Daily Briefing – April 6, 2020

Published on
April 6th, 2020
Duration
27 minutes


Daily Briefing – April 6, 2020

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Ed Harrison

Published on: April 6th, 2020 • Duration: 27 minutes

Ash Bennington hosts Real Vision’s Managing Editor Ed Harrison to discuss the apparent disconnect between today’s market euphoria and the severe risks and uncertainty now facing the world economy. The pair discuss spiking unemployment, political risk, ballooning debt, and the corporate earnings outlook.

Comments

Transcript

  • Ev
    Emiel v.
    8 April 2020 @ 09:49
    A Couple of days back here on RV.... Someone placed the remark there are there are 2 types of people on RV. 1 Those with big bookshelves who tend to like gold 2 Those with blank white walls behind them, who like an asset which is Hot at that moment.. Now: Jack Farley rearranges house, so there are bookshelves behind him. :)
  • LS
    Lemony S.
    7 April 2020 @ 01:03
    Does anyone else feel that media outlets, in general, because of the mainstream or a variety of other factors (I'll just be generic here) hamstring any real analysis on the critical side of the economic shutdown related to COVID19? It's like I have to read into or grasp for code words, since I feel the topic is considered gauche. As I've said to others, though, related to what Carl Sagan said, "Don't extraordinary claims require extraordinary evidence"? We have shutdown a large portion (80%?) of the economy, unheard of in our lifetimes, and yet we have absolutely no extraordinary evidence. Are we going to have someone on realvision actually address this issue? Even if there is no answer (I understand it is perilous), is there at least this idea being thrown around? I have to decipher and wade through much to even guess that it might be there ...
    • AS
      Alan S.
      7 April 2020 @ 03:46
      It has been well addressed. Get a better subscription is my advice to you.
    • SM
      Stephane M.
      7 April 2020 @ 11:38
      Hey Milton, is it the king of reply that you consider acceptable????
    • SM
      Stephane M.
      7 April 2020 @ 11:38
      Kind not king!!
    • LS
      Lemony S.
      7 April 2020 @ 22:36
      Alan, are you telling me that the false narrative brought daily to us by Ash and Ed (sad to say, but true boys) has a counter, I am just blocked by a paywall?
  • PC
    Peter C.
    7 April 2020 @ 10:53
    The market does not understand the dynamics of an epidemic. There is a huge difference between the run-up face and run-down face. It is not a bell-shape unless you can really halt the infections to almost zero. This is a much more accurate model: http://gabgoh.github.io/COVID/. While the early exponential growth face mainly depend on R0 (so a factor somewhere between 2 and 3) the later part of the curve depends on Rt (the transmission during a lock-down). This factor depends a lot on the measures of the state or country and Western countries are worse than Asian countries. For example, in my country (Belgium) I estimate Rt at about 0.5 and the lock-down measures are serious (but not as stringent as Spain for example). This corresponds with the model reaching peak hospitalizations now, after 3 weeks, which fits with the data. If we would remove the lock-down measures today, we would need to lock the country again within 10 days. The current plan is to keep the lock-down for another month but even then we can only open the country for 1 month before we need to lock it again to keep the peak hospitalizations below the current (almost critical) peak. So basically, until the infections start to slow due to herd immunity or a vaccine, we need to lock-up the country for 66% of the time or keep it open longer but use semi-lockdown measures when opening the economy that probably have similar effects overall.
    • MT
      Mike T.
      7 April 2020 @ 12:43
      to all those folks thinking deaths are peaking light at the end of the tunnel etc a real game changer would be the widespread availability of a reliable home antibody test...... Check out the following article published earlier today of joint venture between GSK and Vir Biotech based out of San Fran...... talking in terms of 3 to 5 months just to get to phase 2 trial !! https://www.pmlive.com/pharma_news/gsk_and_vir_biotech_join_forces_for_covid-19_antibodies_1337872
    • HC
      Hahns C.
      7 April 2020 @ 17:57
      Thanks for sharing this information.
  • DS
    David S.
    7 April 2020 @ 14:05
    The Dow is up 3.5% again this morning, 4/7/2020. The only thing I can assume driving the market is the massive injections of money by the Fed. In the past most of this money ended up in P/E inflation. I do not think the market is reflection on future profits. Overtime, we will see how this plays out. DLS
    • HC
      Hahns C.
      7 April 2020 @ 17:44
      David - The market is not moving with investment grade injections. The current trades today are Titanic survivors (HFs, Pensions etc) hanging onto sinking valuations - hoping for a modest V recovery and the trading sharks circling the lifeboat pumping short trades. The rudderless trading is machine-function technical-signal driven trades based on old market metrics. When the new company metrics (earnings, revenues, insolvencies, bankruptcies etc) hit the news - hang on for a drop in the coaster ride. Blessings to your portfolio!
  • JD
    John D.
    7 April 2020 @ 15:52
    Just to update this conversation, the ECB just decided to accept Greek paper as collateral.
    • WM
      Will M.
      7 April 2020 @ 16:54
      The ECB is totally trapped. How can they not accept Greek paper (waste), they have to backstop it all or the EU is screwed now (versus later).
  • PT
    Patrick T.
    7 April 2020 @ 14:42
    Dead cat rallies that parallel the 2008 debacle.
  • JA
    John A.
    7 April 2020 @ 14:23
    2 questions Re IG vs HYG: 1. Isn’t the Fed just blurring what is ACTUALLY happening to the debt situation at these companies? Due to lack of revenues, many of these companies can actually default on their obligations, and due to Fed buying, the risk will not be reflected in the price of the bond 2. If I dine with Jay Powell, and our kids go to school together, do I have a better or worse chance of the Fed buying my company’s bonds, and keeping me afloat?
  • EK
    Edward K.
    7 April 2020 @ 14:12
    It's almost like the financial markets are a liquidity driven avatar divorced from the economy and the real world. All this govt/CB intervention is artificially buoying many markets. This only increases future pain and social division.
  • DS
    David S.
    7 April 2020 @ 06:20
    It is the vaccine that will make the difference. Drugs that will help treat the disease are tremendously important; hopefully for death rates. If you listened well the Spanish Flu had three cycles. With the globe so interconnected, Coronavirus will pinball around the world until a vaccine is found. DLS
    • MT
      Mike T.
      7 April 2020 @ 09:12
      ... yes until a vaccine is found AND available in sufficient quantity AND countries develop a programme to deliver to populations at large........ this has to be 2021.
    • DS
      David S.
      7 April 2020 @ 14:07
      Mike T. - Well put. DLS
  • KD
    Ken D.
    7 April 2020 @ 12:31
    First time I watched the Daily Briefing. Very impressed. You guys do a great job!
  • OT
    Omar T.
    6 April 2020 @ 23:49
    I didn't understand the trade, short HYG Long LQD?
    • MT
      Mike T.
      7 April 2020 @ 11:19
      it's a pairs trade
  • GT
    Guillaume T.
    7 April 2020 @ 05:20
    Stay safe! Thanks for the video
  • fT
    forecast T.
    7 April 2020 @ 05:09
    Hey
  • SO
    SAEJIN O.
    7 April 2020 @ 04:20
    How long do you usually take to attach your transcript?
  • GF
    Gordon F.
    7 April 2020 @ 04:04
    I worry that we will get a follow-on peak even sooner, simply because most people will not be willing to continue containment when new cases drop to 10-20% of what they are now. They will feel like the crisis is past, we have this thing whipped, not understanding that as soon as many (not even necessarily most) people resume a "normal" routine, the infections will shoot upward again. And people entered into the confinement restrictions once, but how willing would they be to return to them only a month or two later? The temptation in these situations is always to not stick it out until the problem is really under control.
  • CS
    Charles S.
    7 April 2020 @ 03:19
    For several decades markets have been out of touch with what's really going on, why the surprise now ?
  • JG
    Jordan G.
    6 April 2020 @ 23:09
    Guys, I watch EVERY daily briefing and most videos. I love the depth. BUT... you just opined on why the markets were up, and didn't touch on Gov. Cuomo's briefings over the last two days that showed NYC hospitalizations are 5 days earlier than POTUS coronavirus' task force models showed they would. 5 days is a long time in an exponential world, and it shows how little our understanding of the virus is, and how reliant our models are on Italy, where results are dire, but may be an outlier. Markets are going to react to things like that. (Also strong performance of masks in Czech and Taiwan, and *reports* that high volume Abbot testing is on its way to the states.) I would love to see you work Cuomo's data into your discussion, as NYC is the tip of the spear. Much respect, Jordan
    • LS
      Lemony S.
      7 April 2020 @ 01:04
      Check out my question up top to see if there is any response ... the models have been nothing short of embarrassing, and seemingly no one wants to talk about that ...
    • JF
      Jack F. | Real Vision
      7 April 2020 @ 02:15
      Thanks for your comment, Jordan. We'll address Cuomo's statements, and the argument that New York is nearing peak, in future RVDBs, perhaps tomorrow.
    • WS
      Warwick S.
      7 April 2020 @ 03:14
      On NY timing, consider this. Many people are relying on the virus projections from the University of Washington, available here: https://covid19.healthdata.org/projections They show NY peaking in the next few days, which would be great news, and declining through the rest of April. The projections also show NO more deaths in NY from early May onward. Many people are relying on projections like these to get bullish on stocks. But here's the kicker: the projections are positive on health implications of covid because they assume lock downs remain in place through early August. If that happens then the economic impacts will be catastrophic. It's classic cognitive dissonance, assuming the best on the health front because we want to and also assuming the best from stock markets. No media organization wants to take the other side because they don't want to bring bad news. Tough times all round. Thanks to the RV team for all of your insights.
  • KJ
    Kevin J.
    7 April 2020 @ 00:31
    I'm at a loss too! My puts are getting killed out there!
    • JH
      Jeanie H.
      7 April 2020 @ 02:45
      Kevin, have your tried buying a Backratio? This costs less and can protect you from a huge downward move but not kill you to the upside.
    • KJ
      Kevin J.
      7 April 2020 @ 02:55
      I'll look into it. Thank you Jeanie!
  • MD
    Mike D.
    6 April 2020 @ 22:53
    Ash, Ed, Jack - these daily updates are so very valuable during these confusing times. Thank you!
    • AB
      Ash B. | Real Vision
      6 April 2020 @ 22:57
      Thanks, Mike. We appreciate it.
    • JF
      Jack F. | Real Vision
      7 April 2020 @ 02:17
      Seconded - thanks Mike, that means a lot. Stay safe!
  • SL
    Sean L.
    7 April 2020 @ 01:04
    DA BEARSSS
  • TS
    Tim S.
    7 April 2020 @ 00:37
    I assume the Market is working under the assumption that the FED put, combined with PPT, with perhaps a rule change to allow the FED to buy equities will prop up the market to infinity and beyond. Think they are jumping out of the plane without a parachute.
  • PD
    Peter D.
    7 April 2020 @ 00:04
    The best nightly commentary on business television anywhere. They don't have the best suits. But if RV keeps Ed and Ash together; the Daily Briefing becomes appointment TV.
    • AB
      Ash B. | Real Vision
      7 April 2020 @ 00:10
      Thanks, man. PS Know any good dry cleaners still open on the Upper East Side?
    • TS
      Tim S.
      7 April 2020 @ 00:34
      Pass on the suits. Realvision, keepin' it Real. ;-)
  • mh
    muddshir h.
    7 April 2020 @ 00:22
    Thanks ed and ash
  • RC
    Randolph C.
    6 April 2020 @ 23:36
    BTW, your team is doing GREAT job, please keep videos coming.
  • RC
    Randolph C.
    6 April 2020 @ 23:35
    Agree w Ed & Ash, NYC and rest of US fully back no sooner than 4th of July, more likely closer to Labor Day. What will new normal be on the backside of this event? What about carnage in huge oil industry and ripple effects? Are markets considering that at least 10-20% of businesses will die and contribute ZERO post event? What about credit defaults for high yield and small businesses, plus domino effect to banks/lenders, real estate owners CRE and resi? S&P only factoring in a 20% or so decrease from peak, and I say that's insane!
  • AK
    Adam K.
    6 April 2020 @ 23:25
    Could we please have a look at the rate of change of credit downgrades? I think it would be a spicy addition to the conversation! Love, Adam
    • AK
      Adam K.
      6 April 2020 @ 23:33
      Also, thanks for taking the time to talk on equities. Always good to hear some views on what it looks like, risks and outlook etc.
  • DB
    Douglas B.
    6 April 2020 @ 21:34
    What happens to the US indices if Boris Johnson does not make it out of ICU?
    • LS
      Lemony S.
      6 April 2020 @ 22:23
      This is a Bear Market rally, it'll go more quickly to the 2100 level where it should be anyway, tops, status post corona led central power/elite sabotage of the economy.
    • SS
      Steve S.
      6 April 2020 @ 23:09
      If Boris Johnson dies GBP and markets will sell off and then rebound quickly. Sad and weird markets we are currently in now
    • ag
      alan g.
      6 April 2020 @ 23:18
      The way the markets work, they will probably go up.
  • JG
    Jordan G.
    6 April 2020 @ 23:15
    NYC hospitalizations are *declining* 5 days earlier
  • DH
    David H.
    6 April 2020 @ 23:11
    While it would be a disaster, I think the Fed is very interested in buying equities and finding some way to support the junk bond market. Does Powell want to preside over the next depression? I fear he will do stupid stuff. Can RV address this concern?
  • GK
    George K.
    6 April 2020 @ 23:09
    Great content guys! It really helps knowing you are not alone out there with this "wtf is going on" feeling :p