For the Shape of Our Recovery, CHECK History

Many have suggested that our economic recovery will resemble the letter U or V. However, Gross Domestic Product (GDP) and Employment will likely require at least several years to recover. A rapid recovery is:

Instead envision the recovery resembling a check mark (think Nike swoosh):

This is consistent with the historical analogues we discussed last month the Great Depression and Japan’s Lost Decade(s), although in both of these cases the ‘tail’ (recovery) extended beyond a decade.

The Congressional Budget Office recently revised their estimate for Real Output (GDP) and employment, and they expect both to recover within the next several years:

Source: Congressional Budget Office

Both society and the markets are ripe for turmoil over the next several years. The Cold War with China and civil unrest will flare on and off possibly even conflagrating into a civil or world war. This instability will manifest itself in market turbulence.

Currently massive stimulus is blunting the painful reality that the economy (and some institutions) are broken. For these reasons I am very bullish in the near-term. Like a trauma patient given large doses of potent painkillers, we enjoy a respite from pain; but expect an arduous recovery.

This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an offer to buy or sell any security. .

S&P 500 Overvalued but Likely to Move Higher

Market headwinds persist while tailwinds subside slightly. The S&P 500 remains historically overvalued , while the bullish effects of massive fiscal stimulus persist but are subsiding. The S&P 500 has traded within a range around 3250 (red line) to near 3600 (green line) for the past couple of months: The S&P 500 will likely continue to trade within a range until earnings catch up with stock prices and/or additional fiscal stimulus arrives. When the S&P 500 breaks out we believe it’s more likely above the green line than below the red line. We believe the S&P 500 is in a bull market and are bullish for the upcoming month. This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an off...

We Claim to be neither Fake nor Smart...

...But the Gabriel Private Alpha (GPA) Fund continues to beat the Artificial Intelligence (AI) hedge fund index and numerous hedge fund indices: 8/1/2020 15:51:53 Gabriel Private Alpha GPA Fund (after fees) SP-500 (SP-500 ETF SPY) Barclay Hedge Fund Index Hedge Fund Index AI (Artificial Intelligence) Hedge Fund Index Eurekahedge 50 (50 largest hedge funds) Index Overall Return since January 2020 17.9% 2.7% 0.9% -2.6% -0.6% -5.2% We accomplish this with a Beta of 0.14 (one-seventh [1/7th] the volatility of the S&P 500). Here is a screenshot of our year-to-date return (32.59% before fees): Back-testing of our model supports the Fund generating Alpha with Low Beta over the long-term. Nevertheless we are humbled by our return, and grateful for those who read the Gabriel Report. All the Best, Brian Gabriel

Is the Covid Crisis a Recession or a Depression? (Historical context)

“History does not repeat itself...but if often rhymes” - attributed to Mark Twain In the decade leading up to the crisis the Federal Reserve cut interest rates, and unemployment descended to near-record lows. At the same time corporate debt surged, and the U.S. pursued protectionist tariffs. Then the Great Depression occurred. The 1920s uncannily parallel our past decade, therefore it is instructive to compare today’s COVID Crisis to the Great Depression (beginning in 1929). We will also compare it to the recent Great Recession (beginning in 2007). The table below reveals that the COVID Crisis is more damaging to the Global and United States economy than the Great Recession, and of a similar magnitude to the Great Depression: 1 No reliable annual worldwide data exists for the Great Depression. Source for World Product during the other periods: Intern...

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