Macro economic fundamentals in today's Market

[Ki Lee]

I really enjoyed the BP podcast #374 on March 18 with J Scott and Scott Trench.

I wanted to further ask and also discuss with you guys about macro economics in the current environment.

On the podcast it mentioned that a government tries to stimulate the economy in 4 ways. the central bank lowering interest rates, quantitive easing, printing more money, and direct stimulus(on a personal and business level.)

It’s my understanding that currently the government has executed on all the 4 options above. They are at zero interest rate, I’ve heard that there was quite a bit of treasury purchasing going on, the CB printed a bunch of money, and they are giving trillions in personal and business bail outs.

So my question is- does this mean that the government and the economy are against the ropes? What is the magnitude of actions that are currently taken by the feds to ease the pain here? Has the fed done all 4 of the above before? Are we at a point where we can’t do much else and something has to give?

It’s also my understating that the printing of the dollar and quantitive easing has been rampant in the recent years. Does this mean that the bull market has been artificially inflated by all these methods and people and businesses are now over-leveraged? We could be blowing a huge bubble ripe for popping.

I remember Ray Dalio saying that the short term debt cycle is 5-8 years but the long term debt cycle is 75-100 years. The last one was the Great Depression in 1929. Given the over leveraged situation and that the government is running out of option keep the economy afloat, can the COVID be the straw that breaks the camel’s back where even if the virus is conquered, the fundamentals will catch up and start a vicious downward cycle?

Obviously hard to predict the market, but just wanted your thoughts and opinions.

Thanks

Stay safe and healthy!

@Scott Trench @Brandon Turner