Spekulatius

Starter in WSBC, a cheap regional bank with a decent track record.

Yes, it is important to keep the hospitals open. The most critical number to look at is hospitalizations, which isn’t really impacted by testing rate. I also look at %positive tested. What you don’t want to see is all these three (including tested positive #) indicators shooting up rapidly, which is the code in AZ, FL and a few other stated right now. Any lockdown will be driven by hospital utilization’s. Color of the state (blue or red) won’t matter. Once hospital space gets tight, I think any state will start various lockdown measures.

Thanks for sharing. He is very optimistic that the dance can be maintained at low cost indefinitely, until vaccines are available. If true, doesn’t this support the general market level now? The economy may function almost ok, barring some mass entertainment events which need >50/100 people together. Do you share such an optimistic view? Let’s say California and North east manage the dance, and the mid west, Texas, Arizona fail and need another hammer lockdown. How big an impact is that to the US economy? I just went thought the article and I think it is pretty good. It matches the info I could gather from various sources. The problem with the herd immunity is that it takes a long time, as the Swedes found out and in the case of the US, the current IFR numbers suggest it would cost a lot of lives. We have had 120k death so far caused by the disease and with herd immunity it could be 10x as much. A lot of European countries have already case numbers so low they they can open up and have schools up and running for example. So essentially, they are already ahead of the US in how the economy can operate. This is due to the more effective and stronger shutdown measures. As far as the impact of several states like Texas, AZ, AL and other having high infection rates for a long time and what it means for the economy it’s really hard to tell. Maybe the population in states themselves ignores this and carries on. However, what about travel into and from these states? It’s free movement generally, but will people from COVID-19 free states will want to travel into these states? It will cause some issues for sure. I think we will have to see how this works. I am sure that real virus containment in the US isn’t really an option any more. https://www.aa.com.tr/en/asia-pacific/no-new-coronavirus-cases-found-in-japan/1870548 No new coronavirus cases found in Japan Japan did not have mandatory lockdowns. Yet they went to zero. The other day Spekulatius was arguing about protests and saying because protestors wear masks so it should be ok. So.....why then stronger shutdown measures are needed? Wear a mask and you can do anything, per Spekulatius logic. I never said the protest are Ok. I did state there are 3 factors that mitigate infections - mask wearing ( mostly) , younger crowd and protest being outdoors. Japan did have shutdowns. The larger cities ( Tokyo) were shutdown fairly early. The did not have a countrywide shutdown however.

Thanks for sharing. He is very optimistic that the dance can be maintained at low cost indefinitely, until vaccines are available. If true, doesn’t this support the general market level now? The economy may function almost ok, barring some mass entertainment events which need >50/100 people together. Do you share such an optimistic view? Let’s say California and North east manage the dance, and the mid west, Texas, Arizona fail and need another hammer lockdown. How big an impact is that to the US economy? I just went thought the article and I think it is pretty good. It matches the info I could gather from various sources. The problem with the herd immunity is that it takes a long time, as the Swedes found out and in the case of the US, the current IFR numbers suggest it would cost a lot of lives. We have had 120k death so far caused by the disease and with herd immunity it could be 10x as much. A lot of European countries have already case numbers so low they they can open up and have schools up and running for example. So essentially, they are already ahead of the US in how the economy can operate. This is due to the more effective and stronger shutdown measures. As far as the impact of several states like Texas, AZ, AL and other having high infection rates for a long time and what it means for the economy it’s really hard to tell. Maybe the population in states themselves ignores this and carries on. However, what about travel into and from these states? It’s free movement generally, but will people from COVID-19 free states will want to travel into these states? It will cause some issues for sure. I think we will have to see how this works. I am sure that real virus containment in the US isn’t really an option any more.

Yes, good point. Dry air dries out the sinuses /mucus which is the body’s defense mechanism against respiratory viruses. We know already that workers meat processing planets tend to get COVID -19 partly because standing I cold and dry air for long periods of time makes them more susceptible. So a pickup in virus activity in winter is very likely.

This is just anecdotal, but may add a little more color to anyone wanting to understand the industry. I've been to VicenzaOro many times & if you want quality, Italy is a great place to go (bring a very large wallet with you though). Hong Kong manufacturers (and Thai jewelers to a lesser extent) will copy just about anything & do a very good job of it, but will frequently use inferior quality gemstones (in particular, diamond melee). TBF they offer significantly lower prices, and something has to give, but even if you offer to pay a bit more for better melee, you'll be hard pressed to get the reliability of an Italian manufacturer. That plus the established haute couture names, make for an interesting segment of the market. Basically, there are 2 types of jewelers, those who sell branded (haute couture) merchandise with higher margins & slightly lower turns, and those who sell lesser brands & commoditized products at slightly lower margins & higher turns. Branded jewelers tend to have higher spend on required coop adds in order to promote brands. Commoditized jewelers will have more optionality with regards to participating in coop ads which become more requisite if they are members of buying groups and depending on the stroke of the brands they carry. --- Disclaimer: My hiatus from the offshore industry, into wholsale jewelery, was an abysmal failure. I'd have difficulty selling air conditioners on the equator. I think in this case, brand name, status attached to country of origin matter just as much a the quality of the merchandise. Northern Italy is well known for fine jewelers and Fope is a niche business with a global reach (85% of their revenues are foreign) that can exploit this, I think. Based on the price I paid 7 Euro and change), it trades at 7x EBIT. It’s too small for LVMH, but the new 59% owners have an investment banking background and saw value here. I hope they don‘t screw it up. I see a good chance they they follow up with a buyout when this COVID thing is over.

I wrote this before, but when people see other people doing “risky” things, they intuitively think it is safe (social proof food concept). Ironically it is just the opposite - going to an empty restaurant is way less risky than going to a full one for example. I am not sure how much of a cofactor colder weather is. People are mostly indoors and most infections occur indoors as well. it might increase the susceptibility of the respiratory system but then on the other hand, the epidemic has been raging pretty well in warmer climates as well (Italy, Spain, Brazil etc).

wow. Thank you very much! This is very helpful! I was wondering why their non-GAAP revenue is only 1% higher than GAAP. What's the reason to even bother? Now I understand that it seems to make sense to have this. With that said..... RP's non-GAAP eps is a total shit show. They added back Amortization, interest expense, income tax expense, stock comp and call it non-GAAP eps. Jeeze...... :o Fun fact: Stock based compensation expense for WDAY is ~24% of their revenue. You really can’t make this up.

That’s a great site. Bookmarked. Thanks for posting!

AZ not looking good at all. While the higher number of positive cases can be explained by higher testing numbers either, the higher % positive definitely points into the wrong direction, as does in the increasing number of hospitalizations. The number of death is still small. TX and a few other states in that neck of woods show similar trends. That didn’t take long: https://www.reuters.com/article/us-health-coronavirus-usa-arizona/arizona-calls-for-emergency-plan-as-covid-19-spikes-after-reopening-idUSKBN23H03K

FPE.MI - Italian artisan jewelry manufacturer. Got a buyout offer, but then the new majority owner decided not to go all the way due to COVID-19. The business will take a hit this year, but I think Italy will recover faster than thought. Seems very cheap for this great little business.

Of course the bonds are a crap investment too. by the way, if you compare bond yields to stock yields, you should compare investment grade bond yields (let’s say BBB) and not risk free bond yields to stock yields. The analogy to 1999 is not perfect (it never is) but there are a lot of similarities 1) influx of new market participants - back then via discount brokers like E*TRADE, now via free trades Robin Hood 2) highly speculative trades with a disregard of fundamentals (I don’t think I need to elaborate here) 3) Fed overshooting - in 1999 due to the perceived Y2K problem, now due to epidemic, which unlike the Y2K is very real. That’s where the parallels end unfortunately. The Economy was doing very well back in 1999 and is arguably in worse shape. The Federal budget had a surplus vs record deficits and we had a reasonable political setting back then. Interests were higher back then but were easing as well but then the Fed took the lunch bowl away after Y2K came and passed with not even a whimper. It is less likely now that this is going to happen, but who knows? FWIW, if we get 5% earnings growth from 2019 levels for the next 10 years I think we can consider us very lucky.

AZ not looking good at all. While the higher number of positive cases can be explained by higher testing numbers either, the higher % positive definitely points into the wrong direction, as does in the increasing number of hospitalizations. The number of death is still small. TX and a few other states in that neck of woods show similar trends.

I think 2020 is far worse than 1999. Compared to what’s going on right now pets.com looks viable in retrospect. I think it should just IPO again and I bet it would surge because if the nostalgia value. What's making you say that 2020 is worse than 1999? I remember stories on places like 20/20 (or something) about how much money people were making. Well, we have the stock market of 1999 and the economy of 2001 ( after 9/11) at the same time. Add to this a government about as competent as the Weimar Republik’s if you care. For completeness,

I think 2020 is far worse than 1999. Compared to what’s going on right now pets.com looks viable in retrospect. I think it should just IPO again and I bet it would surge because if the nostalgia value.

Trump has a point (imo) pointing out the protests On one hand and the resistance to allowing campaign rallies on the other : https://www.cnbc.com/2020/06/08/trump-to-resume-campaign-rallies-this-month-as-states-loosen-coronavirus-limits.html However, the protesters skewed young and mostly wear masks and the protests were outdoors, while Campaign rallies would be indoors and the audience as well as the headliners (including himself) skew older. Will they wear masks? This will be an interesting experiment.

Another anecdotal observation. They don’t buy Stocks that are about to go bankrupt because they don’t know about the impending bankruptcy, they buy them because they go bankrupt, having observed that bankruptcy often causes stocks to spike up. So now, some traders front run the bankruptcy or the bankruptcy traders.

Did bankrupt companies stocks actually pop in 1999? I don’t think so. 2020 may actually be worse than 1999: If you think about this too much, you go

USA! USA! USA! Make Covid Great Again! i was part of an interactive online session today dealing with risk management and COVID-19 (how to establish protocols, guidelines when the sky falls etc) and there was a relevant part. One of the participants showed a risk-consequence matrix: low risk high risk low consequence #1 #2 high consequence #3 #4 For many scenarios, CV exposure often ends up in section #3. This is, in a way, similar to driving above the speed limit or investing in an overvalued market. The #3 area often gives rise to controversies in the application of collective measures imposed on individuals. A disconcerting aspect is that individuals seem to go through a two-step process: a) risk perception and b) risk tolerance. How does that work in Las Vegas? Well, the crowd going to Las Vegas is probably not that strong in risk assessment and statistics to begin with. Same with the protests in a sense, although I think the risking catching the Virus at a protest is lower than at the casino. Are the buffets open? Might as well go all in. A while ago the major of LV gave an interview. It was something to watch.... Edit - I checked for some sort of recent visitor experience and this sounded a whole lot for subdued then the Twitter walkthrough above: I found the lack of staffing quite interesting.

Anyone noticed that trends in a lot of states are ticking up. AL, AR, AZ, CO, CA, TX, FL and others. Some of it can be explained by the number of tests going up, but when number of tests go up and % of positives go up and hospitalization rates, it most likely a real trend. We will see how much of a trend this becomes - I guess it is expected when opening up the economy. The NE states still show downward trends, but of course we haven’t opened much yet.

^ I think the bullish take for suburban houses that their appreciation For 10-15 years has lagged so far below core city areas now that they have become a great value in some areas. It’s highly attractive for some millennials who probably get into the age of having kids where the better suburban schools and more space make this option more attractive. Then we have a trend towards remote working and the pandemic which generally was far worse to experience in cities as additional factors lately.

Yes, and that is why the WHO should Continue to perform a study (or at least finish it) even when the odds are long Remdesevir is not just expensive, but also a drug that needs to be Intravenously in 5 or ten rounds applied, which makes it unlikely a game changer even if it works. HCQ is cheap and even if it is only modestly effective might have a significant value especially for the many poorer countries, which are really the main focus of the WHO anyways. Why not add an arm with Zinc in the Solidarity study. I would prefer exactly same dosage regimen as done by NYU grossman study. Many doctors believe in this Zinc addition. I earlier cited a NY doctor and LA doctor. Here is another article, this from India. ...... Along with HCQ, zinc is also normally administered to Covid patients. Doctors said, “The virus is inside the cell and zinc cannot get inside the cell for biochemical reasons. HCQ opens the door and lets zinc in. That’s all it does in this context,” said Dr Praveen Kumar, a physician at a private hospital. "The antibiotic azithromycin protects the patient from secondary infections.” Meanwhile, another renowned cardiac surgeon said, “In Karnataka, the drug has cured many. Cardiac arrests have happened due to various other comorbidities and can’t be linked with this drug alone.” Doctors and medical researchers suspect that several drug companies in the US want to push new drugs that almost do the same work as HCQ and are lobbying for its ban. “But the central government being very firm on the usage of this drug, it’s highly unlikely that its usage will be stopped to treat Covid patients,” a senior doctor said. https://www.newindianexpress.com/cities/bengaluru/2020/may/27/karnataka-doctors-to-continue-hcq-for-treatment-2148433.html ....... When doctors from NY, LA and India saying Zinc helps with HCQ and HCQ and Zinc are very cheap and can be easily provided to a lot of people and HCQ at these doses is already approved for long term use for Lupus, isnt it proper to test that first? Note: Not a medical advise. These are prescription medicines. Consult your doctor. For discussion only. I take zinc supplements myself. They supposedly help against common cold and may help against COVID-19 as well. There is minimal downside so I don’t see why not. Taking antibiotics as a prophylactic is generally not a good idea, I think. It increases the chance of Having to deal with antibiotic resistant strains later. I would think it is better to take it as needed generally.

If ~10% exposure is enough to cause herd immunity, the how do you explain the extremely high positive test rate (>30%) for antibody in Chelsea (the hardest hit community in MA)? If 10% exposure were enough, the 30% exposure should have never occurred. https://www.bostonglobe.com/2020/04/17/business/nearly-third-200-blood-samples-taken-chelsea-show-exposure-coronavirus/ I haven’t seen much updates lately on antibody test results. Some other communities have been evaluated in our neck of woods, but the Chelsea study was never repeated. This study was from mid April, so the positive test rate should be even higher now and close to the herd immunity threshold. On many other points you made, especially deferring medical care, I very much agree with you. I while ago for example, I went through a CC transcript from TMDX, a company that works in the field, of improving organ transplants. They pretty much stated that all organ transplants came to a screeching halt in March 2020, which means that many organs went to waste (got buried) because there was literally chaos and nobody knew how to deal with hospital capacity (mostly reserved for covid) as well as how to ensure that organs weren’t from infected donors (since there wasn’t sufficient testing ). While this is addressed by now (hopefully) it means that many organ transplants didn’t get done and since there is a shortage of donor organs, some will not get transplants don’t just get deferred, they simply will not get done for people that might have otherwise gotten them.

The market was up when the unemployment numbers were worse than expected and the market was up when the number was much better than expected. I think the market just looks for an excuse to go up!

Yes, and that is why the WHO should Continue to perform a study (or at least finish it) even when the odds are long Remdesevir is not just expensive, but also a drug that needs to be Intravenously in 5 or ten rounds applied, which makes it unlikely a game changer even if it works. HCQ is cheap and even if it is only modestly effective might have a significant value especially for the many poorer countries, which are really the main focus of the WHO anyways.