like for the second and third quarters. I cannot remember (or find anyone who can remember) a time when there's been less visibility into the outlook for all corporate profits, not just one or two troubled sectors.....Show me someone who thinks they can price equities in this environment and I'll show you a liar. It's just that simple.

The Fed isn’t going to cancel all of the various liquidity facilities and asset purchase programs put into place over the past four weeks if the spread of the virus slows. That bid (which is now unlimited in scope) will be in the market for the foreseeable future, and now it includes spread products.
https://seekingalpha.com/article/4336021-bad-blood




Comments

  • edited April 2020
    Hi @davfor First, thank you for the article post.

    I have not read the write in full, but much had been discussed here; about forward impacts in so many areas. The economy will be damaged very deeply, just look around with what you know and understand about the state you reside. The cranial-rectal inversion syndrome crowd, for whatever reason, remain impaired with critical thinking. Data page (I'll try the full open link at the end, below my name. It will not link properly at this time when embedded) for the young who don't/didn't know better
    and why I did and do still fear the number of retired snowbirds when they leave their southern nests and return to Michigan, let alone the young invincible and the southern states who refused to close the beaches, etc. The data related link in bold is for the danger that has already arrived regarding the young ones. Surely, they didn't THINK that they might be involved in the deaths of family members or friends who are more "at risk".

    As to the adults with "the cranial-rectal inversion syndrome", well; so many of the older ones I know are not fixable; although some are beginning to "see the light". I/we use Facebook as linkage to our local school system. 'Course, we had to create a page/name; but there is nothing to see at the page........blank city. However, this allows me to visit other pages to read some posts (can't see everything without being a "friend"); but I see most of the posts and replies. Pretty sad bunch on the right side of the fence; folks I've know for decades. They're still posting about getting rid of Pelosi.....they have stopped the posts about COVID not being more of a problem than the common FLU. I emailed 5 of the people I've known for many years, ranging in age from 60-76. I noted to them that I know 3 of you were and/or are still smokers and that 2 of you have had mild heart conditions; and are you aware that if you contract the virus that your odds of surviving are very small. No replies yet.

    A last note regarding Facebook pages I viewed this morning (April 5). A known (I know him) right winger placed a post (data source unknown, as is usual) stated that the virus "success" rate for recovery is 98.54%, "Why isn't this number being talked about on TV/media. Using a rounded figure of 330 million for U.S. population, his math works out to a death number of, 4,818,000. Geez.

    AS to the adults who remain with the "cranial-rectal inversion syndrome" here's the game being played by Gov. Kemp of Georgia. The link has
    multiple choices for reading....especially the Tybee Island Mayor.

    Personal summary = We do our best here to stay out of harms way to avoid contracting the virus; and there remains so many dumb asses in the pathway to safety. I'd like to take them all to Detroit to help the paramedics and hospital staff. OH, and you want to wear a mask.......and you didn't bring your own........sorry, we're out of stock. Check Amazon.

    Talk about part of our society being so screwed up in the brain cell area. I do believe they are in the land of OZ and I know which character they are.....

    I'm done, I'm tired of writing about all of this.
    Nap time is in my future.
    Take care of you and yours,
    Catch


    https://t.co/3A3ePn9Vin" Click the map, enlarge and unmute on sound. About 1:15 minutes
  • edited April 2020
    @catch22

    My wife and I owned a small winter home for several years in a middle class neighborhood adjacent to Lemon Bay in the village of Englewood along the gulf coast of central Florida. Our neighbors were in general very "down to earth", friendly, and helpful people who would sometimes self categorize themselves as rednecks. We still keep in touch with some of them, me only by email, and my wife by email and Facebook. Here are a couple of observations.

    It has done me and my wife little good to respond to "political opinion" emails we receive with fact laced responses. Their emails are intended to preach to the choir. Unless their hymn book gets changed, our fact based arguments will be ignored. (That is why I found the Bill Gates interview I posted this morning with the link to Fox to be encouraging.)

    They are in general "show me" people who are inclined to ignore potential problems until the problems personally hit them square in the face (or perhaps the lungs in this case). This ties to the problem with making data/model/science based arguments. Hopefully, convincing the choir leaders to update their hymn books can help in this regard too.

  • @davfor. Really enjoyed the article. I've grown skeptical of articles on SeekingAlpha, but this is a good one. c
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