There's no way this is a "V-shaped" recovery... right?

[mtwelve]

Perhaps a little off topic as not directly crypto but think it's important anyways to discuss the overall economy and how it may affect crypto.

So as those in tune with the stock market know, essentially we saw a high of 3340~ (SP500), a low of 2170~ (March 17th I believe) and then currently we are flirting with the 3000 barriers today (looks like either this week or next week it might break it).

The economist in me is screaming unprecedented debt, balance sheets, potential negative interest rates, unemployment claims, etc.

But unlimited QE, buying of junk bonds and equity, seems to have created this huge divergence between the usually rational market and it's underlying economy.

I'm young so this is my first real depression/recession I've experienced and really understood what's going on but those that were around for the 2008 GFC or Dec 2018 V shape recovery - does this feel different? What are your thoughts?

How has your asset allocation of stock,bonds, PMs, crypto changed? Are you more cash heavy right now? When do you think we'll the next leg down?

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[mu_enrico]

I think it is more like a W-shape or U-shape since many experts predict there will be a second wave outbreak in autumn this year. Plus, my business (and the majority of my partners) are still on pause, and I don't see we can fully operate this year.

Anyway, all those securities you mention should reflect the real sector, not the other way around.

[Upgrade00]

I expect we'll be having up and down movements over the next weeks, while remaining in the downrange. The general sentiments are gloomy, the effect of the lockdown visible in many economies and with an end to the pandemic not yet in sight, so I won't be expecting a quick recovery.

How has your asset allocation of stock,bonds, PMs, crypto changed? Are you more cash heavy right now?

I expect a heavy push of cash into the markets to encourage spending and revive economies, possibly leading to a inflation, this would likely lessen the weight of fiat.

[Harriti]

Now I think people are investing a lot again so the stock market just went back up. but it seems that they are fomo about cheap stocks but they don't see the real world situation. Now the epidemic has not ended and every day the world has recorded tens of thousands more infected, so what is the reason for the market to recover? I guess most are betting on the future. If the situation doesn't change better, there will be a stronger panic sell. Now I just pray for the disease to be under control and everything is back to normal.

[sunsilk]

My crypto allocation is doing good I'd say. People is more with cash today and this is the reason that make them say that 'cash is king'. I think many were forced to sell most of their investments like crypto but if not, a bigger portion of it.

This isn't just about the depression of the economy but also we're dealing with pandemic. I don't know if these combined bad events are good because they're happening at once, just keeping myself with optimism.

[Febo]

I'm young so this is my first real depression/recession I've experienced and really understood what's going on but those that were around for the 2008 GFC or Dec 2018 V shape recovery - does this feel different? What are your thoughts?

It does not matter how recovery will look like. Governments are printing money and increasing country's debts. Economy will recover. It will recover sooner or latter unless the debt bubble will burst. Debt bubble will definitely burst. Covid-19 lockout helped adding a lot more hot air in the balloon. But e have no ideas when the big bang will happen. It can happen this year it can happen next year or in 10 years time. Latter it will happen more ready Bitcoin will be.

[gentlemand]

I have seen 'L shape' bandied about which is even less appealing.

The thing about this event that's impossible to call is that economies are basically in suspended animation. It's only when they come out of that that we get a sense of the actual damage. The workers lucky enough to be in countries that are paying their wages probably feel relieved at the moment. They may be less relieved not realising their job is withering and dying off screen and may not be there when the subs end.

And you can have a market that appears healthy and a real world economy that bears little to no resemblance to it. That's what it's been like in recent years already. If you were heavily involved in the markets there've been high after high. If you were working an actual job you would've noticed your cost of living going ever up while your quality of life was slowly sliding downwards.

There might be an even more stark delineation after this of that nature.

[20kevin20]

The economist in me is screaming unprecedented debt, balance sheets, potential negative interest rates, unemployment claims, etc.

I'm following this scenario. The current, apparent status of the economy is honestly looking too good to be true for what happened since the beginning of the year. The artificial pumps and desperate attempts to hide the ugliness of what's to come is making me believe that once they stop everything they're doing to cover the real side of the economy, hell will unleash.

This PDF has a chart at page 5 that clearly shows the fact that short-time working is predicted to be for 2020 in Germany on a more-than-double increase in comparison with 2009 which is alarming. To me, the worldwide economy looks like an insane bubble they're still trying to protect from bursting.

Look at the worldwide debt - do you think it'll just increase forever and money will be printed continuously and everything will artificially increase to quadrillions of dollars in debt?

These measures they're taking to protect against a crisis can't go forever. They have to stop one day - wonder what'll happen after they do. I felt a crisis was inbound for years, but never did I expect what we're witnessing right now. I just ask myself many times of the day what comes after health crisis, and I sure do hope the answer isn't food shortage.

How has your asset allocation of stock,bonds, PMs, crypto changed? Are you more cash heavy right now? When do you think we'll the next leg down?

Yes. I was planning to slowly accumulate PMs and crypto in the following 1-2 years, but now I'm on fast forward.

[bitbunnny]

To be honest I don't believe in V shape recovery. Having in mind current situation and some predictions for fall such rapid recovery would be too optimistic to expect.
It's yet to see all the consequences that economies have suffered and at this moment we can't see the whole picture. That also reffers to cryptocurrency market that will also have some indirect consequences and the whole impact is still hard to determine.

[Darker45]

It will take a whole lot of time to recover so it will definitely not be pointed at the bottom. Depending on the speed of development and degree of success of this current virus' vaccine researches, we might actually be seeing a sort of a downward ladder.

If the economy will respond positively and quickly to the lifting of restrictions and lockdowns-- which is a huge risk and therefore highly unlikely to produce the desired results-- it might somewhat be a V-shaped graph, but then it will eventually fall down once again sans a COVID vaccine, and possibly turn even worse after that.

I'm not cash heavy right now, I never was. As far as my crypto portfolio is concerned, it is actually far smaller that it was a few years ago.

[btc_love]

I don’t think that we should wait for the cryptocurrency prices to rise immediately after the events that are happening now, since other problems will begin immediately after these events. We must be ready for a long cold winter!

[Keiser Soze]

I dont believe at all in the "V shaped recovery".

I believe there is still quite a lot of risk off sentiment and this will prevail despite the coordinated efforts by Western central banks to print more money and support the various asset classes.

Isn't it a marvel when an entity can issue 'bonds' and the same entity can issue money to buy those bonds (because no one else is buying)?

[Gozie51]

I think the v shape recovery is what we are seeing because money seem to be flowing into the economic now as the economy itself is coming back. There is no need to be pessimistic because the economy is getting back in a gradual way.

[srcarreira]

I don't believe at all in the "V shaped recovery".
I believe there is still quite a lot of risk off sentiment and this will prevail despite the coordinated efforts by Western central banks to print more money and support the various asset classes.
Isn't it a marvel when an entity can issue 'bonds' and the same entity can issue money to buy those bonds (because no one else is buying)?

Chances are crypto's has its own patterns of chart movement we don't even know about.
So it could be "W shaped recovery" or whatever there isn't

[mtwelve]

I think it is more like a W-shape or U-shape since many experts predict there will be a second wave outbreak in autumn this year. Plus, my business (and the majority of my partners) are still on pause, and I don't see we can fully operate this year.

Anyway, all those securities you mention should reflect the real sector, not the other way around.

Yes got my words tangled up there. And if you don't mind asking, what kind of business do you run? Is it a restaurant, or something else that is directly affected by the pandemic? How do you see your business operating in the future.

A W shape would be nice - was playing with options and should've not gotten greedy and sold out near 2300...

[el kaka22]

Vaccine seems to be a long way out for now, of course there are some tests going on right now and thankfully there was couple of drugs that was used that showed some improvement and since that was discovered we are using that to basically heal people but there is no one cure that you can just inject with a needle and suddenly you are better. So, what we have right now is good because even if its slow and even it is a treatment instead of a cure, at least it shows us what helps people and what doesn't, we know a path. That is better than nothing if you ask me.

However all the tests, all the formulations, all the stuff just on paper (well computer these days) could even take months, after that we are going to need a lot more on top of that in order to reach the vaccine level.

[exstasie]

And you can have a market that appears healthy and a real world economy that bears little to no resemblance to it. That's what it's been like in recent years already. If you were heavily involved in the markets there've been high after high. If you were working an actual job you would've noticed your cost of living going ever up while your quality of life was slowly sliding downwards.

There might be an even more stark delineation after this of that nature.

That's the key. The smartest traders I know were all quick to point out in March/April that the stock market is not dependent on fundamentals. Fundamentals hardly matter at all. What matters is liquidity. Bears can't fight a Fed that is injecting trillions and trillions of dollars of liquidity into the market. They are even propping the market up by buying massive amounts of corporate junk bonds, shoveling endless money into failing companies.

That implies one of two things to me:

• A recovery like 1987 or 2009, which assumes money printing can solve all woes
• The economic damage is too great, buy side liquidity will disappear (except for the Fed) and we're looking at a summer/autumn 1930 situation

Very binary situation, and we really won't know for quite some time. The incredible amount of optimism and the actual economic numbers definitely make me feel bearish though. There is so much irrationality going on. So much of the market refuses to accept even the possibility of an economic depression. The Gilead and Moderna rallies made that all the more clear. Everyone is banking so hard on a fast resolution. What happens if later trials (the real test of treatments and vaccines) don't pan out? What happens if there is a second wave in the fall?

If there is no miraculous turnaround in GDP in the next 3 months or so, the markets are setting themselves up for massive disappointment and another liquidity cascade like March.

[mtwelve]

Vaccine seems to be a long way out for now, of course there are some tests going on right now and thankfully there was couple of drugs that was used that showed some improvement and since that was discovered we are using that to basically heal people but there is no one cure that you can just inject with a needle and suddenly you are better. So, what we have right now is good because even if its slow and even it is a treatment instead of a cure, at least it shows us what helps people and what doesn't, we know a path. That is better than nothing if you ask me.

However all the tests, all the formulations, all the stuff just on paper (well computer these days) could even take months, after that we are going to need a lot more on top of that in order to reach the vaccine level.

Yeah it seems SPY is acting like a huge biotech stock right now. Did you see how it reacted to Moderna? Jeez.

There's talks of a vaccine being made sometime later this year - that's literally impossible right? From what I've read it seems that it will take at least 18 months at the best.

And you can have a market that appears healthy and a real world economy that bears little to no resemblance to it. That's what it's been like in recent years already. If you were heavily involved in the markets there've been high after high. If you were working an actual job you would've noticed your cost of living going ever up while your quality of life was slowly sliding downwards.

There might be an even more stark delineation after this of that nature.

That's the key. The smartest traders I know were all quick to point out in March/April that the stock market is not dependent on fundamentals. Fundamentals hardly matter at all. What matters is liquidity. Bears can't fight a Fed that is injecting trillions and trillions of dollars of liquidity into the market. They are even propping the market up by buying massive amounts of corporate junk bonds, shoveling endless money into failing companies.

That implies one of two things to me:

• A recovery like 1987 or 2009, which assumes money printing can solve all woes
• The economic damage is too great, buy side liquidity will disappear (except for the Fed) and we're looking at a summer/autumn 1930 situation

Very binary situation, and we really won't know for quite some time. The incredible amount of optimism and the actual economic numbers definitely make me feel bearish though. There is so much irrationality going on. So much of the market refuses to accept even the possibility of an economic depression. The Gilead and Moderna rallies made that all the more clear. Everyone is banking so hard on a fast resolution. What happens if later trials (the real test of treatments and vaccines) don't pan out? What happens if there is a second wave in the fall?

If there is no miraculous turnaround in GDP in the next 3 months or so, the markets are setting themselves up for massive disappointment and another liquidity cascade like March.

But the "recovery" in 2009 - we were still in the gutter for a while afterward right? Are you using an economical definition of recovery, as a return to previous highs?

I want to see how the market reacts in 2 weeks time as the nation reopens and data should be coming in soon. It seems pretty much confirmed at this point that a second wave will be coming, no?

[mu_enrico]

Yes got my words tangled up there. And if you don't mind asking, what kind of business do you run?

Sadly, one of my businesses is a corporate event organizer that involves crowds, restaurants, hotels, transportation, etc. It is the biggest and got hit the hardest.

How do you see your business operating in the future.

This year still no demand, Q2 2021 will be low demand, Q4 2021 new normal (not as high as pre-covid).
Just guesstimate, and I will be very happy if my prediction will be proven false in a good way.

[exstasie]

That's the key. The smartest traders I know were all quick to point out in March/April that the stock market is not dependent on fundamentals. Fundamentals hardly matter at all. What matters is liquidity. Bears can't fight a Fed that is injecting trillions and trillions of dollars of liquidity into the market. They are even propping the market up by buying massive amounts of corporate junk bonds, shoveling endless money into failing companies.

That implies one of two things to me:

• A recovery like 1987 or 2009, which assumes money printing can solve all woes
• The economic damage is too great, buy side liquidity will disappear (except for the Fed) and we're looking at a summer/autumn 1930 situation

But the "recovery" in 2009 - we were still in the gutter for a while afterward right? Are you using an economical definition of recovery, as a return to previous highs?

I just mean the stock market. I'm talking about March 2009 onward:



Then, same as now, the market is trying to price in an economic recovery before it actually happens. This time I'm less confident, but at the same time, it's difficult to argue with trillions and trillions USD injected into the markets. These are truly unprecedented times.

I want to see how the market reacts in 2 weeks time as the nation reopens and data should be coming in soon. It seems pretty much confirmed at this point that a second wave will be coming, no?

The consensus among scientists is yes. The market is expecting it to be better controlled next time given awareness, time to prepare, and possible treatments or even vaccines available by then. I'm worried the market is overly optimistic.

I think we need to see June or Q2 financials to get a real feel for how things are progressing.