The narrative that I hear Ash talking about and many others as well is that we more or less have the virus under control now so the next stage is the phased restart of the economy but the big challenge will be this fall when a second wave hits us. While the fall will be challenging due to the combined impact of COVID and the flu, there is no reason to think that there is any 'back to normality' in the mean time. The only reason we are keeping the virus in check now is because of the lock-down. Once we start the economy and as a result relax social distancing this contagious virus will swing back. We already know that the weather will not sufficiently slow it down, which means that the summer is not much better than the falll from that perspective. An other assumption is that we can now better deal with it compared to two months ago. I have my doubts. A very smart control mechanism needs to be in place to let a big part of the economy run in anything that resembles normality to the keep the R0 on average less than one during that period. The statistic of most Western countries show that even in lock-down, the R vallue is still 0.7-0.8. Anybody who understands control theory knows that we will likely fail without interrupting the system to reduce its amplitude. This is simply a result of a few dangerous aspects of the epidemic: massive exponential growth of infections, amplified by super-spreaders and asymptomatic spreading, and a huge delay between being infected and being hospitalized. I fear that any state that opens soon without the proper control system in place will need to close a few weeks later simply because the medical system will break-down. This looks to be the destiny of many US states. At an R vallue of only 0.7-0.8 this lock-down period will again take a long time (1-2 months) before a restart can be tested again, hopefully with better measures in place.

The take that people will start moving away from urban cities as a result of covid might be one of the worst takes I’ve heard since this whole thing started. This is a 1 year, at most 2 year event. Look at the long term trend of population growth by county. This is a hiccup in the grand scheme and comes across as a Simple Jack take of the highest degree.

Roger is spot on! these CBers are f******* us left and right ;-(

daily briefing is the best.

Ha, Roger wanted no part of any "polly pinky rosey" ending to today's call. These are pretty good briefings, so to keep them that way, it'll be nice to hear comments following today's news of how $GILD's remdesiver drug seems to have failed phase I trial. Market's seemed to absorb that news reasonably well for now...Thanks!

I enjoy the Daily Briefing very much. I would like to hear Ash and Roger address what effect the enormous debt/deficits will have on the economy and whether it will trigger inflation or deflation.

Roger was right on the money at the end there. Well said.

I guessed Meursault! Well done Roger. Great Briefing thx.

Exactly right about something needs to be broken. The avoidance of pain here in regards to central bank interventions, has reached ridiculous proportions — bigger than the problem itself. What’s wrong with letting shitty companies go bankrupt and junk debts default? There’s really nothing wrong with that, and the Fed is now standing in our way, the future, and progress.

Super clear, super informative, more Roger Hirst for the UK/European perspective please!

Another great discussion. Loving these Daily Briefings

Very much enjoying Roger Hirst's thinking... everyone on RV, but especially RH!

There was no follow-up on yesterday's discussion about Argentina and possible default today. I am presuming it didn't happen otherwise it would have been mentioned

For heavens sake STOP calling it liquidity!!!!!!!! It's debt and debt being transferred from corporate vampires to the public! Whole really expects this 'liquidity' to be repaid????? Inflation of default - that's not liquidity options - that's DEBT! Take off the those cloured glasses!!!!!!!!

Hey guys, Another excellent and informative conversation. I just want to add a caveat to the Remdesivir story: The economic effects of Covid are really driven by social distancing measures put in place to slow the disease, not the biological effects of the disease itself. So, to improve the economic outlook, any treatment would have to prevent the hospitals from being overwhelmed as people return to their normal lives. It would have to be readily available to anyone who might become sick in a non-socially-restricted economy within the coming months (potentially tens of millions of people), before they arrived in hospital in an overwhelming mass. Remdesivir does not fulfill either of these criteria, even if it does cure everyone who receives it. It is administered as a 5-10 day IV drip, so you must have a hospital bed to receive it, and everything that entails. There are fewer than 1 million available (non-ICU) hospital beds in the US, so these would quickly be overwhelmed in an un-restrained situation. Secondly, considering there are at least 100,000 people currently hospitalized for Covid in the US, there is only enough supply of Remdesivir to treat these American patients. In an unrestrained situation, this supply would quickly be depleted. Based on the timetable provided by Gilead the world will not have significantly more drug before the end of the summer: (From https://www.gilead.com/purpose/advancing-global-health/covid-19/working-to-supply-remdesivir-for-covid-19) "Every day we are improving processes, shortening timelines and increasing volumes as we work to bring remdesivir to patients as soon as possible. Our goal is to produce a total of: More than 140,000 treatment courses by the end of May 2020 More than 500,000 treatment courses by October 2020 More than 1 million treatment courses by December 2020 Several million treatment courses in 2021, if required" This website also describes how difficult Remdesivir is to synthesize, and how Gilead has carefully supplied themselves with several critical precursors to ensure their production capacity. (Of course, I'm only taking them at their word about this. However, I am a scientist and I have a colleague from Wuhan, and she tells me there is consternation in China about their inability to synthesize their own supply.) Remdesivir has great humanitarian potential to prevent lung damage and save lives. But, in a non-social-contrained economy, I don't think it will prevent the hospital system from being overwhelmed, nor do I think the available supply will keep pace with demand this year. Therefore, we may have to endure social distancing until much more Remdesivir can be synthesized and deployed in IVs, or until a vaccine is developed. Unfortunately, I don't think this will happen in the coming months, and we'll have to deal with the economic consequences of our current situation.

Wrong glass Roger. That’s white wine ;-)

In six months, we will probably be seeing the same world we are seeing today unless medical science has a solution. The curve is cresting in New York State because of social distancing. I hope that Sweden's herd immunity works. It has been, however, a massive failure for elderly Swedes. Swedish officials say they should have protected the elderly better, an understatement. Over 70% of the deaths in New York State were people over 70. If we reopen America as many governors supported over the weekend there may be immediate political gains. In addition, we may be able to save the pension and social security systems through the genocide of the elderly. DLS

I've posted the link to the BIS paper I mentioned in the video. The key summary paragraph is below it. HED: "September stress in dollar repo markets: passing or structural?" https://www.bis.org/publ/qtrpdf/r_qt1912v.htm "Besides these shifts in market structure and balance sheet composition, other factors may help to explain why banks did not lend into the repo market, despite attractive profit opportunities. A reduction in money market activity is a natural by-product of central bank balance sheet expansion. If it persists for a prolonged period, it may result in hysteresis effects that hamper market functioning. For instance, the internal processes and knowledge that banks need to ensure prompt and smooth market operations may start to decay. This could take the form of staff inexperience and fewer market-makers, slowing internal processes. Moreover, for regulatory requirements - the liquidity coverage ratio - reserves and Treasuries are high-quality liquid assets (HQLA) of equivalent standing. But in practice, especially when managing internal intraday liquidity needs, banks prefer to keep reserves for their superior availability."

Great wrap-up, and Roger and Ash really hit on two of conundrums facing investors; will there be a 2nd or 3rd flare up, and to Roger's point how do you unwind the Fed's balance sheet and as investors how do we position ourselves? I am in Roger's camp, and as he correctly pointed out you can pretty much track the gains in the U.S. market with liquidity injections from the Fed, and let's not forget what happened to the market in December of 2018. I imagine Jay Powell is facing the ultimate prisoner's dilemma. On one hand he knows he did what had to be done, but then how in the hell do I get out of this mess? On lockdown I have been forced to consume way too much CNBC which forces me to not be too negative, but I do believe the dollar, oil and bond markets are the bread crumbs to follow, especially on a day like today when equities rallied hard as did gold. Too many mixed signals to sort through!

One day we will have a briefing with Ed, Ash and Roger, and I imagine it going something like this: Ed: "That is is that.." Ash: "That's so spot on Ed.." Roger: "Pop" (background noise of wine bottle being opened and poured) Thanks and keep up the great work boys, these daily briefing's are "spot on". Cheers!

New York and London are such a function of immigration at this point and they are both already net losers of domestic population each year. They are both priced for perfection and marginal changes have a disproportionate impact..and they are both bankrupt. God forbid that interest rates ever go up in the UK as the buy to let market has already been destroyed and most mortgage holders have interest only mortgages.

I really get so much out of these. No need to end on a positive note from my perspective.

Remember the share buy backs inflated the markets and was accepted by policy makers because it boosted the pension funds and retirement accounts.

Has anyone said "in vino veritas" yet? Another insightful discussion, very useful. Thanks.

Oil is not no longer the canary in coal mine, it's the dinosaur watching the meteorite about to strike earth. The Fed is the meteorite!!!!

So an anecdote for you, I'm in Perth Western Australia and we have had an easy run of the virus so far. I'm already seeing the general mood and attitude shift in the streets. I think we will not have our habits changed here from the experience so far unless the virus comes back with a vengeance. They will likely be changed in the areas hit hard it will not be uniform around the world. The high-density areas have mainly been the ones hit hard which will also likely be the ones that swing the economy I guess though.

just awesome guys..thanks v much for that

Can you guys stop with the "end on an upbeat note" meme? For example to talk about treatments and vaccines is upbeat. Doesn't matter if it's at the end or middle.

Would be nice if these 2 could talk for an hour. Excellent discussion.

That drug data had no control, and was only applied to severe not critical cases. https://www.nationalreview.com/2020/04/coronavirus-pandemic-gilead-remdesivir-treatment-clinical-trials-inconclusive/

Excellent commentary Roger!

Roger is the man! good, informed honest perspective. "can we end on a positive note?" * deep breath Roger "No"

Please do NOT concern yourselves with ending on a positive note. We count on you to provide an historically rich context and an articulate synthesis and synopsis. Your job ends there, and thank you for doing it so well...day after day.

RV - The only group filtering signal from noise. Thanks Lads, Cheers!

Roger Hirst, what a classy motherf**er. Enjoyed both of their analysis immensely.

Hirst I think is the best analyst on RV currently. Great idea on the perception, Ash and he bounce great ideas off one another here regarding overpopulated/flight to cities now maybe reversing, large corporation problems that have been slowly but surely going that way for years, etc. I loved this one, guys, cheers.

I feel smarter just listening to these guys! Thanks everyone at RV!