Exogenous event required for recessions. COVID-19 is that event. Vimal Gor
"You need exogenous events to take us into recessions. I believe this is that event." Vimal Gor, Head of Bond, Income & Defensive Strategies at Pendal Group. I suspect that Vimal may be one of the smartest fixed interest managers in Australia. To be an excellent fixed interest manager, you must have an extremely good handle on what is happening in economics - globally and in Australia .... and Vimal definitely has an extremely good understanding of that. http://puzzlefinancia
COVID-19 could trigger next GFC, Ariel Investments Rupal Bhansali
The coronavirus could trigger the next financial crisis but the underlying cause will be subprime corporate loans, contrarian investor and chief stock picker for the $19 billion Ariel Investments Rupal Bhansali warns. Recently inducted into Barron’s investment roundtable of Wall Street’s 10 smartest investors, Ms Bhansali is visiting Melbourne and Sydney for a women in super event, but isn't overreacting to the dive in global markets yet. Ms Bhansali has a "bearish view of th
There are times to sell. Now is one of those times.
There are so many historic extremes now, on at least a 170-year perspective, that "bad stuff" will happen.... another global financial crisis. In the coming crisis, I think it is highly likely that it will be more severe than during the 2008-2009, where Australia avoided the worst of that crisis, because China's massive infrastructure stimulus rescued Australia. Some argue that it is "it is too hard" to try to time the market, and therefore you should not try. The last 170-ye
Corporate debt bubble likely burst by COVID-19.
22-Feb-2020 Chris Joye reminds us that the next global financial crisis likely to be centred on sub-prime corporate debt: As this column has repeatedly warned, credit spreads on high-yield, or sub-investment grade (aka "junk") corporate bonds, and more robustly rated “investment-grade” corporate debt in the US have slumped to below the absurdly low levels last evidenced in the heady days of 2007. Concurrently, there has been a surge in riskier corporate lending. Writing in a
"Tidal wave of central bank liquidity" ... has "bid up asset prices to unprecedented
"Despite a range of existential risks, markets are riding a wave of central bank liquidity to bid up assets to new highs." " Actually, it would be more accurate to state that central banks have been blowing bubbles left, right and centre by buying assets themselves, crowding out private agents, while debasing the cost of capital (and hence hurdle rates) to the lowest levels we have seen. " "While all asset classes look dear, yield-hungry investors are being forced to chase ev
Most likely 12-year return now worse than 1929 - Hussman
John Hussman's assessment of likely future 12-year nominal market investment returns - the poorest now since 1928, worse than in 1928 when US market fell 89% over 3 years to 1932. Quotes from John Hussman's paper are here:- At the market open of Friday, January 24, our estimate of likely 12-year nominal total returns for a conventional passive investment portfolio (60% S&P 500, 30% Treasury bonds, 10% Treasury bills) fell to just 0.04% annually, below even the previous recor
