Spekulatius

Debt service after WW2 was serviceable because the US went into a period of heavy growth after WW2, which reduced the debt/GDP metric. This is likely* to repeat after the current epidemic. At some point, all this extra spending will lead to higher taxes imo. Wanted to write *unlikely

I understand that you're not into controlled experiments and use more common sense and hunches. Just for a second though, assume that we could go back in time (at the outset) and somehow the US applies your model (try to selectively protect the at-risk population and keep things going as much as possible somehow; you still need to explain how this would have been done as roughly a third of the adult population in the US is at risk). What do you think the mortality and ICU admissions would have looked like? better? same? worse? Looking at (and comparing) what other countries have been doing may help formulate an opinion? Do you believe in the memory of water concept? I think the interesting thing about how to deal with this epidemic is that so little is known from the get go and everyone learns as we go and adjust to new data coming in. It’s and iterative process not a fixed playbook. Also, none of what happens is deterministic, at the moment orders for shelter in place are givens the future path is changed and we can never know what would have happened alternatively. I think if the government had done absolutely nothing, people would have reacted and some of the things that were ordered would have occurred anyways (social distancing, sports events canceled , restaurants emptying out or being closed etc). It’s less about right or wrong from the beginning, but more how you react to data, using precautionary principles and using proven techniques used to solve similar problems (meaning other epidemics) and iterate from there. A year or two from now, we will much more about this (death rate, asymptotic rate, treatment) and even then, I suspect there will be significant disagreement about what is right or wrong and how to interpret data or deal with newer slightly different situations. People will say “how stupid that none one wore masks” when this thing broke out and future generations may laugh at us just we cringe how they treated the medieval plague epidemics back in those dark times.

This is the small bet I've made with XOM. <5% position but I would like to build to a 5% position in the next month or so. How do you value XOM? XOM doesn’t look cheap to me, except they go back to peak earnings in 2012 or so. It’s just plain overvalued. So many better options out there (not in energy though) That’s the problem, I am not sure the model works at any crude price. Even the majors had problem living within their ash flows at $80-100/brl. The costs have shown a lot of elasticity , both on the way up, as well as on the way doen. Based on FCF, the majors were never cheap. You have to assume that the future is different than the past in order to be successful and more than just a higher crude price is needed. Labor cost, day rate inflation. Marginal projects getting approved. It’s what happens in industries that like to play on the margin. Typically in the past there was a delay due to long project lead times, but when shale started to dominate, the costs and the prices track each other closer.

I would have thought that recent events have impaired NYC status as a safe haven. You can pick 1) NYC real estate with rampant zombie virus or 2) Potentially lawless emerging markets where currency may devalue I don’t think you are born to be a realtor.

Yeah be careful with ozone--O3 is highly reactive and can damage tissues, can be carcinogenic. And it may not be necessary--if you leave your garage open on a sunny day (or leave contaminated items in a car with windows that don't block UV/windows rolled down, that's probably enough UV light to do the job. The primary way of catching this is likely inhalation of droplets from someone nearby who has it, not from touching fomites anyway. Thanks, didn’t know that O3 can be carcinogenic. The problem with leaving outside is that sun is not always there in New England. Also, my wife often comes home at night, so no sun then. We will keep that in mind and minimize our exposure. the ozone smell is gone in the morning if the let it run for 20 min in the evening after coming home. I am a assuming it will kill the Virus long before it kills us. Thanks for the input.

This is the small bet I've made with XOM. <5% position but I would like to build to a 5% position in the next month or so. How do you value XOM? XOM doesn’t look cheap to me, except they go back to peak earnings in 2012 or so. It’s just plain overvalued. So many better options out there (not in energy though) That’s the problem, I am not sure the model works at any crude price. Even the majors had problem living within their ash flows at $80-100/brl. The costs have shown a lot of elasticity , both on the way up, as well as on the way doen. Based on FCF, the majors were never cheap. You have to assume that the future is different than the past in order to be successful and more than just a higher crude price is needed.

Banks looking at roughly 2 years of lost earnings (20% fair value loss with a 10 PE) and a couple of years if not permanently lower earnings power . It’s not too hard to come up with a 40% fair value loss. Maybe give back some for lower discount rates,but still. I don’t think the share price losses have been much in excess of the fair value losses. They area only a bargain when above assumptions are incorrect and we reverse to the mean quicker.

Pentagon suggests otherwise: https://futurism.com/neoscope/us-military-unlikely-covid-19-created-lab-bioweapon It’s a big enough disaster to investigate closely and maybe even go down some rabbit holes, but the way the virus got started as well as Occam’s razor and existing genetic evidence suggests that this virus got its start in nature.

I think when layoffs occur, licenses get canceled. In good times, companies often forget a out these things, but in tough times, companies turn around some stones and find these savings. I don’t know SAAS pricing well, but I think with any high gross margin product, there here are ways to negotiate. And I would think that price per seat would automatically mean less revenues when people are eliminated As for GOOG or FB.I would think about advertising total being a fixed percentage of GDP - so if GDP shrinks, the advertising TAM shrinks by a similar percentage. Now GOOG and FB may gain some market share as structural winners, but I don’t think they would be able to over come a Let say 20% GDP shrinkage without getting bit hit in revenues themselves.

When does speculation become investment? When do you decide that conviction is sufficient to put 10% of your net worth in a specific investment? ---)You need to define a threshold. I fully realize that comparing an investment decision to a life or death situation is different but you (we) need a framework. It has been suggested (from various observational and rational reasons) that remdesivir could result in better outcomes than doing nothing for CV. We don't know the answer to this question. In order to answer that question, trials that involve randomized blind trials with control groups will be essential unless several trials done in different centers with different patients clearly show an advantage (pre-defined targets). When patients are recruited for the studies now, they have a choice to accept (and potentially get drugs that are potentially useful {or not and with negative side effects}) or not. Given the difficult situation, patients may get access to remdesivir through a company-sponsored expanded access program or through a compassionate program. The results do look promising and that should speed up the process. The approach is obviously not perfect but has provided the shoulders on which future generations could see. How could you know if you don't know? The pharma cemetery is full of ideas that looked good at some point. We need a controlled study - Remdesivir for Democrats, hcq for Trump supporters.

This is the small bet I've made with XOM. <5% position but I would like to build to a 5% position in the next month or so. How do you value XOM? XOM doesn’t look cheap to me, except they go back to peak earnings in 2012 or so. It’s just plain overvalued. So many better options out there (not in energy though)

Anyone has an opinion to use an Ozone generator for desinfection? I felt it’s worth a shot and bought a~$100 unit and put it in the garage. My wife leaves her scrub, shoes there and The car doors open and we let this run for half an hour. I do the same coming home. Likewise we keep everything going in he house ( grocery, mail ) and expose it for 1/2 hour plus risk time. Subjectively the ozone smell is pretty strong and lingers for a couple hours when the unit is done. I have read some Chinese papers that seem indicate that ozone disinfection works well viruses ( small particles = large surface to volume ratio) but nothing definitive. You definitely want to be careful running this in the house because ozone can create respiratory issues, but running in the garage should be ok. Any input welcome. I looked at UV desinfection but determined that what obenan buy noncommercially most likely doesn’t have enough power to do much.

Just put them all on PPP and preserve the resource for future generations. It’s cheaper.

How many of these parents take the summer off when their kids don't have school? Not many take the entire summer of, but most do some vacation. Which won’t happen this year. Also most activities like summer camps /soccer won’t happen. Staying with friends/family/in-laws won’t happen. My sons does now school via Zoom. I don’t think this works LT either, but this probably depends on the kid. He now need to organize himself to make sure he doesn’t miss any classes if none of us is at home, which sometimes fails. My wife usually works only half time as a Nurse but since this virus popped up in our area too, she works more hours than I do.

Today, yes, I think the risk is acceptable, based on general reports of curve flattening and general lack of overwhelmed local ERs and ICUs. The "re-opening" of local economies should be conditional on: 1. universal mask usage 2. maintaining 6-ft social distancing 3. no large crowds This can allow many businesses, restaurants, maybe some schools to re-open. The decision regarding timing, pace, and extent of re-opening will be left to state governors and local authorities, who can fine-tune the above conditions, based on local factors. If a surge of serious cases start to show up in ERs and ICUs, they'll have to clamp down again. The federal government level can mostly give permission to states and localities to open up around April 30 (maybe even before), when they feel ready. They can veto crazy decisions that might happen in some regional southern areas, such as large church services, movie theaters, sports arenas. As you say, there is no good medical treatment/vaccine, and testing has been disappointing. (Whenever you rush out with new tests for a new disease, being unable to evaluate accuracy and reliability systematically, we really can't trust the results.) But you don't need testing or treatment in new pandemics, since the only effective measure is various levels of quarantine and travel restrictions. (If South Korea had no testing but had only lockdowns, they would have still been fine.) Today, I think the risk of economic recession/depression (deaths, suicides, depressions, lack of confidence in authorities) is greater than the risk of swamping the medical system, especially if the heavy lockdown extends beyond April 30. I think this feeling is widespread, and is percolating from the bottom-up. Any heavy handed top-down governmental restrictions will be answered by spontaneous bottom-up rebellion - so in a way, I think your question is moot. Improvement in testing should go on, but their utility will primarily be in retrospective analysis for future outbreaks. We don't need precise knowledge from test results to know what to do now (again, the only thing to do is isolation with masks and some form of quarantine). And even if a vaccine is developed, I don't have confidence that it will be effective or safe enough, especially if it comes earlier rather than later. I agree at most people will get tired of this lockdown. I believe the economy will have to be opened up in May, possibly in baby steps. One concern I have is that you can’t really open up the economy without opening up the schools,which isn’t exactly a baby step. Perhaps open up kinder gartens first, then middle schools etc. This would still take a lot of time and I incur quite a bit of risk. Without schools being open, parents with kids are screwed. Then,what you describe interns of going out with mask, social distancing ET still doesn’t really help any service business like restaurants, hairdressers, bars, sports venues etc. Maybe they could operate,but at much reduced capacity. There is another can of worm with liabilities. What happens when there is an outbreak that can be traced at a business. Trial lawyers will go after this, show that some protocols weren’t followed and here we go with huge number of lawsuits. I don’t think it will be possible to buy insurance for this unless the government creates one.

LOL yea, or that the government response was a disaster, even though the numbers turned out to be pretty underwhelming. Or that Cuomo and De Blasio did a great just, when NY was the dumpster fire, WHILE broadcasting that the entire US was basically going to be Italy, when in realty it only ended up being his state and his elected officials... He didn't commit to things on purpose though, a lot of hucksters do this. That way, either way, they can claim they were right. Its a very NYer way to behave. I would put more blame on Blasio than on Cuomo for handling the COVID-19 epidemic. As a major, he is responsible to keep his city safe foremost and he failed to do so. When you look around the county, there were many majors (in Texas- DFW and Austin- etc) example), where majors before the state did and sometimes county the state advisory. Blasio failed in that regard it just continues his track record of failure (in my opinion) and while Cuomo wasn’t particular proactive either did manage the crisis well. The real hero’s (if you want to call it that) are Gary Newsom and Jay Inslee who were proactive, and despite having early exposure squashed this thing before the problem snowballed. It also can remind on the then derided decision of the SF major to shut down the city even though there were no cases at that time (February 25). Those folks deserve way more credit than Cuomo in my opinion.

I would have thought that recent events have impaired NYC status as a safe haven.

Florida has been producing boom and busts in RE since the 1920’s. Main industries are tourism and especially the theme park and cruises will take a big hit. Plenty of land. I would take my chances elsewhere, like a Rocky Mountain state.

I don’t have a position , but I would need to swallow crazy pills before pushing the buy button for $CVNA at $81.5

Do we actually still do trace and test here anymore? Seems like we have pretty much given up on tracing. I have a buddy in Germany who told me some of his relatives tested positive and they did trace down contacts during the last two weeks prior to the positive test results. So at least in Germany, they still attempt tracing.

10. Everyone is a potential vector for the disease but the young will barely be affected. Children should not be locked up when they are essentially protected from almost any symptoms of the disease. The sooner they get the virus, the sooner they can develop immunity. In other words, the sooner my kids get it, the sooner I will get it, and my wife, and her coworkers, and their spouses and spouse's coworkers, etc... etc... Children don't live at home alone, what is this author dreaming about? He is also wrong on hospitals not separating COVID from regular patients and likely many other details. Too many hobby doctors and epidemiologists now growing out of the woodwork. (Says the guy going down these rabbit holes himself.)

^ What the BOJ is doing is Nuts. It feels like a snake trying to eat it’s own tail. Other bugs are Italy, Greece(again) Spain, Brazil and perhaps other emerging markets, perhaps even Saudi Arabia (regime change ).

My theory for the reason for selling his airline stocks is that it makes it easier for the airlines to get good bailout conditions . Otherwise this would get politically charged as supporting a billionaire with $128B in dry powder taxpayers money. It looks better if you are poor and in clothed in a cheap suit rather than look like someone who has a rich uncle. WEB clearly doesn’t want to go all in with the airlines and I think the recent events have led his to change his view on the industry again.

“We don’t believe in loans we believe in grants”. It will be interesting to see what they come up for the airlines.

Perhaps more doctor visits, checkups?