Note: Navigating the links within this post will be time consuming
With the FED meeting..the NZ Treasury report already out and the soon to be released NZ GDP numbers,this maybe the time to revisit the Yale University's 4 R's model.
A fewf months ago I mentioned the 4 R's a lot in my posts, but it seemed back then to have conflicted with the media's position..Media and the market expectations were ahead of the ball game...and you don't fight against the market..
In saying the above the 4 R's is still a brilliant way to figure out what the Reserve Bank/FED and the Governments are going to do next, and so we can take that crystal ball and make decisions about what to expect in the near future...By now nearly everyone will have observed that most of the Countries in the World are applying very similar Monetary and Fiscal methods..All these methods are contained in Yale's 4R's model...In other words everyone is singing the same song sheet...
this makes it easier to "accurately" assume what the Government and Central Banks are going to do next.
The 4 R's Model are Run...Repair.....Recession.....Recovery...(This link article is 4 months old but it has updated links)
Contrary to Media and Markets...we are not in economic recovery stage yet!!!....
We are in the Recession stage of the 4 R's model..If you want to accurately look forward in your decision-making you have to remind yourself of that.
Each stage of the 4 R's model has the recommended Fiscal and Monetary actions to help combat a "crisis/aftermath" event...
While the recovery stage is next..These latest reports out this week has a theme..not as bad as previously predicted and this recession could last longer than previously thought...
The conflict:..The media and public think we are in recovery based mainly on the v shaped bounce of the Equity markets and businesses reopening after lock down...This is not a change of stage (recovery) but a monetary manipulated and then sentiment fueled positive reaction designed by the repair stage actions ... lowering interest rates flooding the economy with money, rent and eviction freezes, Government support..etc (see more on the Yale University link above)..
Recovery Stage:...We are not there yet but looking ahead, what will be the Government and Central Banks actions in this stage? ..Too many to list here on this post but here is one to wet your appetite..Bank resources strain (Government to advise/action the halt of Bank dividends to shareholders ...may need money injection into the banking system..etc)..This was telegraphed by Sir John Key's looking forward statement a few months ago..
.See the links to view the other recommended actions and results of earlier stage actions to date.
Other links with included links:
Covid 19 Crisis ..Fiscal Response trackers
Policy Responses to the Coronavirus Epidemic
Bookmarks