Comments of the Day
28 April 2020
Video commentary for April 27th 2020
Eoin Treacy's view
A link to today's video is posted in the Subscriber's Area.
Some of the topics discussed include: some evidence of rotation and risk appetite returning, major stock markets approaching the first area of potential resistance, oil remains under pressure from USO liquidation, gold steady, emerging market currencies remain under pressure.
Consumer Better than Feared? Earnings Revisions Bottoming
Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:
Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.
The US consumer is holding up for good reason. With an additional $600 a week in unemployment benefits, on top of the $1200 sent to 90% of the population, many people are making more money than if they were working.
Email of the day on bond market risk
Thanks for the regular coverage. I have been a subscriber for a long time, and find this really the only voice of sanity and unbiased views. So, thanks. Could you elaborate on the statement you mentioned where the bond investors should be cautious because / if majority of the bonds are held by the government. Also, could you kindly help think through and elaborate how the fed would deal with the following - exits from the agency papers the Fed is buying. Is there any limit on how much the Fed can buy in this program? - how will the fed deal with losses in the Junk bond ETFs if there were to be defaults? Are the losses guaranteed b6 the Treasury?
Eoin Treacy's view
Thank you for your kind words and long-term support. Governments very seldom pay back their debt. Instead they are more interested in the cost of servicing the total relative to other spending priorities. As interest rates have trended lower, the cost of servicing has followed, even as the overall quantity of debt has increased. That has created a situation where if interest rates rise, for any reason, the ability of the US government to fund itself will be impaired.
Email of the day - on dividend paying gold companies
Mr. Treacy has mentioned in one of his previous articles:
[https://Mr. Treacy has mentioned in one of his previous articles: https://www.fullertreacymoney.com/general/gundlach-sounds-alarm-on-paper-gold-etfs-raking-in-billions-/ ...There are 1145 precious metals miners listed on Bloomberg and 123 of those pay dividends. Some of the largest miners have tied the size of their dividend to the gold price and almost all have All-In-Sustaining-Costs significantly below prevailing gold prices.... I searched Bloomberg for the 123 metal miners that pay dividends but could not find the list. Would Mr. Treacy be able to point me to the list?]https://www.fullertreacymoney.com/general/gundlach-sounds-alarm-on-paper-gold-etfs-raking-in-billions-/
...There are 1145 precious metals miners listed on Bloomberg and 123 of those pay dividends. Some of the largest miners have tied the size of their dividend to the gold price and almost all have All-In-Sustaining-Costs significantly below prevailing gold prices....
I searched Bloomberg for the 123 metal miners that pay dividends but could not find the list.
Would Mr. Treacy be able to point me to the list?
Eoin Treacy's view
That you for this question which may be of interest to subscribers. If you have access to a Bloomberg try the EQS fundamentals search function. Filter for precious metals miners and then add a filter for dividend per share >0.
Email of the day on Australian coronavirus infections
Long time since I have sent an email to you, however I have kept my subscription up (joined in 2006) and always look forward to your daily audio/video etc.
In your last audio on 24 April I believe I heard you describe Australia’s Covid-19 rate as rising. I have to say that Australia is rightly proud of its success in fighting this virus and you can see from the following chart, from the Australian Financial Review, what a great job the Australian and state governments have done. I understand we have the second highest testing rate in the world and, so far, we have had only 93 deaths, compared with 20,319 deaths in the UK and 54,161 in USA. Boris and Donald should hang their heads in shame!
Just wanted to set the record straight!
Keep well!
Eoin Treacy's view
Thank you for this graphic which, as you say, highlights Australia’s success in curtailing infection growth before the “knee” of the exponential curve was reached. Thanks also for setting the record straight.
There has been significant dispersion between early actors and late reactors in their success rates in containing the viral spread. That was the primary reason I was so critical of the UK’s approaching more than a month ago. Since then almost every country has introduced lockdowns which has significantly reduced pressure on healthcare sectors.