mcliu

@orthopa, thanks for the colour. @readthefootnotes, that’s actually a really good idea.. maybe we can figure out the facts and get an edge on the market, especially if we figure out when the virus is getting contained. Then you might get a few days/weeks headstart to buy..

Fiscal might not work right now since you want people to social distance, isolate, stop spread of virus. Maybe after virus goes away, fiscal will provide a big boost. Right now you want people/companies to borrow and extend debt maturities, lower borrowing costs, get enough cash to sustain themselves until the virus is contained.

I think this is to ensure that liquidity is available to companies taking a revenue hit. Financial system needs to lend, especially to borrowers in need. It’s not going to generate more activity, people aren’t investing or buying right now. But you need to ensure companies that are short on cash can roll debt, won’t default and cause a chain reaction. The economy is still solvent, not like 2008, this is a liquidity issue..

@orthopa, what is your assessment of what went wrong in Italy? Why the high # of deaths and probability that occurs in the US?

Chinese # probably off by 10x. If you can read Chinese, go through archived social media (most posts deleted), it is much more widespread and covered up.

Hmmm...Canada does have an advisory against international travel, does have recommendation for self quarantining for 2 weeks post international travel, doctors have been requested not to travel abroad so that they can be present to help treat, governments have mandated that schools be closed in New Brunswick, Quebec, Ontario & Manitoba, there is no formal entertainment going on - restrictions on gatherings have been placed...@ the grassroots level in Canada I find no one is shaking hands, meetings are being cancelled, there is alcohol based sanitizer everywhere.... Hospital capacity is what it is. However there are plans in place for closing OR's and turning them into ICUs if necessary. Bank of Canada has slashed interest rates, government has issued liquidity. Overall, from what I can see Canada is doing an exemplary job. But US has all the things that you’ve listed and then even more and everyone here is saying the US response is botched and they’re just waiting for Italy to happen so...??

If you think it’s bad in the US then we’re really fcked up here in Canada. No travel ban yet, lax airport security, no emergency declared, lowest hospital bed per capita, very limited hospital capacity, colder climate.. Economy-wise, mostly o&g and commodities, no big tech, housing bubble..

I think FFH is pretty consistent, doing what they’ve always done. Problem is that they have too much capital to use the same approach properly. Cigar but investing is good if you manage small amounts of money, not tens of billions.

Might also be cultural, Asians like to wear masks and don’t like to touch each other, also, bowing/waving instead of shaking hands/kissing. Koreans probably took quarantine more seriously since the outbreak was right next door in China. As anecdote, Chinese community in Toronto region has initiated self-quarantining program with volunteer food delivery since beginning of Wuhan outbreak when no one was really paying attention.

Risk-free + risk premium. In 2016, it was around 5% at a 2% risk-free rate. Maybe it's dropped to 4% or 3% as risk-free has gone down. Or maybe higher as risk premium goes up. You can run a sensitivity.

US economy is better, but SP500 valuation is stretched. In 2016, earnings fell from $110 to $90 share as oil prices collapsed. Discount rate was around 5%. Today, earnings are $140 per share, assume it falls to $120, even at a 4% discount (adjusting for 2% decline in risk-free rate), you're only at 3,000 points. If earnings fall a bit further to $110, and discount rate increases to 5%, it's 2,200 points.

Probably another -30% (~2,000 S&P500) before things look attractive. But it probably won't go that far. Just by the comments I've read on this forum, it sounds like everyone has cash..

Anyone here still going to the FFH/BRK AGMs? Looks like I'll pass this year. Hope WB/PW cancels AGM, they're in the high-risk age groups. :-\

Which medical expert? The one who's flooding this thread with his opinions? Or the ones that work on the disease in question and publish their opinions in medical literature/sites? I meant experts in the CDC and other organizations that are running this operation. I just question whether we have the expertise to criticize the US response at this time. I do think that those that have medical expertise like orthopa are in a better position to judge the situation than most of us. But then again, I read from another thread that we're facing an "extinction" level threat, so maybe it's time to panic. :o

It's amazing how you can read a couple of articles, look at a few graphs and suddenly become better informed than medical experts with decades of experience. I must suck at reading.

Gg. It’s gonna be a bloodbath tmr. I’ve somewhat lucked out with only a 5% position in mostly integrated, but it still sucks.

Low oil prices are probably a net positive for US economy, so bailout seems unlikely.. The strongest players will survive, consolidate and probably be better positioned for next upturn. Maybe a new cartel will form, Middle East+Russia+US.

I don’t know for sure, but I watched a doubleline presentations where he says clients are going unhedged, rather take the fx risk (potential upside) and get some yield..

It's definitely not predicting deflation. I find it useful to use both of charts below when thinking about the bond market. The second one is probably more important. https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DFII10 What it is saying though is that the stock market guys were way too enthusiastic especially in 2019. It's also saying that the economy is not that great. It's also saying that things in the labour market are not as they seem. I just didn't figure out what exactly. All of this probably has a lot to do with income inequality and a lot of other stuff like that though, not just a prediction of the next quarter GDP print. Don't you have to factor in the trillions of $ of negative yielding debt which is pushing many Japanese/European investors to US treasuries. https://fred.stlouisfed.org/graph/fredgraph.png?g=qj1l

Same thing happened end of 2018 when yield curve inverted slightly, people panicked. Then they saw stock prices fall, and they panicked some more. In 10 years, this will be mostly forgotten like SARS. I could be wrong and this is the start of the apocalypse.

Warren Buffett's company bails on Saguenay LNG project because of 'Canadian political context' https://www.cbc.ca/news/canada/montreal/saguenay-lng-project-1.5486517

It's interesting how we all became qualified pandemic experts all of a sudden. ::)

At some point people will realize how much BRK is worth. In the mean time, just sit back and enjoy. ::) I don't think a dividend is tax-efficient. It forces shareholders that do not want a dividend to receive one and also pay a portion to taxes. It's much more tax-efficient for the shareholders that do want a "dividend" to sell a portion of their shares.

Don't think it'll wipe out half of revenue. Even in Japan, NIM is around 1%. US banks also have more room to increase lending and cut costs than Japan/Europe. Negative rate policy in Europe/Japan is designed to keep heavily indebted/insolvent countries and companies afloat whereas US has done a better job de-levering and restructuring following 07/08 financial crisis. Impact to life insurance, and maybe float returns. But I think insurance companies will re-price policies to achieve targeted ROE through underwriting.

Just announced -50bps!