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mal85 -prospect of inflation -well I noticed bank (ours put up...

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stayer

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30/03/20

12:46

Post #: 43773720
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Originally posted by mal85: ↑

@madamswer @Klogg @MarsC @stayer
People don't know how to analyse the data- including the people advising some governments. Within 2 weeks now, the data will not lie- it is already bearing out the truth. The market has not figured it out yet, although the smart money has.

1. The data reflects actions taken weeks ago and reflects real decisions taken by real people.
2. As with all epidemics, there are two waves- the first was from Wuhan, and the second was from community transmission in Italy which was not picked up.
3. Places which shut borders to China quickly did not have much of a first wave.

Now, the disease causes hospitalisation in somewhere between 5-10% of people. The findings (bilateral interstitial pneumonia) are diagnostic. Hospitals worldwide noticed as soon as 100-1000 cases in a particular region were affected, but this only occurs at day 10 of the epidemic.
Italy got swamped, because it had direct flights from Wuhan that were not ceased in time, due to ties with its fashion industry. Other places did not. The subsequent travel from Italy, has seeded epidemics around the world, and consequently, Europe has suffered the most, then the US and Australia/New Zealand the least. This is in reality what has happened. Now people saying this is not that severe are wrong- the lag to deaths, mean that the fatality rate of 1% is actually very high. I strongly suspect that the places with higher fatality rates (esp Spain and Italy) was due to combination of widespread transmission within hospitals (ie infecting already sick patients) + inadequate testing.

The other thing that the data bears out is that public health works. The most effective intervention is in fact testing and the places that have tested the best have the best outcomes. Quarantine works, and is necessary once case numbers exceed testing and contact tracing thresholds- governments have on the whole done the right thing here, but in some places it has been too late. The only missing bit of information was what the government response would be, ad there has been synchronised confirmed fiscal stimulus (again, the right thing to do). So we are now moving from a paradigm of trickle down economics to a Keynesian reality, due to exogenous forces.

As the realisation that the only way this is paid off in the long term is inflation, people are going to start looking at their cash holdings and realise that equities are the safest place to be. In particular, we have documented proof that Australia and New Zealand will be least affected (by chance of geography + very coordinated early action). Fiscal stimulus will work, as, with the wars, there is a huge need for economic productivity to meet the demands of tackling this virus. Ie there are obvious places where money will have to be spent. So in Australia, we have one of the most skilled, most diverse countries in the world, with what will be the least affected country, and we have had to date one of the worst affected sharemarkets.

When the people managing money in Australia wake up to the prospect of sitting on cash with the prospect of inflation, we are going to be in for a nice ride. I am set.

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mal85 -prospect of inflation -well I noticed bank (ours put up rates on 2yr and 3 yr loans in past week if we want to fix- i have not checked the markets thoroughly if that is a bank margin increase exercise or a market rate change)

thing is, the low rates was what drove market so high! But yes , we have a big enough correction in play that a small increases in rates are not a huge issue but the recovery in the economy will be what drives it.

I still had no comment from anyone re my post about gfc lows and me indexing it by retained earnings and getting the 4400 to 4500 level!!?

I have said re the market it is more a medical question but most medical experts are not pragmatic enough and scared by some Euro countries and the U.S.A.(we all are/were and its a tragedy) - but, there has been a taper again in most of those badly hit Euro countries- Germany is a shining light, France perhaps tapering off before it got like Italy and Spain . It seems herd immunity is too slow to kick in (and comes at huge loss of life) and Netherlands which was adopting that is having a slowdown in new cases but they may have changed strategy i think!

I guess here we will have another blowout of sorts in new cases before hopefully the final taper- the big worry from the market point of view is how long governments remain cautious for!!!??? And at any rate , I cant see the government baling out shareholders in many of these companies -what is full value of asx? About 2 trillion and if you take into account private companies and landlords you have likely 8 trillion or more (madamswer likely has numbers at fingertips) so 10% fail and it is one trillion! I had been hopeful of a three week to one month shutdown of sorts, but the worry is if it drags!! Yes, there are still good buys but I am being more cautious and have sold a few more speccie types.

You know I have been positive on the big sell off days -but I have taken some money out on stocks that have had a good announcement or a good run relatively - like CDY today and sold some MTS , MP1 - not csl yet but was toying Fri at over $300!
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