Buy equities? Nah, not now

Although I am 40% invested in the equities markets, I will not be adding fresh capital until a bigger correction comes along. When will that be? Like what Mark Wilson says, can be weeks or even months...

https://www.morganstanley.com/ideas/thoughts-on-the-market-wilson

Do not buy now.... Wait

Markets have been stubbornly high, but surely, it has to come down.

The thing to do now is wait.

Source https://www.morganstanley.com/ideas/thoughts-on-the-market-wilson

Portfolio Update _ Frencken

 I bought Frencken in Sep at 0.95 to ride on the 5G boom.

So far, it has done very well for me. Glad to read about the coverage on the counter.

For more info: https://www.theedgesingapore.com/issuepdfviewer?issue_id=41299

Market is ripe for a correction

 According to Morgan Stanley, a correction could be round the corner.

What to do then? Wait... then pick up bargains with both hands.

For more info:

'Ripe for another correction': US stocks could tumble 12% by year-end as the vaccine-driven rally gets exhausted, Morgan Stanley's investment chief says

2021 will be a super bull - Jeremy Siegel

According to Jeremy Siegel, a confirmed bull market in 2021.

As for me, I am a bull too.

For more reading:

https://markets.businessinsider.com/news/stocks/stock-market-economy-outlook-stronger-expected-jeremy-siegel-wharton-bull-2020-11-1029810785

Why Donald Trump could win 2020 Election

Majority polls are pointing to a Joe Biden victory, but this article provides a contrarian but interesting perspective.

https://www.learntotradethemarket.com/nial-fullers-blog/why-trump-wins-2020-election 

Does this correction have more legs?

 

Contrary to anlysts'opinion, this model predicts the correction has more legs to go. Who is right?

The S&P 500 will soon see a double-digit correction but investors should use it to buy not bail

 Investors should be prepared for the possibility of additional pressure in the markets, but it won't necessarily be a signal to exit, said Sam Stovall, CFRA chief investment strategist.

"We think that the S&P 500 will test its 200-day moving average, rather than just its 50-day average as it did recently, which could convert this pullback into a low-level, double-digital correction," the strategist wrote in a note on Monday.

But Stovall also said that because the Fed is likely to keep interest rates low over the next few years, this dip will be an "opportunity to buy rather than reason to bail."

The strategist said that at the end of August, the 12-month price return for the S&P 500 Growth index was 35 percentage points higher than the value index. "This month-end difference was the widest since these indices were created in mid-1970s," Stovall said. "Not surprisingly, this extreme made the market vulnerable to a selloff, which it got during the low-volume days surrounding the Labor Day Holiday." 

Potential upcoming correction could be opportunity to buy stocks

SINGAPORE (June 12): Bank of Singapore analysts Eli Lee and Conrad Tan believe the halt in the US stock rally on Friday could be part of a bigger pullback.

Corrections above 10% occur frequently enough, and investors could take time to re-look at valuations to evolving market risks, they say in a Friday report.

“This pullback so far is characterized by a sharp reversal of the rotation into Cyclical and Value, which has been in place over the last couple of weeks, but we see the Cyclical/Value rotation re-asserting itself if the economic recovery does pan out over the medium to long term as anticipated,” say the analysts.

Notably, Lee and Tan see the pullback as an opportunity to add “structural long-term winners” on attractive valuations.

Cyclicals and value stocks with resilient balance sheets will, over the long term, benefit from the economic recovery, they say.

“In the near term, we do not see systemic selling to be a serious concern for equities as yet,” they say, noting that the market does not appear to be underhedged at this point.

“Only if the correction deepens further significantly, would we see systemic selling triggered at funds employing strategies such as CTA and risk parity,” they add.

The recent spike in Covid-19 cases in the US has led to concerns of a second wave of infections.

While the situation remains to be seen, Lee and Tan believe that the economy will not be as heavily impacted, should subsequent waves of infection occur, as the public and policy-makers are now more aware of the nature of the virus. Therefore, full shutdowns, as seen in the earlier parts of the year, are unlikely, they say.

Lee and Tan also believe that the equity market is unlikely to bottom out to the levels in March, which reflected greater levels of uncertainties.

“[The market free fall] includes the real risk of a greater financial blow-up stemming from the tremendous liquidity pressures at that time, which is now mostly diminished,” say the analysts. Lee and Tan say that the search for yield is expected to be a powerful market driver in this environment. As such, they have an “overweight” position within their asset allocation strategy on Emerging Market High Yield bonds.

“As valuations become more attractive alongside this sell-off, we will look to add exposure to selective attractive opportunities in this space,” they conclude.

V-shaped recovery likely, but correction likely first: Morgan Stanley 8 Jun 2020

Since late March, I've taken an optimistic view of equity markets for the following reasons. First, bear markets end, rather than begin, with recessions. Second, the health crisis that triggered this recession has brought unprecedented monetary and fiscal stimulus that would otherwise have been impossible. Three, the political pressures behind the reopening of the U.S. economy are likely to make it faster and more durable, even if a second wave of the virus emerges. Four, sentiment and positioning have remained remarkably bearish considering the size and persistence of the equity rally to date. And finally, index prices, the equity risk premium, market breath, and early cycle leadership are all following the same pattern we witnessed at the 2009 bottom during the Great Financial Crisis. In short, our recession playbook is working.

Having said that, a few signals have been missing that would support a continued bullish outlook for equities. Specifically, the U.S. dollar has remained strong and the 10 year Treasury yields remain depressed. While one could argue that a strong U.S. dollar benefits U.S. equity markets through flows and lower interest rates support valuations, our contention is that both are bad signs for the economic recovery. Therefore, we were glad to see both a weaker dollar and higher back-end rates last week, even before the stronger jobs data were released on Friday morning. In fact, both have moved above some key resistance levels left over from April. This combination provides a missing signal for two critical macro markets that a V shape recovery is, in fact, looking more likely.

It also matters because we continue to hear concerns from investors that equity markets appear disconnected from reality. One argument in support of this view is that longer term Treasury yields haven't budged and the bond market is smarter than the equity market when it comes to forecasting the economy. However, a good part of my investment framework is based on analyzing the internals of the equity market-- in other words, how sectors and styles and factors are behaving, rather than just looking at the headline index. These signals contain a tremendous amount of information, and I've found them to be helpful in forecasting real economic activity. One of my favorite stock ratios tracks how cyclical stocks trade relative to defensive ones. This ratio has been an excellent leading indicator for economic growth, often better than Treasury yields.

In 2018, for example, this ratio proved to be timely in calling the peak rate of change in the U.S. economy. It even foreshadowed the top in long term interest rates at a time when the consensus was bearish on Treasury bonds. In other words, equity market internals did a better job than the bond market in calling the top of the economic cycle. Now we find ourselves in the exact opposite situation. The stock market is rallying strongly, led by cyclicals. However, bond yields have lagged and failed to confirm the signal from stocks until this past week. The divergence between our cyclical and defensive equity ratio and the 10 year yield hasn't been this wide since 2018, right before yields unexpectedly collapsed. Could this be the turning point for 10 year yields to move sustainably higher at a time when the consensus least expects it? Based on our interpretation of the equity market internals, there's a good chance it is. We also think sharply rising yields could have implications for equity portfolios, and the kind of rise in yields suggested by our cyclical defensive ratio would qualify as sharp.

If interest rates quickly catch up to cyclical stocks, it may be a temporary negative for equity indices as valuations come under pressure. Such a rerating would likely be most damaging to the bond proxies like utilities and consumer staples, and the most expensive growth stocks which make up a large percentage of the index. However, after a period of adjustment, a move higher in rates should ultimately be interpreted as another sign of better growth to come. The bottom line, equity markets have been telling us growth is going to surprise on the upside. Interest rate markets have lagged this move in equities, but could quickly catch up. A sudden, sharp move would likely cause a correction in the equity market, but I'd view it as just a bump in the road of this new bull market and an opportunity to add risk, especially in the more economically sensitive areas that have been leading.

Wharton professor Jeremy Siegel lays out why a record-high stock market in 2020 remains 'a real possibility'

Wharton finance professor Jeremy Siegel still sees a scenario where the stock market breaches new highs before the year is out, despite reopening risks, historic unemployment, and a deep recession.

The Federal Reserve's multitrillion-dollar relief operations offer an unprecedented lift to the recently struggling market and should aid in a run-up through the rest of the year, he added. Couple the hefty stimulus with investors' growing appetite for long-term risk, and stocks could rally to fresh highs before 2021 as buying picks up, Siegel said.

"Believe it or not, it is a real possibility. Given no serious second wave, which could mean just effective therapeutics without even a universal vaccine, my feeling is it's even a likelihood that we will reach it," he told CNBC on Tuesday.

Siegel's comments arrived during a strong market upswing. Investors piled into equities throughout Tuesday as optimism toward reopening efforts grew. The S&P 500 breached 3,000 for the first time since early March before closing just below the threshold.

The Wharton professor said the market's late-March low marks a floor for equity prices unless the coronavirus pandemic flares up again. Stocks' rally through the lockdown could prove too powerful, he added, as the larger firms included in major benchmarks likely performed better than smaller businesses.

"One of the unfortunate things about the lockdown is we've actually improved the prospects of the very companies in the stock market," Siegel said. "We've widened the gap between large and small, and between those people feeling the pain and those people that have their portfolios."

One factor Siegel is less concerned about is the Fed's stepping back from emergency lending. Several market experts see a market correction on the horizon once the central bank unwinds its nine credit facilities and stops its backstopping of the credit market.

The professor expects the Fed's retreat to take place over a long period of time to ensure a steady recovery. As long as that cash remains in the financial system, the economy will likely enjoy a brief bout of healthy inflation, he said.

"There's no way they're taking that back, and as a result, that is all going to be flowing into the stock market and the economy," Siegel said.

(published 27 May 2020)

Add cyclical stocks, says Morgan Stanley

Economies move in cycles. However, these cycles only matter for financial markets at turning points because most of the time the economy is in an expansion phase. Such turning points include periods when growth accelerates or decelerates, but the economy is still expanding. Economic recessions are different, however. These are periods when growth is actually negative and the economy is shrinking. Recessions are also rare, occurring just once per decade in the US.

Therefore, it makes sense that a good part of our investment strategy research centers around cycle analysis. We find it very useful and profitable when properly interpreted. As discussed over the past few months, when it becomes obvious to everyone we're entering an economic recession that usually marks the end, rather than the beginning, of the bear market. In fact, we've shown in our research just how similar this cycle has been to prior recessions with respect to financial markets.

Of course, all economic cycles are unique in some way too, which can affect the rate and sustainability of the recovery while also determining both new opportunities and areas ripe for disappointment. With respect to this recession, we think the primary differentiating feature is the nature of the exogenous shock that triggered it. The pandemic provides a faceless villain that everyone wants to defeat but can't really punish for our economic hardship. In short, there are no bad actors in this recession. This has liberated policymakers to do whatever it takes, both on a monetary and fiscal front, and that is what's very different this time when thinking about the recovery.

More specifically, after the Great Financial Crisis recession of 2008, we got unprecedented monetary policy support with central banks introducing quantitative easing, or QE. To the average person, QE is better known as "money printing." However, these QE programs were uncoordinated at first, with the U.S. initiating its QE program in late 2008, while Japan and Europe waited several years. This time, all three major central banks are printing money at the same time, with the Fed printing more money in this current program than they did in the following three years after the financial crisis.

We're also getting fiscal support this time. After the financial crisis, many governments practiced fiscal austerity, whereas this time we are seeing record setting fiscal deficits led by the US. This coordinated policy mix has led to much faster growth in the money supply. And money supply is a function of both the amount of money on the Fed's balance sheet and the velocity of money in the real economy. This money is flowing into asset prices, but it's also flowing into the real economy. And it's just one more reason why we will likely remain more optimistic on both the rate and sustainability of the recovery. It also means we will continue to suggest investors look for more cyclical stocks as they add equity risk to their portfolios.
- 26 May 2020

Some ideas of cyclical stocks (semiconductors, oil) have been covered in recent articles in this blog.

Robust outlook, limited Covid-19 disruptions for semiconductor stocks: Maybank

SINGAPORE (May 19): Amid the Covid-19 pandemic, semiconductor and equipment companies have been deemed “critical” in many countries. 

Maybank Kim Eng Research analyst Lai Gene Lih says that this means the odds of further virus-induced disruptions to stocks such as UMS Holdings and AEM Holdings are unlikely. 

In fact, the industry’s demand remains intact with supply reverting back to normal levels. 

“Contingent on fundamentals staying intact, we remain accumulators on dips for AEM and UMS,” says Lai in a Monday report. 

Lai notes that AEM and UMS both posted “solid” 1QFY2020 results, and the read-across for both companies remains favourable. Intel and Applied Materials (AMAT), the respective key customers of AEM and UMS, are also progressing with leading edge investments and record orders. 

For AEM, Lai says Intel’s continued spending on 10, 7 and 5nm chips could be a key driver for the counter’s prospects. 

 “While Intel’s “more disciplined” approach to 2020 capex likely infers slight downside to the US$17 billion guidance earlier in the year, it emphasized that spending for 10, 7 and 5nm will be on schedule,” says Lai. 

According to Lai, Intel is banking on a strong data centre business in 1H2020 but is bracing for weaker enterprise and government demand in 2H2020.  

“Intel also sees 2H2020 headwinds from softer PC demands, as well as industrial, retail and automotive end-markets,” says Lai. 

However, he is quick to note that Intel not only has major design wins from Ericsson, Nokia and ZTE, but is also a major silicon provider for 5G infrastructure. 

For UMS, Lai shares that AMAT has enjoyed record orders in 2019, a signal that the company’s demand fundamentals have not been adversely affected by the pandemic. 

“Drivers are unchanged, being sustained spending from logic and foundry as chipmakers continue with development plans at the leading edge, and improving dynamics that is supportive of increased memory investments through FY2020,” says Lai. 

Furthermore, AMAT’s Endura platform, which UMS assembles modules for, is a flagship product for physical vapor deposition (PVD). 

AMAT is also looking forward to strong double-digit growth for the year on the back of a single digit increment in 3QFY2020, followed by a further increase in 4QFY2020.

“AMAT is not seeing strong capacity additions from memory customers, but investments based on technology roadmaps are progressing to plan as this affects the cost structure of memory chipmakers when industries recover,” says Lai. 

“Research found that AMAT gained significant share in PVD in 2019,” observes Lai. “AMAT’s view for sequentially higher revenues over the next two quarters present upside potential for UMS, in our view,” he adds. 

To reflect AMAT’s strong momentum in the near term, Lai has raised its FY2020-22E earnings per share (EPS) forecasts by 3-5%, which would translate to an average return on equity (ROE) of 17.7% for the period. 

Maybank is reiterating its “positive” stance on the semiconductor equipment sector. The brokerage also has “buy” calls on AEM and UMS with target prices of $4.04 and $1.00 respectively. 

As at 12.21pm, shares in AEM are trading five cents higher, or 1.7% up, at $3.07 while shares in UMS are trading one cent higher, or 1.1% up, at 91 cents. 

STI a long term buy

According to Dr Tee's optimism model (updated 14 May 2020), STI is now sitting on long term buy.

Morgan Stanley says we are at the beginning of a new bull market

Today’s stock market looks like March 2009, before the longest bull run in history,

says Morgan Stanley’s Mike Wilson

Published: May 18, 2020 at 12:04 p.m.

By Chris Matthews

Stocks’ value relative to bonds is equal that of 2009

As investors navigate the coronavirus recession, the financial crisis a decade ago looms
large in their collective memory, with pessimists arguing that the resulting bear market
took 18 months to hit its lowest point and optimists countering that swift and decisive action
from the Federal Reserve and Congress this time around has saved the stock market from
that fate.

Michael Wilson, head of U.S. equity strategy at Morgan Stanley is squarely in the bull camp,
arguing in a Monday note to clients that the current stock market looks uncannily like
March 2009, when the U.S. economy was emerging from the crisis, and the
S&P 500 index SPX, +3.15% was beginning its longest bull-market run in history.

“Markets are tracking the Great Financial Crisis period very closely in many ways,” Wilson
wrote, adding that stocks have rebounded in a “similar pattern” to March 2009, at the same
time that the number of individual stocks trading above their 200-day moving average has
begun to climb, supported by “cyclical stocks” like small-capitalization stocks, which typically
lead at the beginning of recoveries.

Another important similarity between the two periods is the equity-risk premium, or 
the expected earnings yield for the S&P 500 minus the 10-year Treasury yield, which 
gives investors a rough estimate of the extra return they’ll get investing in stocks compared 
with risk-free government bonds.

“A significant driver of our bullish call in March was based on the equity-risk premium

reaching the same levels observed in March 2009,” Wilson wrote, referring to his calling a 

stock-market bottom on March 16, just a week before the S&P 500 closed at its recent 

low of 2,237 on March 23.

“If there’s one thing we’ve learned over the past 10 years, it’s that when risk premium 

appears you need to grab it before it disappears,” he said. The risk premium will fall either 

when bond prices fall and interest rates rise or when equity prices rise, thereby reducing 

their expected return.

Though traditional cyclical stocks like small-caps have outperformed of late — the Russell 2000 RUT, +6.10% has risen 8.3% during the past month versus the S&P 500’s 2.9% rise.

— others, like financial stocks have not. In fact, bank stocks are performing worse relative to

the S&P 500 than during the bank-driven financial crisis.

Wilson explained this dynamic by arguing that the very same Fed stimulus that has

truncated the coronavirus bear market is repressing government bond yields in a way that is 

scaring bank investors. “The biggest headwind for banks is the persistently low level of rates,” 

particularly for longer-term debt, Wilson wrote. Low interest rates hurt banks because they 

lower the profit margins they can earn by issuing loans.

But Wilson believes the market is underestimating the chances that longer-term bond yields,

like the benchmark 10-year U.S. Treasury note TMUBMUSD10Y, 0.705%, will rise

significantly as the economy rebounds from coronavirus, and is therefore underestimating 

chances for a huge rally in financial-sector stocks.

He pointed to Congress passing at least $3 trillion in fiscal stimulus, the potential for a faster

and more sustained recovery in the post-coronavirus economy and unexpected inflation as

demand returns before supply chains can adjust as possible catalysts for higher inflation and

long-term interest rates.

“While hypothetical, these are real possibilities and worth considering given current levels of

inflation and 10-year Treasury yields,” Wilson wrote. “We continue to think higher 10-year

rates would be perhaps the biggest surprise to markets at the moment and would have 

significant implications for equity markets and leadership.”

Wilson explained this dynamic by arguing that the very same Fed stimulus that 
has truncated the coronavirus bear market is repressing government bond yields in a 
way that is scaring bank investors. 

“The biggest headwind for banks is the persistently low level of rates,” particularly 
for longer-term debt, Wilson wrote. Low interest rates hurt banks because they lower the 
profit margins they can earn by issuing loans.

But Wilson believes the market is underestimating the chances that longer-term bond
yields, like the benchmark 10-year U.S. Treasury note TMUBMUSD10Y, 0.705%, will 
rise significantly as the economy rebounds from coronavirus, and is therefore 
underestimating chances for a huge rally in financial-sector stocks.

He pointed to Congress passing at least $3 trillion in fiscal stimulus, the potential for a
faster and more sustained recovery in the post-coronavirus economy and unexpected 
inflation as demand returns before supply chains can adjust as possible catalysts for 
higher inflation and long-term interest rates.

“While hypothetical, these are real possibilities and worth considering given current levels
of inflation and 10-year Treasury yields,” Wilson wrote. “We continue to think higher 
10-year rates would be perhaps the biggest surprise to markets at the moment and would 
have significant implications for equity markets and leadership.”

Why Goldman Sachs Says The Market Is In For An 16% Drop Soon

•  May 14, 2020

Pessimism is soon to take over the FOMO that has been driving the market higher since the March bottom. Here’s why. 

As cases of the coronavirus climb to more than 1.4 million in the U.S. and jobless claims rise past 36.5 million since the start of the coronavirus crisis, many are scratching their heads over why the market has been rallying higher amid the worst economic picture seen since the Great Depression.

Goldman Sachs said this week that FOMO, or the Fear Of Missing Out, is what has been driving the market higher. That FOMO appears to be overshadowing the fear of all that’s wrong with the economy.

However, Goldman believes that pessimism will soon take over the market, sending the S&P 500 down nearly 16% over the next three months. 

Goldman chief U.S. equity strategist David Kostin wrote in a report this week that even as fiscal and monetary policy support has helped ward off a full blown financial crisis amid the pandemic, a return to normalcy is still a long way off and investors have gotten ahead of themselves.

“The ‘fear of missing out’ best describes the thought process,” Kostin said as investors feel pressure to chase the recent rally, while warning that it’s a risky move.

“Skepticism abounds regarding the likelihood the rally will continue,” Kostin wrote.

“In six weeks, as the S&P 500 index has soared by 30%, investors have raced from despair at the market bottom to optimism about the economic restart,” Kostin wrote in a note to clients. “A single catalyst may not spark a pullback, but concerns exist that we believe, and our client discussions confirm, investors are dismissing, including $103 billion in expected bank loan losses in the next four quarters, lack of buybacks, dividend cuts, and domestic and global political uncertainty.”

Goldman expects the S&P 500 to drop to around 2,400 over the next three months before rebounding to around 3,000 by the end of 2020. 

Kostin noted that one of the biggest risks moving forward is that investors have been too optimistic that the COVID-19 epidemic in the U.S. has been contained. 

“While New York has thankfully been able to flatten the curve and the rate of growth of new cases has decelerated, new infections in the rest of the U.S. are increasing,” Kostin wrote. “Cases of infection may accelerate as states begin to relax shelter-in-place rules.”

He also warned that “the restart process will take time,” noting that company conference calls with analysts indicate that many executives are predicting a slow recovery to pre-coronavirus crisis profit levels. 

Aside from the domestic picture, Kostin added that “investors may need to contend with another twist in U.S.-China trade and strategic developments, which was at the forefront of investor concerns for much of 2019. The nature of the tension seems multifaceted, going beyond conflicts in merchandising and service trades, with the U.S. administration’s rhetoric and actions towards China turning more hawkish in the past month across various issues and strategic domains.”

THREE REASONS THIS RECESSION WON'T BE WORSE THAN THE GREAT DEPRESSION

1. Unemployment Figures Do Not Paint a Complete Picture

The U.S. economy is losing millions of jobs – there is no sugar coating this fact. But if we take a very close look at the job losses across the economy, we find that a large percentage are furloughs (temporary layoffs) as opposed to permanently shrinking the workforce (data below):

Source: : Zacks Investment Research³

In the current environment, employers appear to be keeping employees close by, in anticipation of the economy’s reopening. A recent survey conducted by Morning Consult found that two-thirds of workers believed that they would return to work for their current employer, which could help restart business much more quickly than if the employer had to rehire.⁴ When employees are asked to return to work, there’s no need for training, recruitment, job search, background checks, ‘onboarding,’ etc., all of which are costly and time-consuming. Workers can return to their jobs and immediately be productive.

Additionally, more than half of job losses have come from hospitality, accommodation, food services, retail trade and other service-sector jobs. Those who can work remotely – typically in high-skilled, higher-income jobs in tech, finance, management, professional services – saw a much smaller change to payrolls in March and April. The implication here, in my view, is that the majority of layoffs come from industries that could resume operations immediately when lockdowns and restrictions are lifted – which is beginning to happen now.

Jobs disappeared during the Great Depression because there was no demand, no capital, no functioning Federal Reserve or financial system. Companies had to permanently restructure – or declare bankruptcy – in droves. There was no safety net during the Great Depression.

Today, businesses are struggling in major ways, but they are also receiving financial support from the government with payroll loans that are in many cases forgivable, and workers across many industries are seeing close to full replacement of income from unemployment insurance under the CARES Act.⁵ This is not a Depression-like outcome.

2. Event-Driven Shock Versus a Structural/Financial Crisis

The collapse of the financial system was one of the major causes of the Great Depression. Today, banks are very well capitalized and the credit markets remain stable. Comparing the financial system during the Great Depression to the financial system today is essentially comparing night to day.

Because the causes of the Great Depression were structural, industrial production fell by more than half during the entirety of the 1930’s. Back then, industrial production was a critical component of the economy. Production trickled higher over a four-year stretch during the mid-1930’s, only to plummet sharply again in 1937-1938.⁶ Again, the Great Depression was a long, grinding decline. The current lapse in production and services is expected to last a few quarters – not years.

Historically, “event-driven” bear markets (which is how I would characterize the current downturn) have been shorter, less severe, and take less time to recover from than structural or cyclical downturns. I do not believe this time will be different.

Source: : Goldman Sachs⁷

3. Policy Mistakes Drove the Great Depression Deeper

Governments and central banks failed miserably in their response to the Great Depression, doing basically the opposite of what needed to be done.

In the midst of the 1930’s downturn, central banks tightened monetary policy in order to maintain the gold standard, resulting in severe deflation which raised the cost of debt and lowered real incomes. The U.S. government equally fumbled the response by putting austerity measures in place (cutting spending) just as the economy needed it most. The government also passed the Smoot-Hawley Tariff Act in 1930 in an effort to help domestic producers, but it only resulted in more pain due to the loss of global demand.

The policy response in the current crisis has drawn from lessons learned during the Great Depression, and the government and central bank are essentially doing the opposite of what they did during the Depression. The U.S. government has spent some $2.9 trillion in stimulus to boost the economy, and the Federal Reserve slashed rates to the zero bound in addition to offering basically unlimited liquidity to the capital markets.⁸ The difference in responses is night and day.

Bottom Line for Investors

I strongly believe the current recession will be shorter, less painful, and will inflict far less damage on households and businesses than the Great Depression. But that’s not to say it will be an easy and painless downturn. All recessions hurt the economy and society at-large, and it will take time to rebuild.

In my view, however, getting the economy back to a strong position may require about 15-18 months, versus the 10+ years that were needed to recover from the Depression. There’s no comparison, in my view.

Instead of letting fearful headlines influence your investment decisions, I recommend staying focused on the fundamentals and the long-term view during this recession. 

(source: Zacks Investment)

This could be the beginning of a tremendous oil rally.

According to https://oilprice.com/Energy/Oil-Prices/This-Could-Be-The-Beginning-Of-A-Tremendous-Oil-Rally.html , WTI will be back at $45-50 by end of the year.

Buy London Property

According to this article https://www.marketwatch.com/story/this-could-be-the-end-of-the-stock-market-as-we-know-it-but-thats-not-necessarily-a-bad-thing-strategist-suggests-2020-05-05 ,

buy real assets such as London property to prepare for the end of stocks.

Will this pan out?

Will a possible Aug crash predicted by this model trigger the next global stock crisis?

ECM

According to Martin Armstrong's Economic Confidence Model, the end for stock market bull run is coming.

Other notable events:
- a commodity bull market is being formed and will run into 2024
- demise of the West  (but not so soon, in 2032)
- rise of China (further out in 2037)

Chips are the place to be in a post-coronavirus world

Buy on any dips

Chips Ahoy!

https://www.theedgesingapore.com/issues/tech/chips-are-down-not-long

Goldman patiently bullish on oil

Goldman Sachs is patiently bullish on oil.

I am gonna ride the oil bull back up!

https://www.reuters.com/article/us-global-oil-research-goldman/goldman-patiently-bullish-on-oil-as-fundamentals-improve-idUSKBN22D61D

A Major Bull Run is Forming in Oil Markets

Came across this article.

Seems coherent with my current belief that oil markets are bottoming.

Read that there will be a commodity bull market which will last until 2024.

https://oilprice.com/Energy/Energy-General/A-Major-Bull-Run-Is-Forming-In-Oil-Markets.html