2019 and the end of a decade which has left most of us more stressed out, confused and overwhelmed by markets than ever for a decade that ended with a big bang, leaving virtually no asset class in the red except for natural gas, if we look hard enough. A 60/40 portfolio of US Stocks and Bonds was up over 22% in 2019, its best year since 1997. As we can observe from the table below, there have been outsized returns in Bitcoin equities, bonds, gold and cash and before we can even catch our breaths, 2020 has taken off with bonds leading the way.
2019 Total Returns
Source : Pension Partners on Twitter
More significantly, the world made history in a decade without recession since 1900’s, the longest economic expansion in known history 126 months and counting, with global bond markets adding US$ 6.5 trillion in value and global stocks up US$ 17.5 trillion (US$ 2 trillion from the Aramco IPO included).
Source : Ryan Detrick on Twitter
Indeed it has been a “Buy Everything” year despite lagging corporate profits and CEO exits at levels not seen since the last financial crisis on one of the poorest earning seasons since 2010 on weak sales growth and EPS that is based on significantly downgraded consensus too.
Source : Daniel Lacalle on Twitter
What are we to make of 2019? Or do we really have to?
All the Things We Got Wrong – How did 2019 even happen?
There are riots in Hong Kong, India, Chile, Iraq, Lebanon, Italy, Spain, Ecuador, Guinea and more as fires burn in all continents except the Arctic with record high temperatures (Sydney at 48.5 degrees this weekend) while Jakarta experiences a flood of a lifetime this weekend as well.
There is everything to hate just like the final installation of Star Wars to end the epic in a movie where you hate the heroes, the villains and the space-ships too. The tenacity of the Resistance and their final victory, reminiscent of ….. “fake news” ?
How did we watch WeWorks rise meteorically each round of fund raising, asking ourselves if it is believable and yet tell ourselves that the bankers are smarter and buy the next loss-making IPO as if it is different this time when we find in the first week of 2020 that another Softbank-backed Indian start-up has ran into scandal?
The entire sharing economy has started to turn a bit pear-shaped even after the “we may never turn a profit” Uber IPO which still got people hooked even as their former founder sold out and even as folks start wondering if we really need loss-making Uber with 6,000 sexual assaults in the past 2 years in the US alone?
We do not really need WeWork and gang to tell us it sucks because Singapore’s e-scooter ban speaks for the silent majority as GoBike folded this year and our Honestbee restructures.
We also knew there was no way Boris Johnson would have won unless it was Jeremy Corbyn he was running against because the silent majority are simply just too afraid of socialism and yet think the Democrats have a chance in the US elections.
Source : Bloomberg
We knew there is no way dictators and despots and populist politics can last after Venezuela and it is the same when opportunities are denied of the young and the next disgruntled country appears to be South Korea.
Is it any wonder the Millennial generation is disgruntled and unmotivated when tuition fees in America has risen 1000% since 1980 when wages are only up 100%?
Source : Barry Ritholtz on Twitter
Just to put things into perspective: The average US worker must now work 126 hours to buy 1 share of S&P 500. That’s a fresh record. In the 1980s, it took less than 20 hours.
Source : Holger Zschaepitz on Twitter
What is the point of having an opinion about China when you will never get the truth because China has overtaken Turkey (which has no journalists or central bankers left perhaps) as the biggest jailer of journalists in 2019?
This year has demonstrated what we always knew, that despite the defaults and more defaults, the economic numbers will hold and beware because we saw what happened to the NBA and Arsenal if you dare express otherwise.
While it is not known if China is the largest jailer of economists, economists refrain from commenting on the Chinese economy or risk the axe like the chap below in Hong Kong but the unwritten rule is not to ever publish negative research or information about China and it is clear when HSBC got omitted from the list of banks in helping to set a new benchmark in August for the group’s CEO to quit after just 18 months into his job purportedly after the bank’s Greater China head stepped down on the protests in Hong Kong.
Arsenal FC may be the latest but they are not the last to bow after the host of names to have apologized to China in recent months.
All the International Brands that have apologized to China (not exhaustive). Source : Supchina
Even Reuters bowed to China on the anniversary of Tiananmen and again, in the recent Hong Kong protests. Now, what about those economic numbers that never seem to disappoint by much again?
So much for the practice of totalitarianism and surrendering all 10 finger prints on arrival in China plus the face print and voice print and perhaps DNA, one cannot help but wonder if they are less partial than lying Donald Trump who has managed to wear out the entire world and markets (aka gas-lighting) with no less than 2,700 false claims or lies or, God forbid… fake news this year?
If that has become “normal” and acceptable in life, then it becomes rational to believe that God is on his side.
We do not know who to hate more – totalitarian China or Lunatic Trump, or maybe we are just angry with ourselves because we cannot make sense of things these days?
How can China buy US$50 billion worth of agricultural products when the peak they ever managed was US$25 billion, that they would have to resort of including ethanol as agri?
Source : USDA
What happened is that We Have a Problem with Too Much Information
We have too much information bombarding us at any point in time and it is not just relentless, it is debilitating.
Yes. That is the problem if you ask. It was 1979 when William Shatner presented an astonishing fact:
“A daily copy of the New York Times has as much information as an educated individual of 16th century would absorb in a whole lifetime… it’s doubling every 7 years”
Today it is doubling every 18 weeks – Brian Roemmele.
Information and disinformation is numbing our minds that we throw in the towel sometimes and opt to subsist on a lower level of analysis as we grow older and leave the problem to our leaders who are equally overwhelmed.
Seriously, do we really expect 60-80 year old leaders to understand the complexities of technology and how the algorithms and A.I. are second guessing us? Not to mention the flood of disinformation and fake news out there?
What happened is that Our Brains are No Match for Our Technology
They are stalking us.
Source : Bloomberg
And our brains are really no match for the flood of information that is driven to us by systemic programmes that are atuned to our psyche which leaves us to doubt our own innate ability to function as a logical and rational being.
And hence, the floodgates open to the antitrust lawsuits that our limited imaginations can suggest to us but there is really more. The doubts set in – Do you really trust yourself?
What happened is that We Had a Leap of Faith or a Breath of Bad Air
Vaping was superior to cigarettes and now people are dying.
Marijuana/Cannibis/CBD was proclaimed to be safe and even a cure but now, risks are emerging.
Beyond and Impossible Burgers were proclaimed the new wonder food to save the planet and our healths but have been dissected to overall be less healthy than turkey.
Lastly, social media and the ability to link us all together as social creatures which is conducive to mental well being, errr, has proven to be a fallacy, turning ordinary folks into narcissists and scammers and depressed, suicidal beings.
Source : Fast Company