I still think there's way too much naive optimism out there that things will all be back to normal a month or two from now. I found this [1] deeply fascinating.

I still think there's way too much naive optimism out there that things will all be back to normal a month or two from now. I found this [1] deeply fascinating. Some highlights: - Corporate earnings have been pretty much flat since 2014 (this one in particularly surprised me). So the last 5 years has been a disconnect between earnings and valuation and that always comes crashing back to earth at some point, Covid-19 was just the spark. - The demand for US dollars will likely devastate some developing nations (who borrow in US dollars) with all that entails; - The US is in a fiscally weak position; - Because of the strong dollar and huge deficit the US essentially has to print money to buy its own bonds. A real (rather than nominal) devaluation in US government debt is not out of the question; On the Covid-19 front: - Making a vaccine takes time. Proving it works and is safe takes time. Even after you've done all that you have to manufacture it somehow. This is a nontrivial problem. For the flu vaccine the US government actually pays billions to grow eggs for this purpose [2]. This is unsatisfactory in many ways and there has been a long search for an alternative but so far to no avail. Influenza viruses reproduce in chicken eggs. Coronaviruses do not. - It will take time--possibly years--for spending to return to previous levels. We have examples of this already with the SARS and MERS outbreaks in Hong Kong and South Korea where spending took 6 and 12 months respectively to return to previous levels [3]. - Some industries will take years to recover. Cruise lines are an obvious one but airlines, hotels and tourism are in the same boat (at least it's not the Diamond Princess). I wouldn't be surprised if a lot of frequent flyer miles just evaporate or getting hugely devalued; - Some businesses just won't come back. Those businesses spend money. They paid employees who spend money. All that money went to other people and businesses who then spend money. - Social distancing may be here for the long term [4]. - My own belief is that the protracted response to this is there will be some permanent changes in behaviour. This will create new opportunities but also devastate some sectors. For some reason, share buybacks are the latest bogeyman and I really don't understand why. They're just another form of dividend (ie returning money to shareholders). Borrowing money at low interest for share buybacks is just a tax deferment strategy (one that I don't think should exist but it does). There's still significant market and economic downside potential and at best I think we'll have stagnant growth for several years. The problem here is that many people now have no memory of what an actual recession looks like. Even the GFC was quite localized (but of course devastating to many). [1]: https://www.lynalden.com/global-dollar-short-squeeze/ https://www.lynalden.com/global-dollar-short-squeeze/ [2]: https://edition.cnn.com/2020/03/27/health/chicken-egg-flu-vaccine-intl-hnk-scli/index.html https://edition.cnn.com/2020/03/27/health/chicken-egg-flu-va... [3]: https://www.abc.net.au/news/2020-04-14/retailers-warned-not-to-expect-post-coronavirus-spending-bounce/12144354 https://www.abc.net.au/news/2020-04-14/retailers-warned-not-... [4]: https://edition.cnn.com/2020/04/14/health/social-distancing-research-coronavirus-2022-trnd/index.html https://edition.cnn.com/2020/04/14/health/social-distancing-...