Dead Cat bounce?

[HKG2301]

OK, so I'm relatively new to the NZ market, investing in the NZX less than a year. It's still not clear to me how much we're driven by the US markets, but assuming there's a link (at least during Covid), should we not be calling this a Dead Cat Bounce and preparing for a re-test of the March lows? That's certainly on the cards for the US markets, especially if they've badly mis-timed their Covid 're-opening', which is likely. Will our market ignore another 20% drop in the US markets, or should we be battening down the hatches as well?

[ynot]

OK, so I'm relatively new to the NZ market, investing in the NZX less than a year. It's still not clear to me how much we're driven by the US markets, but assuming there's a link (at least during Covid), should we not be calling this a Dead Cat Bounce and preparing for a re-test of the March lows? That's certainly on the cards for the US markets, especially if they've badly mis-timed their Covid 're-opening', which is likely. Will our market ignore another 20% drop in the US markets, or should we be battening down the hatches as well?

Billion dollar question. Nobody knows.l

[SBQ]

Billion dollar question. Nobody knows.l

Exactly and recently Warren Buffet at his annual meeting made the same claim. No one and NO ONE with certainty and reliability and consistently time after time can tell you where the share markets will be tomorrow, next month, or next 2 or 3 years. What Buffet kept saying in his slide show presentation: "Never bet against America" and he's demonstrated many examples in his meeting of times in the past how the US came from nothing, to a super power, netting Americans to live a high standard of living with the highest disposable income around the world - all in a period of 230 years. And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...

[ynot]

Exactly and recently Warren Buffet at his annual meeting made the same claim. No one and NO ONE with certainty and reliability and consistently time after time can tell you where the share markets will be tomorrow, next month, or next 2 or 3 years. What Buffet kept saying in his slide show presentation: "Never bet against America" and he's demonstrated many examples in his meeting of times in the past how the US came from nothing, to a super power, netting Americans to live a high standard of living with the highest disposable income around the world - all in a period of 230 years. And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...

Yes I heard him, but then he does have a vested interest in wanting to talk the market up. Like all great empires they eventually will go down.

[SBQ]

Yes I heard him, but then he does have a vested interest in wanting to talk the market up. Like all great empires they eventually will go down.

The Roman Empire went down. The Egyptian, etc. A question of 'when' will the US empire go down? Not in mine or my children's lifetime. If it's a question of WWIII where everyone blows each other up... no investment asset would matter as they would all crumble to ashes.. gold would be worthless.. everything. But for the meantime, Buffet is correct.

[Bjauck]

...And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...

The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

[SBQ]

The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

For as long as I can remember, it's always been "The US" vs the world, well before Trump made this observation. I've heard the most moronic excuses locally here in NZ about why there's been bias against Americans? One being, during war times, Americans were known to come and impregnate our women. This view would be synonymous over in Europe as many tourists i've met from those regions have a similar view. Over the years living in NZ, I put it down to simple jealousy, and certainly not recent issues like Trump is voicing this out. I even recall watching 80s movies where Americans were portrayed negatively in the rest of the world (in pop culture) ; this is nothing new.

Some reading: https://foreignpolicy.com/2018/07/10...the-same-time/

Now for some hard figures:

https://tradingeconomics.com/europea...per-capita-ppp $38K
https://tradingeconomics.com/united-...per-capita-ppp $55K

During my last year at uni we did a study on the European Union model. We also debated on the issues & roles of the UN, NATO, WTO, etc. Perhaps the best years of my study because a lot of it had little to do with text book studies and more with real world issues. This was in 1997 before the EU currency was about to be floated. For the UN, the conclusion we based was it was a 'useless' organisation. Some 20 years later and they still prove to be useless against global conflicts.. yet we criticized why the US continued to fund most of the UN's budget. Took until 2016 when Trump came in for the US gov't to realise this problem. and we look at issues like the WTO and NATO - again all organisations with their shortfalls. Canada for years has lodged complaints with the WTO against the US but somehow, the WTO can't impose binding laws against the US. Wow! is this not a surprise?

But for the most compelling issue is the formation of the EU. What was it's motive, it's role? why? We came down again, to the simple conclusion. They wanted to adopt a model that the USA has used for the past 200+ years. A "Unification of States". Yet we saw so many shortfalls. Europe has a diverse mix of cultures and languages, many that maintain conflicts that had gone for generations. You have a huge gap between the haves and the have not nations within Europe. Then there's sovereign debt issues that never was marked by the ECB - that is, the EU nations never 'consolidated their debt' - you have Italy that claims debt from Germany over the war years. The US had sorted their debt consolidation centuries ago. Martin Armstrong talks a lot about the EU monetary problems and debt financing on various member states:

"There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt."
https://www.armstrongeconomics.com/i...tion-of-debts/

and from a 3rd reporting of Mr. Martin:

https://snbchf.com/2017/02/martin-ar...isintegration/

"Every nation including the United States should consider the success of Switzerland and its small government. They provide the ideal example of democracy in action and how to rid society of bureaucratic corruption."

Switzerland is not part of the EU and seems to be holding well. (helps to have all that money as a once tax free haven nation). But to have greater nations like UK to pull the lion share and propping up poor EU nations is not going to work in the long term. Germany being the largest economy is getting the short end of the stick by being part of the EU.

A lot more can be discussed about the issues of the EU - but from what the EU model was intentionally meant to do... we're witnessing the model falling apart.

[HKG2301]

... A lot more can be discussed about the issues of the EU - but from what the EU model was intentionally meant to do... we're witnessing the model falling apart.

Can't argue that. But sadly the US seems no better these days, at least with Trump at the helm.

Hopefully things will improve in November because now, more than ever, the US and the world needs a safe pair of hands at the helm.

The coincidence of political, social and even military unrest in so many parts of the world was worrying before the pandemic, much of it exacerbated by Trump's mischief. Now it's positively scary!

[MSJ]

The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

When i look at the UK GDP Growth rate all i see is lower highs and lower lows..the trajectory has been down since the 70s ?

https://tradingeconomics.com/united-...-growth-annual

[kiora]

Sometimes even Blackrock managers say what they believe

"DeSpirito added that when it comes to stocks, absolute valuations, which calculate present values of businesses by forecasting future cash flows, “are not cheap. That said, stocks are still very attractively priced when compared with bonds. The implied equity risk premium (the expected return on stocks over bonds) is still quite high,” said DeSpirito.


His stock picks include a mix of stable health care, technology and consumer staples businesses and a mix of more cyclical financials, energy and industrials companies.

If the virus “continues to wane,” and activity starts to normalize, S&P 500 SPX, 1.79% earnings estimates for 2021 should “approximate the original estimates for this year.

“A recession shouldn’t really change either the long-term growth of the economy, the earnings power of the S&P 500 index, or the valuation of the market. The market always overshoots in corrections,” said DeSpirito."
https://www.marketwatch.com/story/bl...of2&yptr=yahoo