So, what is the alphabet shape guide to economic recoveries? It is a question worth pondering, bearing in mind that we could be in the final half of the COVID-19 pandemic, undoubtedly the worst health crisis of the century. The current state of play, regarding the pandemic, is leading me to be cautiously optimistic, bearing in mind that pharmaceutical companies are developing vaccines, health experts are gaining a better understanding...
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The declining labor force participation rates were already in play before the pandemic hit as fourth industrial revolution technologies, the digitalization of everything, the fintech revolution and ongoing automation from cashier-less stores, automated vehicles, and fast industrial robot production lines, has meant that humans need not apply. The declining labor force participation rates in the Fourth Industrial Revolution is a macro...
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Investing in a zero rates environment is particularly problematic for the traditional 60-40 retirement portfolio of stocks and bonds. If fact, investing in a zero rates environment has meant that the traditional retirement portfolio of stocks and bonds is down by 20% for the fourth time since WWII. The 60% stocks and 40% bonds portfolio lost value during the energy crisis recession of the 70s in 1974 and in September 2002. The...
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A deep earnings recession made worse by a coronavirus-induced collapse in profits could be the final straw that dashes all hopes of a swift V-shaped recovery. Before the coronavirus hit the mainstream corporates were already in an earnings recession. In a piece entitled, “Earnings Recession” dated November 2019, I wrote, “the overall three straight quarters of year-over-year earnings declines suggest that companies are deep into an...
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The transition to a new monetary policy regime, known as MP3 state capitalism is in play according to Bridgewater’s CIO Prince. MP3 state capitalism puts the government at the epicenter of capital distribution and it is likely to have a profound impact on investment portfolios going forward. So how did we get to MP3 state capitalism, which is likely to be radically different from previous cycles? The idea of state capitalism...
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With the central banks in cahoots with pursuing a policy of staggering global stimulus, a risk-recovery rally could now be in play. The market has got its fix with over $18 trillion in global stimulus snorted up the nostrils of global markets, the central banks in cahoots with their asset purchases (QE) to infinity, has ensured a melt-up in risk assets, while the fundamental meltdown In the age of Zombies and bankrupt companies with...
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