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Drumbeats of the Epocalypse: The Economic Death March Has Come to Town!

Drumbeats of the Epocalypse: The Economic Death March Has Come to Town! 

Photo of breadlines during the Great Depression

The coronavirus pandemic inflicted a “swift and massive shock” that has caused the broadest collapse of the global economy since 1870 despite unprecedented government support, the World Bank said.

“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu….

The depth of the crisis will drive 70 to 100 million people into extreme poverty.

Yahoo! News

The Depression is deep, and the pain is wide.

Yet, the NADAQ is a rocket, attempting to break out of earth’s atmosphere. As I wrote several days ago and reiterated yesterday, saying I’d follow up with greater detail today, this bubble in stocks is the most extreme euphoria ever seen. It will, however, blow when the initial burst of good news from reopening gives way to the reality of all that did not recover after reopening.

That endless lineup of headlines is arriving now.

Since COVID-19 has been rebuilding its claimed outbreaks around the nation in the news, the market has become troubled, knocking the S&P 500 and the Dow back down to that seemingly magical 61% retracement fibonacci line on the charts that really big rallies after really big crashes like to top out at. 

As I mentioned yesterday, the Nasdaq has pressed on ahead in a tear. Here is how it looks relative to the rest of the economy (GDP). See if this picture looks stable to you:

Northman Trader

And how well did that work out last time?

“Ahh,” you may say, “but this time it is only because then denominator (GDP) has crashed so hard.” 

“Nay,” I say.

…click on the above link to read the rest of the article…

Market Update: A Titanic Disaster Ahead?

Market Update: A Titanic Disaster Ahead?

Tech stocks now in a classic blow-off top

At this point, as go the leading Tech stocks, so go the markets.

So much capital has crammed into the tech sector this year that it boggles the mind. Tech stocks now make up 40% of the market cap of the S&P 500.

And despite their huge size, they continue to race higher. Nearly. Every. Single. Day.

Here’s a chart of six of the biggest tech companies. Over just the past 7 trading days, they have increased a combined total of half a trillion dollars in market cap. That’s $500 billion, folks — in just a week!

Big tech stocks gain $500 billion in past 7 trading days

(Source)

Looking at Amazon’s (AMZN) stock price, up nearly 20%(!) since the start of July, we see a trajectory that we’re familiar with — a near-vertical blow-off top:

AMZN stock chart

(Source)

This is the classic manic ending to an asset price bubble — as seen when Bitcoin hit 19,000 in late 2017 and when silver hit $49/oz in 2011. For further affirmation, watch this short video chapter from Crash Course on Bubbles.

In a way, this is comforting to see because it gives us confidence this insane, mindless, unjustified market euphoria will end soon. We just need to be prepared for the predictable violent aftermath when it does.

As we do each week, we’ve once again asked the lead partners at New Harbor Financial, Peak Prosperity’s endorsed financial advisor, to share their latest insights on the end of Great Tech Bubble and what comes next.

We spend a fair amount of time in this week’s video asking New Harbor for actionable options to protect recent gains from a potential pull-back, as well as how to position for a larger market melt-down if indeed Tech soon reverses and we experience a crash greater in magnitude than what we suffered in February:

…click on the above link to read the rest of the article…

Game Over Spending

Game Over Spending

Second quarter 2020 came and went like a California wildfire.  The economic devastation caused by the government lockdowns was swift, the destruction immense, and the damage lasting.  But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace.

The Dow booked its best quarter in 33 years.  The S&P 500 posted its best performance since 1998.  And the NASDAQ had its biggest increase since 1999…jumping 38.85 percent in just three months.

The economy, on the other hand, was severely scorched.  Decades of debt had built up like dead wood amongst a forest understory.  Then, at the worst possible time, government lockdown orders sparked a match and set it ablaze.

The results were predictable to everyone but the experts.  Supply chain disruptions followed by retail disruptions, followed by declining sales, followed by disappearing cash flow, followed by layoffs, followed by business closures, followed by shrinking tax receipts, followed by unserviceable public and private debt, followed by mass bankruptcies, followed by riots, followed by full societal breakdown.  The economic wildfire raged through so fast most people don’t comprehend what has happened.

The interim solutions from Washington, in concert with the Federal Reserve, have been to add more fuel.  That is, the solutions have centered around mega efforts to paper over the economic depression with massive amounts of fake money.

Money Printer Go BRRR

Mass corporate bailouts were just the beginning.  Payroll Protection Program (PPP) loans were made to over 650,000 small businesses, including presidential candidate Kanye West’s clothing brand, Yeezy, and Grover Norquist’s anti-tax group, Americans for Tax Reform.

On top of that, the Fed began creating money from thin air for the purpose of buying individual corporate bonds.  As of June 28, the Fed’s bought $428 million worth of corporate bonds in 86 different companies.  These companies include Berkshire Hathaway Energy, McDonald’s, Southwest Airlines, CVS, AT&T, Boeing, Coca-Cola, Exxon Mobil, Ford, Walmart, United Health Group, Philip Morris International, and many, many more.

…click on the above link to read the rest of the article…

TOTAL MARKET INSANITY: Toyota vs. Tesla

TOTAL MARKET INSANITY: Toyota vs. Tesla

The present market insanity reminds me of the similar mentality of Americans right before the 1929 stock market crash and the pre-1999 Tech Bubble.  However, the big difference today is that technology has destroyed the ability of investors to understand the meaning of VALUE.  The notion that technology makes the world better fails the test of time, especially when you read Joesph Tainter’s book, THE COLLAPSE OF COMPLEX SOCIETIES.

The new generation of millennials and even the baby-boomers have fallen HOOK, LINE, and SINKER for the glamour and glitter of technology.  So, if we ask most Americans about our future energy predicament, their knee-jerk reply is that “Technology will solve all of our problems.”  This is quite hilarious when, in fact, complex, sophisticated technology is a massive ENERGY BLACK HOLE.  The more technology we throw at a problem, the more energy is consumed.  

Thus, this brings me to my comparison of Toyota Motors vs. Tesla Inc.   Toyota was the largest auto manufacturer in the world in 2018 but was overtaken by Volkswagon last year.  Toyota didn’t produce any electric cars in 2019 but plans on rolling out ten new EV models in 2020.  However, if we compare the market fundamentals for Toyota and Tesla, investors have gone completely insane.

Currently, Tesla’s market cap is worth $259 billion compared to $206 billion for Toyota.  Why did investors push Tesla’s stock up to $1,400 a share ($259 billion market cap) when its total revenues in 2019 were only a little more than Toyota’s net income profits?  As you can see, Toyota posted $19 billion in net income profits on total revenues of $278 billion compared to Tesla’s $862 million net income loss on $24.3 billion in revenues.

Again, a perfect example of the investor mindset today.  Profits don’t matter, just technology, regardless if it continues to lose money.

…click on the above link to read the rest of the article…

Who Will Get Hit When Collateralized Loan Obligations (CLOs) Blow Up? Banks or Unsuspecting “Market Participants”?

Who Will Get Hit When Collateralized Loan Obligations (CLOs) Blow Up? Banks or Unsuspecting “Market Participants”?

Answers emerge from the murky business of CLOs.

There has been quite some hoopla surrounding Collateralized Loan obligations (CLOs) because the underlying leveraged loans – junk-rated loans often used by private equity firms to fund leveraged buyouts (LBO) and other high-risk endeavors such as special dividends – are now starting to come apart. There are approximately $700 billion in US-issued CLOs outstanding.

US banks hold $99 billion of these CLOs, according to S&P Global Market Intelligence. The rest are held by various institutional investors, such as insurance companies, pension funds, mutual funds, hedge funds, private equity firms, and the like. They’re also held by entities overseas, including certain banks in Japan that have gorged on these US CLOs. But that’s their problem.

One third of the CLOs in the US banking system are held by just one bank: JPMorgan Chase; and 80% of the CLOs in the US banking system are held by just three banks. But at each of these three gigantic banks, CLOs account for only 1.2% to 1.3% of total assets (total asset amounts per Federal Reserve Q1 2020):

  • JPMorgan Chase: $34.0 billion in CLOs = 1.3% of its $2.69 trillion in assets.
  • Wells Fargo: $24.6 billion in CLOs = 1.2% of its $1.76 trillion in assets.
  • Citigroup: $21.4 billion in CLOs = 1.3% of its $1.63 trillion in assets.

In 11th position down the list is the second largest bank in the US, Bank of America, with just $807 million in CLOs, accounting for barely over 0% of its $2.03 trillion in assets.

In other words, the largest four banks in the US hold $81 billion of the $99 billion of CLOs in the US banking system – but given the gargantuan size of their assets, this percentage-wise small CLO exposure is the least of their problems.

…click on the above link to read the rest of the article…

Blain’s Morning Porridge – June 29 2020: What if it’s just begun?

Blain’s Morning Porridge – June 29 2020: What if it’s just begun?

What if the real pain is still to come?

“That about sums it up for me..”

There is an amusing piece on the FTs’ Alphaville listing 20 things investors should look for when trying to work out who will be the next Wirecard. You don’t need to be a financial genius to work out which company they might be talking about… It’s a basic wake-up call. In periods of economic darkness, its all-to-easy to be persuaded as to the efficacy of snake oil. If something over-promises, makes lots of noise while underdelivering, and is basically a personality cult – then it’s long-term unlikely to be a particularly successful investment.

Back in the real world…

We are nearly half-way through 2020. Although we’ve been shocked, surprised and buffeted by the Virus, and buoyed by the swift and effective intervention of Governments to support companies and mitigate job losses while Central Banks have calmed markets with the opium of QE Infinity, I can’t help wonder if the real earthquake is yet to come. 

I am still bullish about long-term recovery as we adapt to the virus and it spurs a new tech development age. But I can’t help feeling deeply uneasy about current markets and the resilience of global financial systems. 

This crisis is unlike anything I’ve experienced before. Normally a market crash is explosive event – it occurs when something in the financial sphere breaks; like confidence in housing and financial systems in 2007, or valuations in the Dot.Com crash, or faith in credit constructs like during the European Sovereign Debt crisis in the 2010s. In each of case of financial mayhem I’ve experienced since the Great Perp Crash of 1986, the initial shock and horror gradually lessens as the market discounts the shock, shrugs it off, and carries on. 

…click on the above link to read the rest of the article…

Global Trade Recovery Could Be Weakened By Multiple Disputes

Global Trade Recovery Could Be Weakened By Multiple Disputes

According to CPB Netherlands Bureau for Economic Policy Analysis, world trade experienced an “unprecedented” decline in April as major economies suffered from strict lockdowns due to coronavirus. The volume of global trade in goods dropped by 12.1% MoM in April (the largest monthly contraction since records began in 2000). On a three-month moving average, the index was also down 7.2% in April (largest decline since March 2009) and should contract even more in May.

However, WTO Director‑General, Roberto Azevêdo, noted that “The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse.” In the details, the latest WTO report highlighted that “In light of available trade data for the second quarter, the April forecast’s pessimistic scenario, which assumed even greater health and economic costs than what had transpired, appears less likely.”

As a matter of fact, latest high frequency data suggest that the worst seems behind us (if there is no second coronavirus wave later this year) with the Baltic Dry Index recovering since late May/early June. Looking at the 20-day moving average, the index could even turn positive on a YoY basis in early July.

The ongoing normalization (reopening) in China, Eurozone, several U.S. states and Asian countries imply that both private investment and household expenditures will mechanically rebound from 3Q20 so that global trade growth will exit almost two years of recession.

Nevertheless, excluding several risks such as a second coronavirus wave, several trade disputes could slow the recovery. First of all, the long-lasting clash between U.S. and China. Despite positive comments from U.S. officials, the latest figures showed that, even if China boosts significantly its purchases of U.S. goods, it will be far from meetings U.S. demands defined in the “phase one” agreement.

…click on the above link to read the rest of the article…

The #1 Question I am Receiving From Readers

The #1 Question I am Receiving From Readers

Could the markets crash again?

This is the #1 question I’m receiving from subscribers. When I ask them why they’re concerned, the #1 explanation is that the economy is in a recession/depression and yet stocks are close to or have already hit new all-time highs.

Let’s dissect this way of thinking…

First and foremost, we need to dispel the myth that the stock market and the economy are closely related.

As Puru Saxena has noted, between 1972 and 1982, the US economy nearly tripled in size from $1.2 trillion to $3.2 trillion. And yet, throughout that entire period the stock market traded sideways for ZERO GAINS!

In contrast, from 1982 to 2000, the US economy again nearly tripled in size from $3.2 trillion to $10 trillion. But during this particular time, the stock market exploded higher rising nearly 1,500%!

So, we have two time periods in which the economy nearly tripled in size. During one of them, the stock market went nowhere, while during the other, the stock market rose nearly 1,500%.

Again, stocks have little if any correlation to the economy. There are times when stocks will care a lot about the economy, but those time periods are usually short and due to an unexpected surprise (like the surprise of the economy being shut down to deal with the COVID-19 pandemic).

So, what do stocks care about?

Liquidity.

Historically, whenever central banks start printing money at a rapid clip, stocks do well. A great example of this is the time period from 2008 to 2016 when the economy was weak at best and flatlining at worst. But because the Fed printed over $3.5 trillion during this time period, socks soared, rising over 100%.

Which brings us to today… stocks are rallying hard yet again, despite the economy being extremely weak.

The reason for this is because of the TSUNAMI of liquidity policymakers are throwing at the financial system.

…click on the above link to read the rest of the article…

Market Begins To Internalize Reality

Market Begins To Internalize Reality

Summary

  • The financial media is beginning assign blame to the recent stock market weakness to the spike in COVID cases and the potential for a November Democratic sweep of the White House and both chambers of Congress
  • Nothing new to GMM as we have been on this early and stood alone
  • The stock market’s valuation is at a historical extreme
  • The stars are aligned for a nasty and protracted bear market. Timing is anyone’s guess
  • The Fed has created an asset scarcity induced stock market bubble, similar to the Beanie Baby bubble of the late 1990s

In graduate school,  Rudy DornbushJacob Frankel, and Michael Mussa, all giants in the field of macro and international economics,  gave a seminar to our economics department.  I was invited to dinner with them along with the department’s international economics professors.  The one take-away from that dinner was a comment seared into my mind by Jacob Frankel, who went on to become the Governor of the Bank of Israel  and now serves as Chairman of JPMorgan Chase International.

Why Markets Do What They Do

Over dinner, he laughingly mocked the financial media for their propensity to assign specific reasons for why the market did what it did on a daily basis.  He quoted two diametrically opposed and contradictory headlines, one from the NY Times and the other from the LA Times, which explained why the market was down that day.   That comment has stuck with me throughout my career — nobody knows what really causes the stock market to do what it does on a daily basis.  The best, and the safest explanation I have heard on a down day, for example, is  “there were more sellers and buyers,” which doesn’t even suffice.  The comment should be qualified, “there were more sellers than buyers at yesterday’s closing prices.”

…click on the above link to read the rest of the article…

Wild Ride to Nowhere Since Jan 2018: What the US Stock Market Looks Like Minus APPL, MSFT, AMZN, GOOG, FB

Wild Ride to Nowhere Since Jan 2018: What the US Stock Market Looks Like Minus APPL, MSFT, AMZN, GOOG, FB

Entire market of 3,451 stocks minus “Giant 5” is down 1% from Jan 2018. But wow, the volatility! You would have been better off with a despicable freaking savings account.

The market capitalization of the five largest stocks combined – the “Giant 5:” Apple, Microsoft, Amazon, Alphabet, and Facebook – rose to a new record today of $6.18 trillion. Since their combined low point on March 16, their market capitalization has soared by 51%. That’s an increase of $2.1 trillion in a little over three months. Since January 2017, my Giant 5 index has soared by 164% (market cap data via YCharts):

So how big did they get?

The overall stock market capitalization, as measured by the Wilshire 5000 Market Cap Index tracking 3,451 US-listed companies, ticked up to $31.8 trillion, up by 41.6% from its low on March 23.

Today, the “Giant 5” accounted for 19.4% of the total US stock market capitalization, as measured by the Wilshire 5000, a new record. On January 3, 2017, the Giant 5 had accounted for 10% of the Wilshire 5000. In the three months since the crash in March, the share of the Giant 5 has soared from abound 16% to 19.4% today (Wilshire 5000 data via YCharts):

But wait… Performance of Wilshire 5000 without “Giant 5.”

Let’s take the five largest stocks out of the largest stock market in the world, with 3,451 companies, and see what’s left over. What’s left over is now valued at $25.7 trillion. It’s up by 28.4% from the March 23 low, and while that’s till strong for a three-month rally, it’s a far cry from the 51% for the Giant 5.

And here is the thing: All these companies combined, minus the “Giant 5,” are way below their peak in February 2020, and below a whole bunch of other dates before then, and below where they’d first been in at the end of January 2018.

…click on the above link to read the rest of the article…

The Fed Just Admitted It Won’t Stop Printing Money For YEARS… Here’s How to Profit From This

The Fed Just Admitted It Won’t Stop Printing Money For YEARS… Here’s How to Profit From This


The Fed will soon be buying stocks.

Earlier this week, the Fed announced that it will begin buying corporate bonds from individual companies. Before this announcement, the Fed was already involved in the:

  • The Treasury markets (US sovereign debt)
  • The municipal bond markets (debt issued by states and cities)
  • The corporate bond markets by index (debt issued by corporations)
  • The commercial paper markets (short-term corporate debt market)
  • And the asset-backed security markets (everything from student loans to certificates of deposit and more).

With the introduction of individual corporate bonds, the Fed is now one step closer to buying stocks outright.

Indeed, the Fed has made ZERO references to stopping its monetary madness. Just yesterday Fed Chair Jerome Powell emphasized to Congress that the Fed is “years away from halting its assets monetization scheme.” 

Again, the Fed is explicitly telling us that it plans on buying assets (Treasuries, municipal bonds, corporate bonds, etc.) for years to come.

The next step will be for the Fed to buy stocks.

It won’t be the first central bank to do so…

The central bank of Switzerland, called the Swiss National Bank has been buying stocks for years. Yes. It literally prints money and buys stocks in the U.S. stock markets.

Then there’s Japan’s central bank, called the Bank of Japan. It also prints money and buys stocks outright. As of March 2019, it owned 80% of Japan’s ETFs.

Yes, 80%.

The BoJ is also a top-10 shareholder in over 50% of the companies that trade on the Japanese stock market.

If you think this can’t happen in the US, think again. The Fed told us in 2019 that it would be forced to engage in EXTREME monetary policies during the next downturn.

…click on the above link to read the rest of the article…

If Stocks Don’t Hold Here We Could See Another Crash of Sorts

If Stocks Don’t Hold Here We Could See Another Crash of Sorts


Stocks have fallen hard over the weekend again. The media is pinning this drop on the potential for another COVID-19 pandemic, but the facts don’t support that theory.

At times like these, it’s essential to ignore narratives, and focus on price. With that in mind, the S&P 500 remains in an uptrend, barely (blue lines in the chart below). Stocks need to hold here for the bull market case to remain intact. 

If stocks break down from here, there are two items in play. One is support at 2,940 (lower green line in the chart below). The other is the gap established by the open on May 18th (blue rectangle in the chart below).

When we plot the S&P 500 against the VIX (inverted), it looks like there’s more downside to go here.

However, both breadth and credit suggest the downside is limited here.

My point with all of this is that today the market is literally a crap shoot. The easy money from the rally has been made, and the next trend is not clear yet. So now is NOT the time to be putting a load of capital to work.

However, if stocks don’t hold here, we could potentially see a crash down to 2,700.

That is a high reward type move. And one we need to consider.

Weekly Commentary: Extraordinary Q1 2020 Z.1 Flow of Funds

Weekly Commentary: Extraordinary Q1 2020 Z.1 Flow of Funds

Financial crisis erupted in March. The Fed slashed rates at a March 3rd emergency meeting – and then began aggressively expanding its holdings/balance sheet (creating market liquidity). Even from a “flow of funds” perspective, it was one extraordinary quarter.

Total Non-Financial Debt (NFD) surged a nominal $1.597 TN during the first quarter ($6.379 TN seasonally-adjusted and annualized!) to $54.325 TN. This was the strongest quarter of NFD growth on record (blowing past Q1 2004’s $1.234 TN). Indeed, Q1 growth surpassed full-year NFD expansions for the years 2009, 2010, 2011 and 2013. This pushed one-year growth to $3.271 TN (6.2%), significantly exceeding 2007’s record $2.521 TN expansion. NFD increased $20.857 TN, or 59%, since the end of 2008. NFD as a percentage of GDP rose to a record 260%. This compares to previous cycle peaks of 226% (Q4 ‘07) and 183% (Q4 ’99).

Financial Sector borrowings jumped $963 billion during Q1, surpassing the previous record $656 billion from Q3 ’07. This pushed one-year Financial Debt growth to $1.247 TN (7.6%), the strongest expansion since ‘07’s $2.065 TN.

Total Credit (Non-Financial, Financial and Foreign) surged nominal $2.391 TN for the quarter to $77.861 TN, surpassing previous record growth from Q1 ‘04 ($1.512 TN). One-year growth of $4.790 TN was the strongest since 2007. Total Credit jumped to 362% of GDP, the high going back to 2010.

Federal Liabilities (excluding massive “contingent”/off balance sheet liabilities) jumped to $22.0 TN during Q1. At 102%, Federal Liabilities surpassed 100% of GDP for the first time in at least six decades. For perspective, Federal Liabilities ended the seventies at 50% of GDP; the eighties at 63%; the nineties at 59%; and 2010 at 85%. It would not be surprising to see this ratio approach 150% over the next three to five years.

Outstanding Treasury Securities jumped nominal $500 billion during the quarter to a record $19.518 TN. This pushed one-year growth to a staggering $1.612 TN (9.0%) and two-year growth to $2.472 TN (14.5%). Treasuries ballooned $13.467 TN, or 223%, since the end of ’07. Treasuries-to-GDP jumped to 91%, more than doubling the 41% from the end of 2007.

…click on the above link to read the rest of the article…

Inequality On Rise – Many Of 99% Dirt Poor As Rich Gain

Inequality On Rise – Many Of 99% Dirt Poor As Rich Gain

Inequality has soared over the last several months with billionaires seeing huge gains in their wealth while many people are getting slammed. Much of the adverse effect on the average American has so far been masked by trillions of dollars flowing from the government in the way of temporary stimulus checks. The covid-19 crisis and how it has been handled by the governments and the central banks have resulted in creating a twilight-zone economy. The moment the current $600 a week federal unemployment benefits run out at the end of July, many people will find they are caught in a financial vise with few options. Getting that unemployment money is the biggest reason many people who’ve lost jobs are able to keep a roof over their heads. Knowing many of these people are not going back to work is a big problem. You are not alone if you are having difficulty reconciling the growing divide between Wall Street markets that seem totally ignoring economic reality.

Many market watchers and pundits are troubled and confounded by the recent market action. Several explanations exist with each one having some validity but great uncertainty remains. In a manipulated environment such as we have today where markets are propped up and manipulated with no true price discovery, all investments have become risky. The markets are reflecting a V-shaped recovery that Citigroup warns may be far too optimistic.

A slew of new investors, most inexperienced, have stepped into the breach and bought the dip under the impression it will lead to prosperity. This is evident in the area of the most shorted stocks which are on such a rant as those most negative on the economy are forced to capitulate to a soaring market. This is occurring while Citi writes its model still shows that a greater than 70% probability of a down market in the next 12 months remains.

…click on the above link to read the rest of the article…

Central Banks Bailed Out Markets To Avoid Trillions In Pension Losses

Central Banks Bailed Out Markets To Avoid Trillions In Pension Losses

The Organization for Economic Co-operation and Development (OECD) recently published a report showing how pension funds in OECD countries recorded a massive loss of approximately $2.5 trillion during the stock market meltdown in February through late March. Shortly, after that, central banks intervened with monetary cannons to rescue stock markets and other financial assets to avoid pension returns from going negative. 

The spread of COVID-19 worldwide and its knock-on effects on financial markets during the first quarter of 2020 are likely to have reversed some of these gains. Early estimates suggest that pension fund assets at the end of Q1 2020 could have dropped to USD 29.8 trillion, down 8% compared to end-2019 [or about a $2.5 trillion loss]. 

The drop in pension fund assets is forecast to stem from the decline in equity markets in the first quarter of 2020. Returns, inclusive of dividends and price appreciation, were negative on the MSCI World Index in the first quarter of 2020 (-20%), and between -11% and -24% on the MSCI Index for Australia, Canada, Japan, the Netherlands, Switzerland, the United Kingdom, the United States.

An increase in the price of government bonds that pension funds own could partly offset some of the losses that pension funds experienced on equity markets in Q1 2020. Some Central Banks, such as the Federal Reserve in the United States, cut interest rates in 2020 to support the economy. The fall in interest rates may lead to an increase in the price of government bonds in the portfolios of pension funds as the yields of newly issued bonds decline. – OECD

Bloomberg’s Lisa Abramowicz pointed out in a tweet, “this report [referring to the OECD report] shows the massiveness of pension assets & points to why central banks are tethered to bailing out markets: social infrastructures depend on their not going down too much.” 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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