Sunday , September 20 2020
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Tag Archives: Most Recent Stories

I Did Some Podcasts. They Were Great.

I did some podcasts recently that I think you might enjoy. Or you might hate them. I guess it depends. But I figured you might want to give them a listen in any case. The Alpha Trader Podcast – I joined Aaron Task and Stephen Alpher to discuss the current state of the financial markets including: Why the recent rally makes more sense than some people seem to think. Why this isn’t the next Great Depression. Why value stocks might finally become more attractive. The risk of future...

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What the Hell is the Stock Market Doing?

The stock market just had its best month since 1987. And the economy just had one of its worst months ever. How is this possible? What is going on? Is it all a conspiracy by the Fed? Are stock traders just insane? All of the above? What do we make of all this? Let’s talk about it. First, the stock market is forward looking. So, while we see everything for what it is, the stock market is looking for what it might become. This ebbs and flows across time. The stock market’s fluctuations are...

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Letting States Default is Very Dangerous Thinking

There’s a growing narrative that states should be allowed to default if they can’t fund their spending needs during the pandemic. Let me be very clear about this: THIS IS AN INSANELY DANGEROUS PROPOSAL Get the message? Let me explain. During the Euro crisis I explained the important difference between the European Monetary Union (EMU) and the USA. The Euro had a series of rolling crises coming out of the financial crisis and they experienced depression-like growth in many countries....

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Understanding the COVID-19 Aid Package

I was watching CNN the other day when a commentator, discussing the government aid package, said that individuals were only getting $1,200 checks and the rest of the money was going to “big business”. This seems to be an increasingly popular narrative and the confusion over the aid package seems widespread. The new COVID programs are much more targeted towards Main Street than the media has been reporting. I was vehemently against the bank bailouts in 2008 and thought that they didn’t help...

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Three Things I Think I Think – (Mo Ron)a

Here are some things I think I am thinking about: 1) What’s up with the stock market? There was widespread outrage that the stock market didn’t go all the way to zero in the last few weeks. This image from Mad Money seemed to symbolize the outrage well: The global stock market is down 20% over the last 5 weeks. It was down 35% at one point. But then things started to look a little better on the virus front. And so the stock market recovered a little, but is still pricing in a pretty bad...

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Fed Truthers Are Wrong (Again)

Fed Truthers spent much of the last 10 years screaming about hyperinflation. When that turned out to be wrong they pivoted and claimed the “inflation” was all in asset prices. That was also wildly misleading and based on the same underlying fundamental misunderstandings that led them to believe in the hyperinflation narrative. Unfortunately, now that a pandemic has hit the global economy they’re using the same set of misleading narratives to argue against any sort of Fed intervention in...

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This Isn’t the Next Great Depression

In my recent research note on COVID I noted two potential scenarios: Short and painful. Basically, 6 months of lockdown with a modestly fast recovery (~15 months). Short-ish and painful. Basically, 12-18 months of lockdown with devastating economic pain and a much slower recovery (24+ months).¹ Case 1 happens if social distancing is working, herd immunity is building, treatments are improving, warm weather helps and we can stave off the virus long enough for a vaccine to be developed...

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Pragmatic Thinking on COVID-19 – The Podcast

I joined Taylor Schulte from Define Financial to discuss the potential impact of COVID-19. We covered: The recent research paper I published. Two potential scenarios for COVID-19. Why this recession is more like a natural disaster than a standard business cycle recession. The temporal dislocation between the economy and financial markets that makes this environment difficult to navigate. What makes the government unique in times of crisis and how it creates money. I hope you enjoy it! ...

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What Do you Do When the Shit Hits the Fan?

Full blown panic has set in. And no one knows when it will end. The uncertainty is like a daily replay of the worst moments of the financial crisis. Except on warp speed. A global pandemic is the type of event that you expect to see in movies, not in reality. And there’s no precedent for how to navigate such an acute and fast economic/market downturn. So, we’re in uncharted territory. What can we do now? Match Your Liabilities Good asset management is about asset liability mismatch. What I...

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It’s Time to Declare War on COVID-19

We’re going to see an economic contraction due to COVID-19. No one knows how deep it will be, but there are going to be sectors of the economy that experience depression-like pain. Restaurants, bars, travel, etc are very likely to see 50%+ year over year declines in revenue. I don’t know how long this will last, but based on past experience with Coronaviruses we should assume that it won’t be brief. We should assume this will last 6, 9, 12 or more months. Now, all recessions are painful....

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