Inside the Rope with David Clark Ep 59: John Hempton - Central Banks aren't the answer to Coronavirus
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Mar 15, 2020 Join John Hempton, an equity manager at Bronte Capital known for his insightful investment strategies, as he discusses the real crisis facing markets: COVID-19. He argues that central bank stimulus won't solve a virus problem—scientific intervention is essential. The conversation highlights stark differences in how countries are managing the pandemic. John shares how his fund thrived during market turbulence, advises investors to adopt a long-term view, and underscores the importance of prioritizing public health over financial fixes.
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Contrasting Approaches
- Singapore successfully controlled the virus outbreak with strict contact tracing and quarantine measures, resulting in minimal impact.
- Iran's approach of hiding information and downplaying the severity has led to a catastrophic outcome, highlighting the impact of different responses.
Mispriced Risk
- When China officially reported 19 deaths, they were building mass hospitals, signaling a disconnect between official reports and reality.
- This disconnect, observed in mid-February, indicated a mispricing of risk in the market, prompting Bronte Capital to buy insurance.
Virus-Driven Crisis
- This financial crisis is driven by a virus, not financial institutions, making central bank intervention less effective.
- Central banks may worsen the situation by encouraging social activity, contradicting the need to slow viral spread.