Macro, macro, macro viewpoint.

[scotview]

Hi,
Lots of detailed discussion going on, like Shell divi reduction...... shock and awe, etc etc..
Would anyone care to say what they think is going to happen with Stocks, Oils, Metals and Chems etc, etc in the next few months?
Haven't seen too much macro guidance lately on Bloomberg or anywhere else from the pundits, it's ALL rear view mirror stuff, no one has a clue.
Would anyone here like to jump right in ? would be greatly appreciated.
Macro please.

[PinkDalek]

Macro, macro, macro board is here, if of interest:

Macro and Global Topics
viewforum.php?f=76

[BT63]

I think we'll have a terrible time trying to balance the premature death of those who are most likely to succumb to Coronavirus against the severe economic, social and health problems that lockdown is causing.

Yes, we slowed down the spread of the virus but it will never be completely eradicated and there are still millions of susceptible people out there in the UK (billions worldwide) that it will eventually find and infect.

Vaccination is likely to be a year or more away and I've heard from a medical colleague I used to work with that the virus in the UK has possibly recently spawned a new variant strain, which, if true, will ruin the effectiveness of a vaccine.

If the economy is locked down for a year the consequences will be extremely severe, probably leading to food shortages and riots.
Ultimately, I think the government will be forced to abandon attempts to contain the virus because of the damage to the economy. Most people will catch it and have a mild or moderate illness. A small proportion unfortunately will die. The alternative will be economic collapse.

So while we are all locked down - probably some parts of the economy for much longer than we expect - the economy will be dreadful. I would not expect to see many dividends reinstated even by the end of this new tax year and I would expect unemployment to start soaring soon as companies give up on furlough and decide to wield the jobs axe.

[Itsallaguess]

It's not easy, is it?

The one thing I keep coming back to in my thoughts is that betting against focussed and aggressive human endeavour is a dangerous thing to do, and I hope that we'd agree that this virus is currently concentrating the collective minds of more people on this planet than anything else in recent history...

I'm also very wary of anchoring my ideas about this virus around the early outbreak and it's initial rapid global spread...

We now know much, much more about it, and we're still taking great strides in that collective learning every single hour - and we now have a number of tests and the capacity for those tests currently growing exponentially day after day, in a way that the virus itself did in it's early days, and I do believe that when countries with mature economies and modern infrastructures manage to get their infection rates and infection numbers down to manageable levels, then there's a good chance that we can deal with this thing in a much, much better way than we did initially.

On top of that, there's recent breakthrough's with drugs like remdesivir, which have had very positive results in recent trials. It doesn't look like a silver bullet, but it might be made up of things that can help to make that silver bullet, and it's a very important step on the way to helping to develop stronger and more reliable treatments for this virus.

There's nothing we humans like better than a massive challenge being put in front of us, and this is one hell of a challenge, that's for sure, but would I want to bet against the sheer might of global human endeavour in defeating it?

I really do think that I would be a braver man to do that than to bet that we will...

Cheers,

Itsallaguess

[Itsallaguess]

There's nothing we humans like better than a massive challenge being put in front of us, and this is one hell of a challenge, that's for sure, but would I want to bet against the sheer might of global human endeavour in defeating it?

And here we are, within the same day -

Scientists working for the US military have designed a new Covid-19 test that could potentially identify carriers before they become infectious and spread the disease, the Guardian has learned.

In what could be a significant breakthrough, project coordinators hope the blood-based test will be able to detect the virus’s presence as early as 24 hours after infection – before people show symptoms and several days before a carrier is considered capable of spreading it to other people. That is also around four days before current tests can detect the virus.

https://www.theguardian.com/world/2020/may/01/us-germ-warfare-lab-creates-test-for-pre-infectious-covid-19-carriers

Cheers,

Itsallaguess

[odysseus2000]

Hi,
Lots of detailed discussion going on, like Shell divi reduction...... shock and awe, etc etc..
Would anyone care to say what they think is going to happen with Stocks, Oils, Metals and Chems etc, etc in the next few months?
Haven't seen too much macro guidance lately on Bloomberg or anywhere else from the pundits, it's ALL rear view mirror stuff, no one has a clue.
Would anyone here like to jump right in ? would be greatly appreciated.
Macro please.

No, I haven't got a clue.

There is so much misleading information and such a disconnect between the economic reality and equity and oil prices that I would not like to predict anything.

Regards,

[odysseus2000]

There's nothing we humans like better than a massive challenge being put in front of us, and this is one hell of a challenge, that's for sure, but would I want to bet against the sheer might of global human endeavour in defeating it?

And here we are, within the same day -

Scientists working for the US military have designed a new Covid-19 test that could potentially identify carriers before they become infectious and spread the disease, the Guardian has learned.

In what could be a significant breakthrough, project coordinators hope the blood-based test will be able to detect the virus’s presence as early as 24 hours after infection – before people show symptoms and several days before a carrier is considered capable of spreading it to other people. That is also around four days before current tests can detect the virus.

https://www.theguardian.com/world/2020/may/01/us-germ-warfare-lab-creates-test-for-pre-infectious-covid-19-carriers

Cheers,

Itsallaguess

Hmmm, dunno about this. I am told the c19 virus is most murderous if you get a lot of the infectious agent, not so bad if you only get a bit.

Would this kind of test not be exposure dependent?

E.g. if you got a bit of the infectious agent would it show up or is there a threshold amount that is needed?

I am seeing many breakthrough claims like this.

The Gild drug is considered very effective by some, marginal by others and not effective by others.

One expects fog in war, but the recent level of organised and intended deception such as the Japanese Nobel Laurette claiming C19 was manufactured with evidence being that it survived in all climates struck me as being rubbish long before it was officially taken down.

One thing that would help is that anyone found guilty of spreading lies like this would get a mandatory 60 days in the slammer.

Regards,

[Avantegarde]

Everyone but the super rich will be poorer, much poorer. Certainly wage and salary earners, pensioners and investors of all sorts. Maybe even landowners, and commercial and residential landlords too. Offshore tax-dodgers too,I hope.

[Bubblesofearth]

Hi,
Lots of detailed discussion going on, like Shell divi reduction...... shock and awe, etc etc..
Would anyone care to say what they think is going to happen with Stocks, Oils, Metals and Chems etc, etc in the next few months?
Haven't seen too much macro guidance lately on Bloomberg or anywhere else from the pundits, it's ALL rear view mirror stuff, no one has a clue.
Would anyone here like to jump right in ? would be greatly appreciated.
Macro please.

Unless we get something resembling a 'V' recovery then there are a lot of companies that could go to the wall. Companies in sectors that have already been hit hard, travel & leisure, oil, banks etc. However, if you do believe in a 'V' then these are the sectors where the biggest gains will be had.

If, on the other hand, you believe any recovery is going to be slow and painful , but still want to invest in shares, then how about a portfolio of shares in companies that have already performed OK despite the virus. Companies in sectors that supply essential goods and services such as FMCG, utilities, Pharma, food retail. You will still get dividend income from these well in excess of anything you can get from fixed interest.

Personally I'm in the slow, painful recovery and if I were building a portfolio now I'd go for the second option above. Sadly I'm not in that position but instead have the usual basket of shares scattered across all sectors. I shall continue to do nothing and hope at least some of the bombed out shares recover. Otherwise I would be selling stuff that has halved in value or worse and I know what would happen then!

BoE

[BT63]

I am told the c19 virus is most murderous if you get a lot of the infectious agent, not so bad if you only get a bit.

I would expect there to be some truth in that. Many disease-causing organisms have what is known as an ID50, which is the number of viruses/bacteria etc required to have a 50% chance of infecting an otherwise normal, healthy adult human.
Some organisms have very low ID50s. Some are quite high.

Would this kind of test not be exposure dependent?
E.g. if you got a bit of the infectious agent would it show up or is there a threshold amount that is needed?

Probably to some extent.

One expects fog in war, but the recent level of organised and intended deception such as the Japanese Nobel Laurette claiming C19 was manufactured with evidence being that it survived in all climates struck me as being rubbish long before it was officially taken down.

I have also seen some credible evidence, months ago, that the Coronavirus has some characteristics that would be a highly unusual combination of genes unless someone had modified a few of its genes.
The Coronavirus outbreak also happens to have started near to a Chinese virus research lab.
Lots of nations experiment with genetically modified life forms, not necessarily with the aim of causing disease. Wasn't there a Chinese doctor who got in big trouble for genetically modifying human embryos?
Some pharmaceutical companies have been looking at using GM viruses to 'infect' human cells purely to modify the DNA within (whether to eliminate a cancer cell or repair a damaged gene).
But whether genetically modified or natural, Coronavirus is not so much more lethal than seasonal flu that I would get too worked up about it.
Yes, it kills people - and maybe it will get me, too - but only a few percent of people die from it and only several percent of people have a serious illness.

Regarding the virus surviving in all climates, well that could be true, with a 'but'. The 'but' being dependent on the conditions in that climate, with dull, humid or cool environments allowing the best conditions for its survival (hours or days) compared to bright (sunny) dry, warm environments where it would probably be non-viable in a matter of minutes. Viruses fortunate enough to be in a big smear of mucus could survive many hours even in adverse conditions.

[BT63]

For the record, I think we should have told vulnerable people to stay at home but encourage healthy people to continue with their usual daily activities and jobs.
The healthy people would soon have become infected, mostly with a mild illness, most acquiring resistance to the virus.

Then you have tens of millions of people with resistance, forming a 'human shield' against infection of the vulnerable. And no shutdown meaning no 'Great Depression II'.

A major problem we had was that people's activity hugely increased in anticipation of lockdown, which, in my view, crammed people together as they panic-bought in shops or as elderly crowded in banks to cash-out their ISAs.
The result of all that close contact pre-lockdown caused the surge in infection we've seen in recent weeks.

The above might sound like I'm bitter and twisted about the lockdown or adverse effects on my investments. However, pre-crash I held about 30% gold and 15% cash, with my largest shareholdings being GSK, AZN, IMB, NG. and SSE.
So no significant downside to either share prices nor dividends and plenty of cash on-hand to pick up bargains.
But I don't think it needed to be this way.

[odysseus2000]

The interaction between science and government led to the shut down and the corresponding economic contraction. It is interesting to look at how science funded in part by pharmaceuticals, Gates foundation and taxpayers influenced the political decisions to shut down the country on the advice of Prof Ferguson and on several of his earlier and wildly incorrect pessimistic calls:

https://www.businessinsider.com/neil-fe ... ?r=US&IR=T

The whole episode indicates a severe disconnect between the scrutiny of scientific methods and the reliance placed upon it with disputes among the scientists on mathematical models and their reliability.

The clear conclusion is that macro economic policy based on scientific models is unsatisfactory.

Regards,

[dealtn]

The clear conclusion is that macro economic policy based on scientific models is unsatisfactory.

Well that might be your conclusion, but I don't think that is at all clear, and certainly not based on a single "clickbait" article that was written about 2 weeks ago.

Like many fields there will be competing experts, and you would hope there to be some form of peer review etc. You might conclude, in hindsight, that over reliance on a single model was a suspect strategy, but to dismiss all science and models in making policy is a recipe for more frequent, and larger errors, I would have thought.

Are you really advocating a better alternative is for politicians to have carte blanche decision making based on their instinct?

[odysseus2000]

The clear conclusion is that macro economic policy based on scientific models is unsatisfactory.

Well that might be your conclusion, but I don't think that is at all clear, and certainly not based on a single "clickbait" article that was written about 2 weeks ago.

Like many fields there will be competing experts, and you would hope there to be some form of peer review etc. You might conclude, in hindsight, that over reliance on a single model was a suspect strategy, but to dismiss all science and models in making policy is a recipe for more frequent, and larger errors, I would have thought.

Are you really advocating a better alternative is for politicians to have carte blanche decision making based on their instinct?

Having written a lot of Monte Carlo code I can tell you that the answer you get is like that often asked by lawyers: "What answer do you want?"

In this case there was no peer review, it was assumed that Imperial were the best and their advice was actioned even though there was disagreement in the scientific community.

As things now are the politicians are able to argue, with some justification, that they were misled, but these kinds of decisions are political and although they might need to take advice from civil servants and experts, it is up to the folk giving advice to be sensible and for more than one point of view to be considered. It is hard to argue that this was the case with c19, nor in several of the previous predictions from Imperial.

Having science to aid decisions make sense but it has to be good science including all competing views. Political instinct is often dismissed but in many ways one can argue that it was better here than this flawed science.

The net economic result of all of this c19 policy has been a knocking back of the economy by several years which will have negative consequences for a long time to come and it has also knocked science back by probably a generations as it has been shown to be of limited practical value.

Regards,

[ReformedCharacter]

The net economic result of all of this c19 policy has been a knocking back of the economy by several years which will have negative consequences for a long time to come...

Regards,

I'm not sure - and it's probably impossible to model - whether a different policy would have made much difference to the economic outcomes. For example, my wife's line of work is in the healthcare\education sector. She is having difficulty getting people to work because they are fearful of becoming infected. I don't think this will be uncommon as lockdown restrictions are lifted. The behaviour of people - who do not always act rationally - is difficult to model or predict IMO.

RC

[odysseus2000]

I'm not sure - and it's probably impossible to model - whether a different policy would have made much difference to the economic outcomes. For example, my wife's line of work is in the healthcare\education sector. She is having difficulty getting people to work because they are fearful of becoming infected. I don't think this will be uncommon as lockdown restrictions are lifted. The behaviour of people - who do not always act rationally - is difficult to model or predict IMO.

RC

Yes, this is all about humans and the failure of the UK authorities to deliver simple information and to use methods that although not 100% effective would likely have reduced infections and to instead rely on numerical modelling.

It is not surprising that folk don't want to go back to work due to fear of the infection given the tables that show the UK near the bottom of international comparisons.

Moreover the lockdown has become more an exercise in police control than one to help people and, at least near me, is now collapsing although severe economic damage has been done and I wonder how many small business will re-open having lost trade to on-line business with people having found alternative sources for goods/services etc.

Regards,

[JamesMuenchen]

https://ec.europa.eu/commission/pressco ... /ip_20_799
The Spring 2020 Economic Forecast projects that the euro area economy will contract by a record 7¾% in 2020 and grow by 6¼% in 2021. The EU economy is forecast to contract by 7½% in 2020 and grow by around 6% in 2021. Growth projections for the EU and euro area have been revised down by around nine percentage points compared to the Autumn 2019 Economic Forecast.

[JamesMuenchen]

https://www.markiteconomics.com/Public/ ... 83a97e25ca
the IHS Markit Eurozone PMI® Composite Output Index which fell to a new series low in April of 13.6, down from March’s previous record of 29.7.

Points to a 6% fall in GDP

[ReformedCharacter]

I'm not sure - and it's probably impossible to model - whether a different policy would have made much difference to the economic outcomes. For example, my wife's line of work is in the healthcare\education sector. She is having difficulty getting people to work because they are fearful of becoming infected. I don't think this will be uncommon as lockdown restrictions are lifted. The behaviour of people - who do not always act rationally - is difficult to model or predict IMO.

RC

It is not surprising that folk don't want to go back to work due to fear of the infection given the tables that show the UK near the bottom of international comparisons.

Regards,

Personally, I don't think that whether the UK is near the bottom or near the top of international comparisons is much of a factor in how people fear the risk of infection, as I said, people do not act rationally.

RC

[odysseus2000]

Personally, I don't think that whether the UK is near the bottom or near the top of international comparisons is much of a factor in how people fear the risk of infection, as I said, people do not act rationally.

RC

When people see the international comparisons with the UK near the bottom it adds thoughts like: "If we have done so badly, why should I trust all these new guidelines?"

This is not the rational mind thinking, it is all about perception and trust which are the feeds to the emotions, to the irrational mind.

Regards,