After watching your latest insightful and thought-provoking long term take on the markets, I noticed on Friday there were daily downside key reversals both for the Dow Jones Utilities and Transportation indices. Could this be a straw in the wind for the main US indices?
Thanks to a subscriber for this memo by Howard Marks for Oaktree which may be of interest. Here is a section:
Questions like these can’t tell us for a fact whether an advance has been reasonable and current asset prices are justified. Buy they can assist in that assessment. They lead me to conclude that the powerful rally we’ve seen has been built on optimism; has incorporated positive expectation and overlooked potential negative; and has bene driven largely by the Fed’s injections of liquidity and the Treasury’s stimulus payments, which investors assume will bridge to a fundamental recovery and be free from highly negative second-order consequences.
A bounce from the depressed levels of late March was warranted at some point, but it came surprisingly early and quickly went incredibly far. The S&P500 closed last night at 3,133, down only 8% from an all-time high struck in troubled-free times. As such, it seems to me that the potential for further gains from things turning out better than expected or valuations continuing to expand doesn’t fully compensate for the risk of decline from events disappointing or multiples contracting.
In other words, the fundamental outlook may be positive on balance, but with listed security process where that are, the odds aren’t in investors’ favor.
This article by Stuart Biggs for Bloomberg may be of interest to subscribers. Here is a section:
Prime Minister Boris Johnson called for people to be “less apprehensive” about Covid-19 as the U.K.
lowered the pandemic alert level and he promised to get all students back to school by September.
The new Level 3 alert indicates the virus is no longer spreading exponentially after almost three months of lockdown, and the guidance allows for some relaxation of social-distancing
measures.
Johnson hinted the rule that people should stay 2 meters (6 feet, 7 inches) apart may be relaxed to 1 meter for pupils -- as Northern Ireland has done -- to help re-open schools in England. He also said the track and trace system, and a new treatment for the virus, means the pandemic is entering a new phase.
“We’ve got to start thinking about a world in which we are less apprehensive about this disease,” Johnson told broadcasters on Friday. “On the social-distancing measures, watch this space, we will be putting in place further changes as the science allows.”
FWIW I found this page on the AP website which seems to debunk the idea on BLM being used to fund Democratic candidates:
https://apnews.com/afs:Content:9043930562
Over here in the UK, I found this expressed aim of the BLM movement a lot more troublesome:
https://www.gofundme.com/f/ukblm-fund
"a commitment to dismantle imperialism, capitalism, white-supremacy, patriarchy and the state structures"
Has raised nearly £1M.
This article by Tae Kim for Bloomberg may be of interest to subscribers. Here is a section:
The announcement adds another major player to Shopify’s growing alliance against Amazon.com Inc.’s e-commerce dominance. Last month, I wrote how Shopify CEO Tobi Lutke has often said his company’s goal was to “arm the rebels” against the Amazon empire. The Walmart deal comes just weeks after Shopify signed a partnership with Facebook Inc. that allows Shopify’s merchants to sell on the social-media giant’s platforms under the newly launched Facebook Shops initiative. Before these moves, the aggregated online sales of Shopify’s U.S. customer base already ranked as the second-largest in the country after Amazon, according to the company. And now with Walmart on board and the expanded deal with Facebook, they mark significant steps to expand Shopify’s eco-system, making its platform a more viable and an attractive alternative to sellers.
Thanks to a subscriber for this note from Albert Edwards at SocGen. Here is a section:
This article by Sophie Alexander and Katherine Greifeld for Bloomberg may be of interest to subscribers. Here is a section:
Portnoy and his ilk have been part of one of the greatest rallies in history, adopting as a mantra the online slogan of “stocks only go up!” Market watchers are being forced to ask to what degree retail interest has become a self-fulfilling prophecy in many parts of the market -- and what dangers it poses for its sustainability. Thursday’s rout, the deepest in three months, offered a reminder that stocks do, in fact, fall, though equities rebounded in trading Friday.
Millennials and Gen Zs, the target audience of Barstool content, have long been under-invested in the stock market, said Julian Emanuel, chief equity and derivatives strategist at BTIG LLC.
That’s changing. Stuck at home with plenty of free time, government stimulus checks, no sports to bet on and, for better or worse, a figure like Portnoy turning investing into entertainment, more and more young people are wading in for the first time.
This impressively illustrated article by McKinsey may be of interest to subscribers. Here is a section:
Liberal-market economies
Countries with liberal-market economies face greater short-term risks than do those with coordinated-market economies but have greater flexibility for long-term dynamism. The group includes Australia, Canada, the United Kingdom, and the United States. A key feature here is a limited framework of preexisting measures to protect households—the countries in this archetype spend 17 to 20 percent of GDP on social protection. Their economies skew more heavily toward big corporations than do those with coordinated-market economies, with a comparatively smaller role for SMEs, and flexible labor policies are dominant.
The limited degree of automatic coverage for workers and businesses drives a focus on emergency support-of-wage bills for companies and direct transfers to individuals. More companies will fail in such economies, and the reliance on massive cash transfers in those countries will increase the pressure to build a robust digital infrastructure. However, creative destruction in the least resilient sectors will provide more flexibility to pivot and emerge from the crisis stronger and more competitive, provided that economic shutdowns do not last too long, as unemployment can become sticky, driving up costs and dampening consumption in the longer term.
This article by Jeannette Neumann for Bloomberg may be of interest to subscribers. Here is a section:
European Central Bank Vice President Luis de Guindos said policy makers at the institution haven’t talk about creating a pan-European bad bank to manage the unpaid loans that are arising during the coronavirus crisis.
“We haven’t had any sort of serious discussion about this instrument,” Guindos said at a webinar hosted by the Institute of International and European Affairs
“I am a little bit surprised when I see this kind of information,” he said in response to a question about a report published by Reuters
Bad banks created after the last financial crisis in Ireland and Spain were “powerful instruments to clean up the balance sheets” of lenders
This article by Saleha Mohsin for Bloomberg may be of interest to subscribers. Here it is in full:
Treasury Secretary Steven Mnuchin said the U.S. shouldn’t shut down the economy again even if there is another surge in coronavirus cases.
“You create more damage, not just economic damage -- medical problems that get put on hold,” Mnuchin said Thursday on CNBC. “We can’t shut down the economy again.”
Mnuchin added that he believed President Donald Trump made the right decision to urge states to ease social distancing rules that have crippled the U.S. economy. He said that in the event of a resurgence, it will not be necessary to impose restrictions again because Covid testing and contract tracing are improving and they understand more about how to contain outbreaks.
As restrictions are lifted across the country, signs of a second wave of coronavirus cases in the U.S. have been raising alarms. More than 2 million people in the U.S. have been infected so far.
