The IMF Wipes Germany off the Map
The International Monetary Fund’s (IMF) little blue book is out, christening the “Great Lockdown” and opining on the world economy. It’s packed with beautiful charts that tell hideous stories, but investors shall not be moved!
Let’s cut to the action: The IMF has predicted a 3% contraction in worldwide gross domestic product (GDP) growth. That’s $9 trillion lost, more than the economies of Japan and Germany combined, and the damage is heavily skewed towards developed economies. The fund says we’re on the cusp of ‘the worst recession since the Great Depression!”
The numbers are plain; the message is clear, but the market reaction is puzzling. The IMF threw its words into the wind; investors finding upside through the trading session regardless on the doom and gloom. There could be two reasons for this, two storylines for the community to follow.
The markets might suddenly be thinking long-term. Some have waited the best part of eleven years for a bearish entry point, so if investors wait out the lockdown and hold thereafter, they can get decades’ worth of business on the cheap at a time like this.
Alternatively, money could be flowing in from bond markets. The Federal Reserve has cut interest rates to zero to kick start the economy, so bonds are paying almost nothing. Fixed income is a safe haven, sure, but loan defaults make this a dangerous time for bond investors.
There’s peril in a ‘dash-for-trash’ search of yield, and bonds can’t put up any defense to inflation, something “unlimited” money printing from the Fed will cause. That’s why a flock of bond bugs might be migrating asset classes entirely, rotating into stocks.
The first theory suggests this bull run will stick, as demand to buy dips ensures there can’t be any. The second theory suggests this bull run is temporary, and a massive crash beckons when the bond crowd is all aboard. Get ready for anything. We’re on a flier in markets, but the IMF just wiped Japan and Germany off the map to make its bear case!
Staying Bust During Market Closures
Anyone out there? American markets took the day off on Good Friday, as did many exchanges around the world on Easter Monday. With no action on the indices, what’s a trader to do?
Well, out goes the noise. There are no momentary mega-risers or flash crashing mega-fallers to distract you from your investing analyses. Some will hit the Invstr feed with hot topics and questions, how long the rally will run. Others will unplug completely, crunch numbers in silence, and return to markets with conviction next week. One thing’s for certain, now’s the time to extend an advantage over market rivals.
Investing is not a zero-sum game, there’s plenty dollar to go round. However, to make more than the average investor, you need an ‘edge’ that the average investor doesn’t have. You need to know something he or she doesn’t know. You need a stronger gut, more practice, experience, and you need to work harder flat-out.
Most buyers and sellers are active between 9:30 a.m. and 4.00 p.m., official trading hours on the New York Stock Exchange. Others start at 8:00 a.m., catching pre-market, and they don’t go home until the bulk of after-market moves are made at 6.30 p.m. Commendable, but what if they took it a step further.
What if they didn’t take leave on days like today, studied companies at night, and traded them during the day? What if they took investing as seriously as athletes take their training? It won’t matter what your rivals do in the pre-market if they’re already ten years behind you. Down to business!