CW18-2020

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https://www.bbc.com/news/business-51706225
#1
No doubt the most significant change in the past days have
been the oil price (WTI) getting into a negative field.
The reasons why this happened are well known; the highlight
on this would be that it is likely to happen again (May
contracts).
Storage capacity is full and seems economies are not going to
ramp up any time soon to start having room for new oil
deliveries.
This situation puts A LOT of pressure on the US fracking oil
industry,and on those countries with high production costs.
Bailouts in the US and revolutions in oil-producing countries
become probable scenarios.
Juan Carlos Golindano / jc@golindano.pro / April 2020

https://ourfiniteworld.com/2020/03/31/economies-wont-be-able-to-recover-after-shutdowns/
#2
Out of the walls of the mainstream media and institutions,several people think our economy's expansion cycle is over,and there
were enough signs of it even before the COVID19 came to stage.
Lockdown policies proved to be highly harmful to the economy.

https://www.zerohedge.com/economics/three-ds-and-high-frequency-leading-indicators
#3
Due to the nature of the crisis we are attesting,on
which a virus rapidly take over the planet,the resulted
recession is more profound than the 1929's Great
Recession.The hard-hit job market is predicting a
steep decline in economic activity,with no signs of
recovery in the short term.
Not to mention that the US and Europe still under
widespread lockdowns.

#3
https://www.zerohedge.com/economics/three-ds-and-high-frequency-leading-indicators
Sudden decline in prices reflects a demand absence
market,particularly to those who don't want to pile up
inventories not knowing if they can sell them at a profit
afterwards.
Industrial indexes dropped,with them,raw materials.

#4
https://www.bloomberg.com/opinion/articles/2020-04-11/coronavirus-this-pandemic-will-lead-
to-social-revolutions?sref=WalY5YEq
One of the most repeated questions after weeks of
lockdown in many countries is how 'safety nets' are
working,how people whose jobs have been shut down
receive any income.
Remote work is only an incomplete solution only
available for those on the highest-paid trench.
Governments have a delicate situation to solve;
broken supply chains affect mostly blue-collar jobs.

#5
https://hbr.org/2020/04/bringing-manufacturing-back-to-the-u-s-is-easier-said-than-done
Globalisation took factories away from final
consumers,on-time production
methodology adopted since the 1980's
help companies on reducing costs at the
expense of relying on a fragile network of
suppliers and trade.
Relocating of those factories closer to final
buyers looks the way to go for this new
world post-COVID-19,and in some cases
supported by government funds.

#6
http://www.policyuncertainty.com/media/COVID-Induced%20Economic%20Uncertainty.pdf
I've found this index when elaborating this report; I
didn't know of its existence.
Authors evaluate the following aspects:
*Stock Market Volatility
*Newspaper-Based Measures
*Business Expectation Surveys
*Forecaster Disagreement
*Statistical Forecast Uncertainty
The result of crunching all of these pieces of
information in the current predicament is an all-
time high level for this index.
As time passes,more people are convinced the
current scenario will look more like 1929's
depression than the 2008 financial recession.

#7
https://www.forbes.com/sites/sergeiklebnikov/2020/04/25/icahn-sees-further-market-crash-from-
coronavirus-says-hes-shorting-commercial-real-estate/#6f3240a2256e
Uncertainty is stopping market-makers from
jumping back into the trading floor (not shorting,of
course).Icahn predicted the 2008 crisis; he is a
respected voice after attesting different market
collapses,from oil prices crisis in the 1970s to the
Dotcom bubble.
As a reference,Stocks Market's historical P/E ratio
is around 15X.

#8
https://www.project-syndicate.org/onpoint/what-the-stock-market-is-really-saying-by-larry-hatheway-and-alexander-friedman-2020-04?barrier=accesspay
The stock market is decoupled from labour numbers,because of two
reasons,1-S&P500 has bigger Hi-tech not job intensive companies
that kept growing while the 'real economy' crumbled.2- Stimulus
packages will bail out TBTF companies; investors play in advance to
what is already known from 2008 experiences.

#8
https://www.project-syndicate.org/onpoint/what-the-stock-market-is-really-saying-
by-larry-hatheway-and-alexander-friedman-2020-04?barrier=accesspay
Mixed informations are being transmitted through
multiple channels to the general public.
Uncertainty,as shown before,is a maximum levels.
Planning future scenarios without having some
solid ground will keep investment and monetary
fluxes on ‘safer instruments’,from cash to US
treasuries.
19X ratio P/E can be interpreted as a bubble.I don't
see stocks that-out-of-range (however,I’not
specialist).In case it is true,COVID-19 crisis may
be bursting it because this is not over,the economy
isn't on its feet yet.

#9
1 - Google Finance Chart SP500 VS SP600
S&P INDEXES
To me,this is one of the most critical comparisons
for grasping how the current economic scenario is.
SP500 is about highly capitalised companies,while
SP600 is linked to the small-cap segment,as stated
in the previous text.
SP600 for obvious reasons is a better tool when
forecasting.Stimulus packages and government
assistant haven't had the same impact on different
capitalisation level companies.

#10
https://tradingeconomics.com/euro-area/government-budget
Last but not least,North Europe leaders are in the
middle of defining how is the best way for giving a
hand to the South + France.

This seems the last big chance the EU has to
demonstrate what its ethos is.Having a Schengen
zone and a common monetary policy is not
enough when a severe crisis shows up.

How to deal with increased budget deficits? How
to avoid cuts on those areas that are sensitive to
people such as healthcare?

Future looks grim,nationalism and isolation have a
fertile ground to flourish.

CW18-2020

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