Friday the 13th and the Unknown

tl;dr: A week ago today, here’s what was on my mind. Let’s see how I did.

I am writing this blog post on Friday the 13th of March.

I have no idea if this (or any) post will age well

Like most of the other posts on this blog, it was written and then scheduled for release at a future date.

Like other posts, it was written from 6am-6:45am in the morning at a time when I have been awake for 45 minutes, but I haven’t yet looked at my phone, email, browser, or Twitter.

My morning routine is such that after I wake up, do some stretches and planks, and then have a meditation session, I sit down at the computer to just write.

There’s a page I have with “blog topics to write about.” Some days, I will just go to it, give a quick scroll and say, “a ha, I feel like writing about that today.”

Some days, however, I know in advance what I want to write about. Others, I need the list to jump start me.

But the important thing for me is the writing process.

It’s a type of meditation, a type of mental exercise. I find that once I look at my email or Twitter, my mind is more easily distracted and I’m less likely to have the free flowing (and random) thoughts that help me flush out the ideas. If the blog is a workshop, a key part of the process is to come in encumbered.

Today, that’s challenging.

Going Back to March 12th, 2020

Yesterday was a crazy day in the markets and around the world. It came on the heels of the NBA and NHL season suspensions. It was the day after Trump’s coronavirus presentation. It was the day that the US Federal Reserve announced its intention to create $500 billion worth of new money every day for a while. We’ll see if that happened.

As my kids and I watched Bloomberg Markets on TV at 11pm that night, we watched everything in Asian markets go red.

Every central bank in the world had either announced, extended, or was exploring rate cuts as a stimulus measure (with a few exceptions–i.e. Peru-yay for them.)

My kids’ school has closed down for 2 weeks starting Monday, though I’m not sure we’re sending them to school today (Friday the 13th).

Everyone seems to be running for cash. The Bitcoin as “digital gold” narrative definitely doesn’t seem to be holding up today as BTC was down 40%. Ouch. Of course, the gold as gold narrative also didn’t hold up as people sold it as well.

There’s no question that there’s “blood in the streets.”

That doesn’t mean everyone is dead. Assuming the Coronavirus doesn’t kill us all (or has killed us all by now-unlikely), somehow the world economy will emerge. Though, like other exogenous shocks to the system, it will never be the same again.

How will things be different?

Your guess is as good as mine.

The benefit is that you already know (at least for a week) since I wrote this post last week on the 13th and haven’t reviewed it since (that’s workshop blog policy).

So maybe all of the posts of this past week (which were also written in advance) look irrelevant now. I honestly don’t know and I’m not sure I care.

All I do is try to capture what’s on my mind at the time and then let it ride. In the long run, as Keynes said, we’re all dead anyway, so if I’m an idiot because of inane predictions, then so be it. I’ll be a dead idiot.

So here are some things I see from the vantage point of Friday morning, March 13th. I’ll just throw some macro and some micro.

• the deflation of the economy has only begun.
• We’ve seen airlines and events get pummeled, but the ripple effect of those and many, many others is only starting to get felt. Once we start missing pay cycles, spending and investment will further contract. This will be the calm before the storm. It’s the water receding before a tsunami.
• the significant inflation will then happen. Sadly.
• There’s SO much money being pushed into the system around the world. First in the form of central banks printing trillions of dollars worth of new money, but the bigger one will be in various government “stimulus” packages. All of the people affected by the deflation of the economy will need money to live on. Even if they get an “airdrop” of money, it’s more money chasing fewer goods (thanks to compromised supply chains). That’s the recipe.
• New laws will get enacted that further kicks the can down the road.
• Maybe the system will stabilize (hopefully) and we can stave off a total meltdown (which would suck). At that point, we will get a new set of Dodd-Frank and Sarbanes-Oxley rules that, though well intentioned, lead to unintended consequences that make an even bigger crisis more likely.

Like you, I have no idea what will happen in the near future. And you have a week ahead of me.

Like you, I’m just trying to make sense of things. Here are a few others that I think might happen.

• Warren Buffet’s massive stockpile of cash will prove, again, that he is a jedi master. The dude is going to own everything. OK, not that much, but a lot.
• Caitlin Long will have more than 43.3k followers on Twitter. She is an incredible source of knowledge.
• Biden, Trump, and Sanders will all test positive for Corona. These guys are in their 70s and shake hands with everyone. That could further complicate the election cycle.
• the end of handshaking. I’m fine w/that. I prefer chest bumps anyway.

What is Certain

I realize that today’s may be more rambling than others and, well, I’m sorry about that, but the last few days have been definitely more intense. I know everyone felt it.

But, as I look at the markets from where I sit (in my basement) and I think about all of the people around the world who are helpless victims of this perfect storm of irresponsible government financing, ballooning debts, coronavirus, and a Russia-Saudi oil price, my heart breaks for them.

Many people don’t have a buffer. Everyone is trying to store value for the uncertain future.

Uncertainty is the word.

I am reading Superforecasters and they quoted the Prussian general, Helmuth von Moltke whose doctrine was simple.

The only certainty is uncertainty.

Getting used to that and accepting it is critical. I know it’s not easy.

Oh, and the other certainty…

There will only ever be 21 million Bitcoin. I suggest you read Erik Voorhees’ brilliant blog post about Bitcoin being born in the dark.

Last time around, in 2008, Bitcoin wasn’t an option as it hadn’t been invented.

Please stay safe and healthy.