Some takeaways from the Strategic Investment Conference 2020

40% companies pulled guidance

Fade certainty

Disproportionate amount of the stock market rally the past 7 weeks has come on jobless claim days

Real unemployment likely over 20%

Majority of individuals reported to the BIS that they believed that their job loss was temporary

Pundits underestimating permanent damage

Permanent damage to corporate profits

Interest rates are not just a discount factor, but also a price signal of deflation

Many small businesses will run out of money in 2 weeks

Bear markets have 3 stages – sharp down, reflexive rebound, drawn-out fundamental downtrend

Dividend stability over yield

Dust off 1970s playbook

Gold supply grows at ~1% per year and currency is currently growing ~30% per year

40% of job losses were part-time

Private interest rates may not fall with treasuries

Prizes over patents is worth exploring

We are all going to be “preppers” now

20th century elections – who would you most want to grab a beer with

21st century elections – who do you least want to punch in the face

Shift in win probability from candidate with most Washington experience to candidate with the least Washington experience

Democrats will try to blame depression entirely on Trump

Both parties want to spend. Will either dominate house and office?

Yield curve control

Global supply chain arbitrage is over

US competing on China’s turf. State-based capitalism.

Fiat news – “It’s the presentation of opinion as fact”

The virus and how to think about the virus started in China

Behind a currency you have a nation, behind a nation you have a currency

Money-printing in tandem with de-globalization means portfolios must change

Cashless society

When central banks do their job you buy bonds. When central banks do not do their job you buy gold.

Expect capital controls

Experts are experts in their one field typically

Cost of capital must rise for retirees

Crisis is evident when you look at which states Trump and Clinton took. Coasts vs. midland

Xi is failing based on inability to keep Trump in line, Hong Kong riots, and concentration camps

A 90% recovery will not suffice

Expect “This week better than last week” rhetoric

We have never made a coronavirus vaccine

Cases spike end of week and ease off over weekends typically

Volatility in yields has gone way down

Major city populations may decline

Fiscal, fiscal, fiscal

The only thing that governments do effectively is raise taxes

Coronavirus may accelerate the green energy revolution

China to move towards more consumer-centric economy

Cold War 2.0

10 years ago US decided to dominate social media and China decided to take the AI and 5G route

If a currency is deserted, then the government loses the ability to monetize the debt

Digital currency disrupts EMs

Covid-19 could replace the war piece in a Fourth Turning

Fourth Turning adds all prior problems to a crux

Governments always become larger, more intrusive, and more authoritarian in a crisis

Inflation defunds promises

Covid-19 is jail without a fun story

Financial capital growth affects multiples

Fed may buy directly in auction if it gets “sloppy”

There is left and right tail risk

May be the crisis we needed to cause change

The way a downturn is entered dictates a recession or depression. Meaning pre-crisis balance sheets and cash flows

Social welfare is a growth industry

Additional debt reduces the productivity of new debt

Long term, low rates lead to a planned economy

Cutting hurts much more psychologically than increasing less in wealth distribution

BOE and Brazil CB have announced direct financing of government

Velocity of money necessary for hyperinflation

Pension with mandates of fixed income will likely fail

US pensions 60% funded

Dollar performs best in shrinking growth

Coal is hated

US Shale is product of QE

Can’t kill shale. Can only change owners.

Once radical mainstream is now redundant news

Trust was replaced with price.

Relationships were replaced with algos.

Biggest profits occur when you run the other way first

Some stocks fall through sector cracks

Tesla financiers are die hard too…

Capitalism leads to uneven distribution of prosperity. Socialism leads to equal distribution of misery.

If your company is protected on the downside, then your upside can be regulated.

Machines know everything about price and nothing about value.

A lion only must outrun the slowest gazelle. A gazelle must outrun the fastest lion.