Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Chief Investment Officer
Summary: We have reached the part of the crisis cycle in which, despite incoming news going from bad to worse we need to look at value, the next policy steps and how the market will find its low. This is extremely dangerous as we are programmed for fight or flight, not to calculate risk versus reward in a pressure cooker.
First, let’s start with where we are relative to the other great bear markets of the past:
Where are we relative to other Bear Markets:
Comment:
Blue line - present market (2020)
Red line – “worst case” – initial phase of 1929 (Another 15% to follow that path)
Grey line – “medium bad” – the steep fall in late 2008 and into 2009
Macro Conditions:
Scenario 1: Optimism - Why the worst may be over (The low is either in or arrives within another 5% from here)
Scenario 2 – Pessimism: Why this is only the beginning of a much bigger crisis
Conclusion
My personal take? Not that it matters, as I have predicted seven of the last three recessions, but the “truth” lies somewhere in between.
Furthermore for the balance of this week we will focus on “tell signs” for the lows being in and creating “need to follow” baskets of equity, bonds and futures for both hedging and new long plays.
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