@RafaelBarbieri9 for day-to-day thoughts

Due to the speed of this situation, thoughts will be updated everyday on the pinned thread using the twitter handle @RafaelBarbieri9.

Be safe and follow the rules as advised by health organizations. Take care of your parent, grandparents, and elderly.
If you take risk, PLEASE use strict risk management (stops or whatever favored method) and proper position sizing.
I lost it all in 2011. This time stops and position sizing saved me! Don't make the same mistake, but don't shun risk if you are so incline. Everyone has to make their own decisions and be accountable to themselves in the end.

Comments

Global bonds continue their rise as the Fed pauses

Given that 2018 ended with the suspicion that decelerating global growth and falling inflation/inflation expectations would force the Fed to pause, bond markets all over the world had begun to rally along with risk assets. Seeing how his rebound has unfolded in Q1, the strength and broad-based nature of the uptrend in credit and risk suggest that the global economy may have averting the potential disaster scenario that was being priced in by markets in Q4 2018. In this light, 2018-2019 so far has more in common with 2015-2016 and 2011-2013 when compared to the prior two pre-recession periods leading up to the cyclical turns in 2000/2002 and 2007/2008. With that said, current market conditions still requires that market participants remain flexible even if a bias toward optimism continues to be favorable. All it would take is for the 2018 lows in credit and risk to give way for major trends and sentiment to shift meaningfully. Before discussing the rally in glob...

Weak & unbalanced secular growth is the problem not bilateral trade or immigration

Global Trumpism could have been avoided. An economy has three broad sources of demand that enable the expansion of aggregate sales (nominal GDP) on domestically produced goods and services.* Domestic private sector (households and corporations) consumption and investment spending Public sector expenditure (which recycles income back to the non-government sectors) Foreign sector purchases (exports to foreign domiciled agents/entities) Aggregate expenditure is funded by: Domestic private sector dissavings in the form of leverage (debt issuance and/or asset sales ), equity issuance, or spending out of existing income Public sector debt issuance, asset sales, and taxes Foreign sector leverage, equity issuance, or spending out of existing income

Keep your eye on the dollar as an indicator of risk sentiment

Last month's post, Are the signals that usually precede cyclical downturns present today? , pointed out how the current financial environment is not (yet) reminiscent of prior cyclical economic tops that ushered in major corrections in risk assets. Despite the ongoing correction/volatility in global equity and commodity markets, the yield curve is still positive and above the January 2018 lows, the 10-year treasury yield remains in an uptrend (a sign of improving growth and inflation expectations), high yield credit spreads are still very low and have yet to widen materially, longer term moving average trends in equities still remain favorable, aggregate economic data suggests that the current upswing in NGDP remains intact. With all that said, it is certainly possible that in hindsight the February risk-off move could eventually be understood as the beginning of a major economic and financial market correction rather than normal volatility in an ongoing uptrend....

Millennial Macro