Investing in the post-Covid world: Picking the survivors and avoiding the zombies Today on @BloombergTV with @flacqua Link
Alberto Gallo Mon 06 Jul 2020 09:43- Things no longer exist: Dinosaurs Audio cassettes Positive risk-free returns Discussing today @BloombergTV with @flacqua Alberto Gallo Mon 06 Jul 2020 08:13
- "Covid did a lot to discredit those who believe there are easy and simplified solutions to complicated problems and those that always want to hold somebody else accountable for their own shortcomings. It doesn't work when you have to save lives." via @FT Link Alberto Gallo Mon 06 Jul 2020 05:33
- When traditional asset allocation no longer works, credit can be better than equity for yield seeking investors (and gold or inflation protected securities better than government bonds): via @FT Link Alberto Gallo Tue 30 Jun 2020 09:59
- When traditional asset allocation no longer works, credit is be better than equity for yield seeking investors (and gold/inflation protected securities better than government bonds): via @FT Link Alberto Gallo Tue 30 Jun 2020 07:08
- Monday macro thoughts: - China: industrial profits back to pre-Covid levels - Europe: looking at €750bn stimulus plan approval in July/August. Watch the next Eurogroup meeting - US/UK: fragility in healthcare/social system exposed by early reopening (see below, via JP Morgan) https://t.co/7IONFFB1wR Alberto Gallo Mon 29 Jun 2020 16:33
- RT @huwsteenis: The scandal at Wirecard has not only exposed $1.9bn fraud in the accounts & profound failures of oversight It's also raise… Alberto Gallo Mon 29 Jun 2020 16:28
- RT @heimbergecon: Politicians, economists and the media have been using distorted images of Italy and the Italian economy. How do we reduce… Alberto Gallo Fri 26 Jun 2020 08:20
- RT @VMRConstancio: Global Britain after Brexit. The pound “ resembles the underlying reality of the British economy: small and shrinking wi… Alberto Gallo Wed 24 Jun 2020 19:38
- Good #ZIRP morning: Today, Austria is getting a €13bn order for its second 100-year bond issue, at around 0.88% yield. Will the new perform as well as the previous one, below? https://t.co/FY2wGoAr6L Alberto Gallo Wed 24 Jun 2020 10:13
- Good #QEinfinity morning: A second blog post by @NYFedResearch @LibertyStEcon on #YieldCurveControl, looking at Japan's experience: Link (The first post was from April, here: Link). Japanification feels just one step Alberto Gallo Mon 22 Jun 2020 12:46Matthew Higgins and Thomas Klitgaard In September 2016, the Bank of Japan (BoJ) changed its policy framework to target the yield on ten-year government bonds at “around zero percent,” close to the prevailing rate at the time. The new framework was announced as a modification of the Bank's earlier policy of rapid monetary base expansion via large-scale asset purchases—a policy that market participants increasingly regarded as unsustainable. While the BoJ announced that the rapid pace of government bond purchases would not change, it turned out that the yield target approach allowed for a dramatic scaling back in purchases. In Japan’s case, the commitment to purchase whatever was needed to keep the ten-year rate near zero has meant that very little in the way of asset purchases have been required. Easy Monetary Policy but Stubbornly Low Inflation Inflation began falling in Japan after the collapse of the so-called “Bubble Economy” in the early 1990s. By...
- RT @RetoGregori: Every nation at one point or another claims to be superior to others. They're all wrong, says @andreaskluth https://t.co/k… Alberto Gallo Sun 21 Jun 2020 03:55
- RT @ProjectLincoln: The American people need to see this. Donald Trump has mismanaged this crisis we're in so profoundly, that it's almos… Alberto Gallo Sat 20 Jun 2020 09:34
- Conclusions: Policymakers need to give better answers to long-term issues. Investors need to navigate this environment with a different approach vs traditional portfolio construction. To read more => Link https://t.co/2t2z9L8W4k Alberto Gallo Fri 19 Jun 2020 12:58
“I’d like to share a revelation that I’ve had during my time here. It came to me when I tried to classify your species and I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus.”Agent Smith, The Matrix, 1999
- The result is, once again, we are avoiding the worst of the crisis, but paying for that with a bumpier recovery. What will be the cost of more QE and large fiscal stimulus? https://t.co/InBzKHaSPG Alberto Gallo Fri 19 Jun 2020 12:58
- In other words, policy responses have focused on the short term result - winning the battle - but making our economic and financial system more fragile in the process. (with inspiration from @nntaleb) https://t.co/cdoLE9o7jk Alberto Gallo Fri 19 Jun 2020 12:58
- In financial markets, this is reflected by a binary, bi-polar distribution of returns and volatility: there are fewer days of bad weather, but when it rains - it's a hurricane. This calls for more active/bar-belled portfolio construction. https://t.co/50iT7ANytw Alberto Gallo Fri 19 Jun 2020 12:58
- This leaves us to deal with even wider divisions across our economy, e.g. between small and large firms, as well as society. https://t.co/wNOpnxfVX9 Alberto Gallo Fri 19 Jun 2020 12:58
- The policy stimulus has been sheer in size, but often implemented through blanket, one-size-fits-all measures (corporate tax cuts or lower interest rates, aka #QEinfinity, rather than targeted SME stimulus). https://t.co/vN1cCczxSR Alberto Gallo Fri 19 Jun 2020 12:58
- The bad news is stronger countries with a better healthcare system (X axis) have come out stronger with a lower contagion factor, while poorer countries have generally lost. The result is a more unequal world. https://t.co/JWvpJh00B6 Alberto Gallo Fri 19 Jun 2020 12:58
- In the war against the virus, policymakers have won the first battle, not the war (1/n) The good news is that countries are recovering, in some cases to pre #COVID19 levels, in ground mobility. https://t.co/4q1VhWLwSP Alberto Gallo Fri 19 Jun 2020 12:58
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- Absent policies to reduce inequality and improve productivity, access to education/healthcare, reduce debt-dependence in the financial system, reform tax systems, economies are likely to remain stuck in a #QEinfinity trap for longer. To read more: Link https://t.co/bKVCOGVcqw Alberto Gallo Thu 11 Jun 2020 22:01
“I’d like to share a revelation that I’ve had during my time here. It came to me when I tried to classify your species and I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus.”Agent Smith, The Matrix, 1999
- Central banks and policymakers need to give better answers on social and corporate inequality. These will affect which steady-state economy we will go back to over the coming years. https://t.co/xvHqrgv54D Alberto Gallo Thu 11 Jun 2020 22:01
- While though fiscal stimulus is, unlike in 2009, aimed at Main Street (SME loans, income subsidies) and not only as Wall Street (tax cuts) - monetary stimulus remains a one-size-fits-all tool. Income/wealth/education/healthcare inequality remains high, in spite of policy efforts. https://t.co/ifZcGCfkCh Alberto Gallo Thu 11 Jun 2020 21:51
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