Seeking Alpha by Adding Beta

Sometime this week, number of confirmed COVID-19 infections would reach one million and number of deaths may touch 50,000. There is no flattening in sight as virus is still spreading exponentially in many countries and big cities like New York. The governments are putting shelter-in-place, 21-day lockdowns type of policies which is crippling economies around the world. At same time governments and central banks are providing trillion(s) $$ fiscal and monetary stimulus so that their economies are kept on life-support during these forced lock-downs. It's difficult choice policy-makers have to make. If you do too much it's a problem (like migrant crisis in India due to forced 21-day lockdown). If you don't go too far, it's a problem (like spread of virus in New York City and New Orleans due to slow actions taken by leaders in those cities and states). If you take the virus lightly the way President Trump took initially, it's irresponsible. In democratic world, one can

Last week the COVID-19 hit home on US shores. Finally US woke up to the upcoming pandemic and   looking at Europe, what could happen. I really have sympathy for Italy that it became worst affected country (after China) and that may be due to all the famous tourist spots. We were in Barcelona at end of Jan and life was going on usual even though 60 million Chinese were quarantined. No one thought world would be at this stage 5 weeks later! And given the speed at which it is spreading, things would get worse before they get better. That brings me to the topic of "The New Normal". Last week almost all US employees of big tech companies started working from home till further notice. Colleges moved to virtual classes and plans to continue that till end of school year. That means all of spring quarter moving virtual. Even convocations most likely will move to virtual. That would be a big dis-appointment since that's once-in-a-lifetime experience graduates of class of 2020 wou

Super Tuesday was really Super with Fed reducing rates by 50 basis points and Biden becoming front-runner. The week ended with clarity on democratic nomination with race between Sanders and Biden with momentum clearly behind Biden. With 3 more contests in March, the race is entering into decisive phase - if Biden wins Michigan and Florida, it would be over for Sanders. That means one of the potential risk of Sanders presidency I mentioned in my blog about " Black Swan " would be over! That leaves other major risk of Coronovirus spread. We already saw major increase of infections in South Korea, Italy and Iran. All these countries are using various mechanisms of quarantine, cancellation of public gatherings as well as workers staying home to stop the spread. There has been 100+ cases in USA and major companies like Google, Amazon, Facebook, Microsoft and Apple are asking their employees to work from home. They have also cancelled major events avoiding potential spread. These

Even though only last week I warned about potential "Black Swan" on the horizon , no one would have predicted that within a week markets would go from all time highs to correct territory in one week. This is the fastest and steepest entry to correction. So it's worth looking at which direction world economy and world markets are heading as new week starts. Here is my take based on some history, market psychology and just some common sense: The world had seen many pandemics such as SARS (2003), Swine Flu (2009-10), Russian Flu (1977-78), HongKong Flu (1968-69) and one of the most deadly Spanish Flu (1918)  The Spanish Flu infected nearly 500 million people and caused over 50 million deaths (more than both world wars combined). Before these pandemics, there used to be plague pandemics. Humanity had always and will always survive. During all these periods, markets go down but every time it had recovered. In 2003 during SARS, markets went down by 15% but six months later t