Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 360

Media worth consuming - May 2020

A monthly look at dozens of local and global media articles that often do not receive mainstream coverage in Australia.


A cascade of bankruptcies is starting to hit the US economy. US auto dealers are overstocked with new cars and are having to rent space to park new arrivals. The real work for mortgage servicers will begin after the pandemic ends, when borrowers have to start repayments again. Credit markets point to more pain ahead for equities. Stanley Druckenmiller poured a bucket of cold water on asset prices and central banks.

Hertz has filed for bankruptcy with formerly AAA-rated bonds secured by its rental fleet at risk of taking a loss and its November corporate bond issue expected to default before making its first interest payment. America’s largest shopping centre skipped its last two monthly debt repayments. WeWork’s non-payment of rent is slamming CMBS transactions. A growing list of emerging market countries have their sovereign debt trading at distressed levels. Ten of the worst bond deals of the last decade. After four decades of strong real returns on bonds, history points to decades of negative real returns ahead.

Leveraged loan investors are regretting their purchases of covenant lite loans. The Federal Reserve is going to participate in leveraged loans with phony EBITDA calculations however sub-investment grade bonds are getting far less help from the Fed than the market is pricing in. UBS sees a world of pain for CLOs unless economies see a rapid recovery. Credit unions focussed on industries currently shutdown are suffering badly. Illinois pulled a bond issue after lacklustre demand. The state’s investment grade rating is likely to be lost and the existing debt is trading at emerging market yields. Deutsche Bank is going to struggle to find buyers for its bad bank assets. The US Government has gone from a deficit of $1 trillion per year to a deficit of $738 billion a month.

Bitcoin miners are getting extra income from load shedding agreements. Unicorns have done an extraordinary job of losing tons of money in industries where others were making decent profits. Bureaucracy is killing investment returns at many pension funds. The man making a small fortune betting against private equity. Michael Hintze’s credit hedge fund is down 50% in two months. There’s three parts to risk; the odds of failure, average consequences of failure and tail end consequences.

Politics and culture

The media castigated Florida’s Covid-19 response whilst lionising New York’s but the data shows Florida’s response was far superior. Nursing homes in New York acquired Covid-19 after they were forced to accept infected residents discharged from hospitals. New York’s Governor claimed they had a low level of deaths in nursing homes but the statistics had been deliberately doctored. New York City forced a hospital offering free care to close in the middle of the pandemic because of a debate over religious beliefs. New York’s Governor begged for out of state health workers to help, then he slugged them with double taxation. San Francisco provided homeless people with free hotel accommodation and free drugs as part of its Covid-19 response.

The Governor of Kentucky called out an unemployment claim by Tupac Shakur (also a dead rapper) as a fraud, but it turned out to be a legitimate claim. In many cases, citizens reacted earlier and more rationally than governments to Covid-19. A series of US courts have ruled against government lockdowns, citing a lack of evidence of their necessity. A Texas salon owner who stayed open “in order to feed her children” was jailed by a judge for a week, but received $500,000 in donations. All workers are essential and leaving politicians to decide who is allowed to work is unwise. What if all the businesses forced to close just opened at the same time? Charity works best when people give voluntarily not forced by governments.

The mainstream media has treated similar accusations against Brett Kavanaugh and Joe Biden very differently. Euthanasia is a slippery slope, with several nations starting with voluntary and now moving to forced. The US is stepping up its support for Taiwan’s involvement in the UN and other global organisations.

In the 1930’s US taxpayers revolted, we could see the same thing again in coming years. If businesses and consumers must tighten their belts, governments should have to as well. Crony capitalists are using the Covid-19 crisis to beg for more government funding. The US Supreme Court is about to reconsider the doctrine of qualified immunity. American education institutions are dealing with a deluge of complaints of systemic discrimination against men.

Economics and work

In February Jerome Powell rubbished Modern Monetary Theory, now he is implementing it. Developed economies are now openly and directly using their central banks to finance government spending. Monetising debt brings long term problems, including skewing the way government works. The Federal Reserve needs to buy trillions of dollars in debt this year to keep up with Congress’s spending plans. If the Fed didn’t buy US Treasuries the lack of willing buyers for government debt would be exposed. The government answer to too much debt is more debt, so expect a lot more zombie borrowers.

The RBA has gone from 0% to 7% ownership of government bonds in less than two months. Germany’s highest court finds part of the ECB’s quantitative easing programme is unconstitutional. The Roaring Twenties were preceded by a pandemic and deep recession, with the economic cleansing a key part of the growth that followed.

Paying workers not to work looks a lot like Weimar Germany. The minimum wage in the US has been effectively increased to $25 an hour by large welfare payments. Less than half of the US population is employed, the lowest percentage since the Second World War. Many Americans have given up their independence and savings, living paycheque to paycheque and now needing government assistance to survive. The US government is using higher welfare payments as a way to sneak through a minimum wage increase.

Half of American small businesses had less than two weeks of cash on hand before the Covid-19 crisis, now one-third of small businesses aren’t planning to reopen, citing an inability to meet rent and/or mortgage payments. The US government gave a ridiculously lavish bailout to its airlines.

Consumers are about to get some overdue price cuts. The fear of deflation by central banks is easily overcome by basic economics. Europe is facing its third financial crisis in 12 years with this one likely to be the worst of them. Italy set a cap on the price of face masks and promptly had a problem securing supplies. The Michael Jordan documentary series contains a whole bunch of economic lessons.


After criticising Sweden for its Covid-19 response, many countries are now adopting its approach treating their citizens as adults capable of making decisions for themselves. Doctors in California are seeing an unprecedented surge in suicide attempts as a result of lockdowns. A clear explanation and examples of how Covid-19 is transmitted.

A thorough dismantling of the political spin and responses of both sides to Covid-19. There’s still so much we don’t know about the virus. One man is fighting to bring balance to the lockdown debate, but Silicon Valley wants to shut him down. Prisoners in Los Angeles deliberately infected themselves with Covid-19 in an attempt to gain early release. The vastly different reaction to the 1957 pandemic shows how we have changed our view of deadly viruses.

What it is like to be stung by a 'murder hornet'. A Californian man was arrested and released three times in a day, each time released without having to post bail. The intriguing story of how a young hacker saved the internet from the WannaCry computer virus after years of black hat misdeeds.

The man who feeds a remote Alaskan town with ingenuity and a Costco card. How one retail trader went from +$77,000 to -$9,000,000 betting on oil futures. Does Michael Jordan the owner care less about winning than he did as a player? How a pizza shop owner fought back against Doordash with a pizza arbitrage. American cannonball run enthusiasts have used Covid-19 to smash records.


Written by Jonathan Rochford of Narrow Road Capital. Comments and criticisms are welcome.

This article has been prepared for educational purposes and is not a substitute for professional and tailored financial advice. The accuracy of the material cannot be verified in all cases. Narrow Road Capital advises on and invests in a wide range of securities, including securities linked to the performance of various companies and financial institutions.



Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates


$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.


Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.