Hello!

I was reading my twitter feed this afternoon ad I stopped by a really interesting Zerohedge Tweet. They published a detailed JPMorgan article about their opinion for the US stock market in the 2n half of 2020. You can read it here.

They basically don't expect a pure "V" recovery and think that the markets can bleed moving forward in the year.

The risk is that the magnitude of a 2H bounce underwhelms, leading to levels of GDP and earnings in 2021 significantly lower than hoped for. Here, JPM economists argue for a more gradual bottoming out in activity, such as seen after the Global Financial Crisis, and not purely a V-shaped one and they have the US unemployment rate staying very high around 10% at year-end.

FED Balance Sheet

In one of the slides of the JPMorgan analysis they talk about the FED Balance sheet expansion. I was concerned about the magnitude of the Balance sheet expansion during this Covid-19 crisis, however if you compare the magnitude of the acquisitions with the last done during the 2008 crisis they are almost the same size.

In one case we have that in 2008 the expansion was around 11% of the GDP. The Coronavirus FED program has been almost the same size than the last crisis.

In the other hand if we compare it with the Standard and Poor market capitalization we have that this time the % of the expansion has been even lower!

What about Bitcoin?

Well, I don't like to be influenced by this kind of information but in this case I am also feeling the same as JPMorgan. The second half of 2020 doesn't look specially bullish to me. As I wrote in several articles I think that Bitcoin prices will follow the same path as the other equity markets, so I expect a correction to happen sooner than later.

I am ready to step in if this happens!

Enjoy! 😊

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