mcliu

Hopefully after this, people realize the importance of having domestic manufacturing capacity so we don’t have the whole world trying to source stuff from China.

There’s no way China style lockdown can or should happen here. If you look at archived Chinese social media, they were literally locking people inside their houses. Doors to entire apartments were welded shut. Infected people rounded up and forced into quarantine hotels. Public apology/denunciation for not wearing face masks. Japan, Korea have shown that there’s ways to contain virus without taking away all your rights. You don’t need to lock everyone up, people just need to pay attention and avoid close contact. Face mask and glove wearing should be encouraged. Also, in many ways, we are dealt a better hand in the Canada/US, many of us live in houses in much lower density areas. We also drive our own cars instead of mass transit. There’s also good delivery and internet infrastructure and many can work from home.

To be fair, it's not like any other Western country did a better job. Here in Canada, they've been much slower to act despite having a SARS outbreak 15 years ago. And Europe.. well just look at the #s.

This is their chance to shine. Hope they don’t f it up. I’m selling if they mess this up. ;D

Anyone have a theory on why the curve is so much worse in NYC/New Jersey than Washington/California?

I see the same thing but I don't understand it. How can bond funds and stocks sell of at the same time? One thing is clear, the jig is up for the central banks. https://www.marketwatch.com/story/fed-sets-new-loan-program-designed-to-ease-turmoil-in-money-markets-2020-03-18

Thanks for the enlightenment, clearly you are much smarter and better informed. I’ll just go back to watching the Big Short again to brush up on my finance knowledge. :-X

GFC was a solvency issue. Lehman and Bear and other banks went down because the assets that they held, AAA-rated MBS/CDOs were worth 0 and they had a 5% equity buffer.

What’s a good source for case data by state to track progress?

Don't forget potential for zombie apocalypse.

Wasn't he also saying "Cash is trash" like a week before everything blew up?

Are you saying it's great depression time? :o

@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. :-\