HCG at these levelsThought 1) To support the economy and by extension the banking sector, the fed government is going to run a 350 bil (?) deficit this year.
If they do not, the economy collapses and bank go to zero.
Reiterate: In order to prevent this collapse (and for all our bank stocks to <> 0), the government has to run this deficit, and future deficits in the amount what? 350 this year? 150 next year? then 100 thereafter and slowly declining? Choose your own numbers
Can they do this into perpetuity?
In addition to those thoughts and questions... this is federal government debt. Then we have provincial debt and municipal debt, neither of which have access to a printing press, so they must either beg the feds for free money (= even higher fed debt), or jack taxes through the roof. As a minor example, the City of Toronto recently said that without a fed bailout they would have to increase property taxes 47%.
Thought 2) A working vaccine or more evolved, efficient and available testing affects 1 above
Thought 3) The above situation of deficits is just so that we can exist in the current environment, which already looks to me like an environment of economic stagnation and decling bank profits and return on equity
There are many other thoughts, but they are of lower significance to the above
It would seem the base case scenario is the govt will do whatever it has to, as long as it can. The biggest danger is what would prevent it from being able to do so? Rejection of the currency caused by massive stagflation perhaps? Our banking sector would be saved, and use the share prices return to "old" prices, but could the value of those dollars decline so much that they buy only half of what they used to?
U.S. Dollar & Gold?
I bought a bit of shares in a small Japanese construction company. Own a chunk of gold (25% of portfolio)
Wouldn't mind stepping back into HCG/EQB, but I have trouble doing so at these risk/reward levels.
Not much clarity. The virus is fading steadily, but probably only so long as we maintain draconian economic measures
GLTA