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Mr T, agreed !

The very brutal view is that the politicians led by the economists with their whiz bang modelling machines had no idea of the economic devastation that they unleashed on the world. Its going to be a long road back to the mean, sorry the normal. I am watching for the money devaluing wars to take place, the debt explosions, etc

Macquarie just re-released their Capita Notes 2, now 180 basis points higher than a few months ago (which they pulled due to abnormal conditions and mounting uncertainties), with the higher interest rate being that which they modelled needed to attract investors commensurate for the new levels of risk! All snapped up in 5 hours, as the alternative interest rates and dividend rates are not great.

good luck to the investors in a company with a commitment and a capacity to paying shareholders a good dividend...rare as hens teeth?!

My own view on the pollies is they should be stripped of future benefit payments (as they do not create long term benefits, but do create long term liabilities..or debt), their salaries should be made equivalent to the basic wage, and their numbers should be reduced by the level of unemployment every year..so that would be 14% less pollies in the US for example...nearly as useless as economists!

best of luck to all, and keep your sense of humor above all.
the gnome

WATCH FOR BLOOD ON THE STREETS.

While shares in the US fell over the final two days of trade last week, the sharp rebound in equities over the preceding weeks has pushed prices to levels considered historically expensive.

The companies that make up the S&P 500 trade at an average price-to-earnings (PE) multiple of 19.3 times on current earnings and 22 times forward earnings. That is significantly above the 10-year average for the US benchmark of 15.2 times, and more unusual because it's happening in the middle of a pandemic.

The ASX 200 by comparison, ended the week on a multiple of 16.8 times, which is still above its 10-year average of 14.5 times, but far more moderate than the US.

The Australian market greets the week close to 27 per cent below its February peak, whereas the S&P 500 is close to 16 per cent off its last high after rallying a massive 31 per cent from its March low.

"Even though we're (oZ) managing the situation better, there's probably a bit more of a realistic pricing in the market here, whereas the US has probably got the biggest risk of a setback but the least risk premium for that occurring in pricing," Mr Doyle explained.

The investment manager expected sharemarkets to record further falls in future, with forthcoming economic data as well as corporate failures seen as the potential catalysts.

"As some of these businesses actually really do start to get into trouble – we've seen it in airlines for example but there'll be other parts of the market that actually get into trouble – we think until you get a bit of blood on the street, that'll be when the low in markets will be."

BERKLEY DOWN $50B
The 89-year-old opened the meeting in Omaha, Nebraska, with nearly two hours of remarks to soothe anxious investors, urging them to stay committed to stocks despite this year's bear market, even if the pandemic got a second wind late this year.

Mr Buffett called dealing with the pandemic "quite an experiment" that had an "extraordinarily wide" range of possible economic outcomes.

GOOD LUCK TO US ALL !!!

The Gnome

The inverse relationship between the price of gold and the amount of us$debt is a compelling if not convincing look (90+% correlation!). Its very easy to predict where us$debt is going short and long term.
https://www.learcapital.com/lear-learning-center/national-debt/
First we had the War on Terror and now the War on Virus debt loadings. Extraordinary...

“Buying gold is just buying a put against the idiocy of the political cycle. It's that simple." – Kyle Bass

Kyle Bass, founder and principal of Hayman Capital Management, is perhaps most famous as being one of the few investors to successfully predict and benefit from the subprime mortgage crisis.
Bass made his gold comment in 2011 while the US Federal Reserve was implementing its second round of quantitative easing which took the US Central Bank’s balance sheet to, then, unprecedented levels.
During the past few weeks Central Bank’s balance sheets around the world have blown out as they implement unorthodox policy to keep the economy afloat.
This is a headwind for gold as the precious metal is correlated to central bank’s balance sheet.
Another headwind for gold is government spending. Gold is negatively correlated to US government deficits and it’s been well documented which direction that is heading.
Relative to the gold price, gold miners look attractive and will benefit more if the price of gold rises.
Fundamentally, gold mining companies’ balance sheets are strong.
Investors can gain exposure to global gold miners via GDX, the world’s largest gold equities ETF with over A$20 billion in assets.
Research house Lonsec has issued a “Recommended” rating for GDX.
For large trade orders please contact our Capital Markets desk on 02 8038 3317.
Central bank balance sheets have exploded and will continue to do so into the near future.
Further, since the GFC, gold companies have been implementing changes to address mistakes of the past which, in our opinion, should lead to outperformance by gold equities relative to bullion in a gold bull market. We expect no credit problems in these companies. On the contrary, we believe their reductions in costs and capital expenditures could translate to an additional near 40% increase in free cash flow, on average, for a gold price move from $1,600 to $1,800 (for seniors and mid-tiers).
Gold companies that have learnt from the past and do not move rashly into the MandA space will be the winners...and so will their shareholders!!!

best

the gnome

Wasnt so long ago that most of us thought a trillion was a large number. Here is the next new words to learn in the next 1-4 years
Name Nos of zeros
Quadrillion 15
Quintillion 18
I can recall being in Zimbawe and seeing my first 100 trillion note...that was when you were in the queue to buy a hamburger, and if you were second you paid 100% more than the guy in front of you, and so on down the line ...

... surge in government and private sector debt from $US37 trillion in 1990 to $US167 trillion in 2007 and $US255 trillion in 2019. The numbers are $US20 trillion greater if you include gross derivative positions.

Lethal virus also killing capitalism?

Veteran Macquarie Group strategist says the coronavirus is accelerating the move towards a new world where whatever is left of free market signals disappear.

Ask Macquarie Group strategist Viktor Shvets to explain why he believes capitalism is dying, or at least mutating into something closer to a version of communism, and his answer will take about 40 minutes.

This is not because his theory is overly complicated. It's because he cannot resist weaving references to economic history into his defence of the argument that governments are replacing the private sector as the primary allocators of capital.

Shvets says the COVID-19 pandemic is accelerating the trend towards greater concentration of state power and the "massive extension" of central monetary levers to a point where most asset classes will be eventually supported by a fusion of financing from governments and central banks.

Macquarie Group strategist Viktor Shvets says the COVID-19 pandemic is accelerating the trend towards greater concentration of state power.

Controversially, Shvets foresees the typical capitalist economy morphing into one that resembles China's where fiscal policy is funded directly by the central bank.

He can envisage the pillars of the capitalist system, including commercial banking, being supplanted by all-powerful governments funded directly by central banks.

This would be a profound change because entire sections of the Western financial system would be disintermediated, starting with all parties involved in government bond issuance.

'The alternatives could be worse' ?

The Shvets theory does not contemplate the nationalisation of industries or an end to all private-sector signals. He says there will still be intermediaries between the state, central banks and corporations. But governments will have much more power and be able coerce businesses to do what they want.

"China’s state-capitalism and political economy offer a potentially attractive answer including an aggressively proactive public sector to soften transition pains," he says.

"Monetary and fiscal spigots simply open and funds flow. There is a price to pay – atrophy of free markets and private sector signals, ultimately further misallocation of resources. However, the alternatives could be worse." ...
wa

The GFC produced deep political paralysis and nurtured a crop of anti-technocratic populist leaders. We can expect even more extreme disruptions from COVID-19....

The GFC was just a dry run for this catastrophe
There will be no return to economic normalcy until a vaccine is available, so the only question is how long and bad the inevitable deep recession will be.

Kenneth RogoffColumnist

With each passing day, the 2008 global financial crisis increasingly looks like a mere dry run for today’s economic catastrophe.

The short-term collapse in global output now being experienced already seems likely to rival or exceed that of any recession of the past 150 years.
Even with all-out efforts by central banks and fiscal authorities to soften the blow, asset markets in advanced economies have cratered, and capital has been pouring out of emerging markets at a breathtaking pace.
A deep economic slump and financial crisis are unavoidable.
The key questions now are how bad the recession will be and how long it will last.
Until we know how quickly and thoroughly the public health challenge will be met, it is virtually impossible for economists to predict the endgame of this crisis.
At least as great as the scientific uncertainty about the coronavirus is the socioeconomic uncertainty about how people and policymakers will behave in the coming weeks and months.
After all, the world is experiencing something akin to an alien invasion.
We know that human determination and creativity will prevail. But at what cost?
Markets seem to be cautiously hopeful that a recovery will be fast, perhaps starting in the fourth quarter of this year.
China slows import slump in March but economists warn worst to come
Many commentators point to China’s experience as an encouraging harbinger of what awaits the rest of the world.

But is that perspective really justified?

Employment in China has rebounded somewhat, but it is far from clear when it will return to anything close to pre-COVID-19 levels.

And even if Chinese manufacturing does rebound fully, who is going to buy those goods when the rest of the global economy is sinking?

US stimulus glosses over failures
As for the United States, returning to 70 per cent or 80 per cent of capacity seems like a distant dream.

Now that the US has failed miserably to contain the outbreak despite having the world’s most advanced health system, Americans will find it exceedingly difficult to return to economic normalcy until a vaccine becomes widely available, which could be a year or more away.

There is even uncertainty about how the US will pull off its November 2020 presidential election.
...markets seem to be comforted by massive US stimulus ...will see how it ends...

the gnome

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