Spekulatius

“I’d rate it a 10,” Trump said at a White House press briefing Monday when asked by a reporter how he would rate his response to the pandemic. https://thehill.com/homenews/administration/487883-trump-gives-himself-10-out-of-10-on-coronavirus-response I gave it a 9/10 for different reasons though. Turned it off after 3 minutes so I am glad to hear that it got a bit more substantial as the briefing progressed.

Lurker for years, my first post on this forum. I had the sae thing in late January. Extreme stomach discomfort that started quite suddenly leading to bouts of vomiting. I couldn't even drive myself back home without puking into a bag. The stomach discomfort got better in 24 hours (mild fever also went away). Then the coughing started which later days. I'd wake up at nights to cough for few minutes each time. Chest tightness also began. I'm a lot better now, but my chest tightness isn't fully gone. If I fully relax my body I can feel a tiny bit of resistance to talking in a whole breath of air. I also have asthma and using my inhaler helped! CorpRaider, keep hope and stay happy. Positivity helps the immune system. Thank God for Netflix. I watched a ton of comedy when I was going through the bug, whatever it was. Stay hydrated!! I never considered Corona seriously but it does look like the symptoms are correlated. Now if there was community transmission in late January, just imagine how off we are with the denominator. I've been thinking about this a lot lately. The hard thing with exponentials is that it's easy to be way off if we are even slightly off in any parameter. What if we are wrong on the start date by a couple of weeks or so? Orthopa's anecdotes and line of thought seems reasonable to me. This might be neither the flu nor COVID-19. It happens quite a bit that viral infections are diagnosed (by exclusion?) and it tests negative for flu. My son years ago had periodic spouts of sickness we could never get to the bottom of. Sometimes, it was just a stomach flu (vomiting), sometimes it was high fever (so high they we went to the ICU with him because were scared) and always tested negative for flu. These period spouts of virus infection went away by itself thankfully as he grow older. I am not a doctor, so don’t claim to know much, but seem seems to be quite often viral infections around they don’t seem to test positive for flu. Anyways, good luck and hopefully you feel better. Even if its’s just a stomach flu it’s no fun, I had my fair shares of those way back,

I listened to first 3 minutes of today’s news conference from the WH. I couldn’t stop laughing. He talks about incredible things happening with the virus spreading and we all come together for a big celebration. WTF? Who wrote his speeches thr Monty Python troupe? It’s basically Saturday night life....

No issues for my with IB. I use my iPhone and iPad. I do have issues with Fidelity with the website getting unresponsive sometimes.

I kind of agree, but I think the time is 15:30pm when the mindless algos set in. I bet Renaissance Tech makes a fortune in this market.

TRV and PINS

No Forrest Trump run today apparently.

@chrispy I would say 15x earnings is what you paid in similar circumstances in the past. Perhaps adjust for cash. For an “extinction level event”, I don’t think the market is doing too badly actually. It’s just back to where it was before Trump goosed it up on Friday 15:30PM, give or take.

Hitting the bottle early today? I think after noon is social acceptable but I usually start with lighter fare.

Or the government should stop coddling everyone and let reality play out the way it should? If this was a run-of-the-mill recession, then I would agree with your mentality/statement. We should let the market wring out the excesses via bankruptcy. However, the COVID-19 pandemic layers on an added and unique issue. In the absence of some sort of paycheck (fiscal stimulus) coming from the guarantor of last resort (e.g. the Federal Gov), one of two things will happen: 1. People are not going to stay home because they need $$$ to put food on the table, and this pandemic will be far worse. And it will crush our hospital system, leading to additional mortality from other treatable illnesses that can't find space/time at the hospital. 2. People will stay home, businesses will go bankrupt in a truly large scale (taking CRE with it), and we will end up with a depression that takes decades to dig out of. The idea of fiscal stimulus, and monetary stimulus, bothers me - I don't like it for a lot of reasons. But if some fiscal stimulus is needed, I'd much rather see that go directly into the pockets of a waitress trying to make ends meet, rather than a financial institution via a bail-out. And in this crisis, it is time to "Go Big or Go Home" with the fiscal stimulus. Trump missed the boat to manage this crisis 2 months ago, and with every passing day, the cost of mitigation grows ever larger. I think the reason that this will be worse than a run of the mill recession is due to previous coddling. Look at what the market did during the Spanish flu issue. Not this. Note that WW1 was won by the allies by the time the Spanish flue became an issue. this lifted a huge burden from the economy (and created new issues) that overshadowed the Spanish flu impact. QE doesnt help individuals, it helps institutions. Lower interest rates help institutions much more than individuals. Instead of helping the airlines, we should think about helping their employees for example. Does AAL really deserve help, the way they managed their capital structure? They rolled the dice adding huge amount of debt so I don’t see a problem letting them restructure.

Interesting - I see more talk about bailouts and government interventions here than I see in discussions in Germany. Market crashing and everyone is turning into Bernie. We may get UBI and Medicare for all and nobody is going to blink. Not saying it is right or wrong, but it is surprising to me.

Isn't that called food panda? I got some tonight. Yes, you can get delivery in some areas, but not where I live. I propose really to encourage the use and subsidize it, plus expand it where it is not available yet. I think even giving away food for free would make sense.

In a crisis, always go with the mighty US$.

They should do infra. But they can't really do infra or anything economy boosting until the pandemic has passed. OK, they can actually throw money on producing tests and building ICU units in 2 days like China did... They could throw money at delivering meals to people who are out of work because of shutdown and quarantine (assuming there's a way to do it safely). Possibly would cost less and deliver more than just cutting the rates. BWDIK. Exactly--healthcare infra. Maybe subsidize delivery boys with sterile gloves on for groceries/restauarant to keep those places in biz. Problem is that Trump-Pelosi relationship has soured, but in a crisis might be repairable. I think that’s a great idea. Set up a system for restaurants to deliver food at no cost, or even pay for the food. It helps the restaurant and gives some jobs to people who are delivering. Most importantly, it would be safer than people venturing out by themselves. Same with for grocery delivery. Some large supermarkets can do it, but only in areas. The government may pay for the delivery as it makes it easier to put up with a lockdown and it is safer for everyone, including grocery workers. I bet that alone would be worth the cost. Better than a payroll tax cut or bailing out the cruise industry for sure.

He is putting a lot of effort into juicing the stock market, even though we know what the stock market can well take care of itself when everything is running along nicely. It’s his outer scorecard. The interest rate cut don’t surprise me, but the extend of it did. I expected a 0.75% cut, it they shot the entire wad. maybe we go negative next?

Explain to me what economic activity is worthwhile undertaking with 0% risk free interest rates can’t be done with 1%. Europe and Japan went this route and have nothing to show for it, other than the destruction of their financial system. US is probably next.

Futures are limit down, interest rates are zero. That went well. Bank stocks are not going to like this.

Insurance is more tail risk, but a lot of their wholly owned business are highly sensitive to the economy : Iskar (Tools, Peer would be KMT), PCP (aircraft, energy are main markets), Burlington (moves still a lot of coal and recently crude), retailers and then a portfolio chuck full with bank stocks thet were done 30-40%. I frankly don’t think they it is that great of a bargain here real-time to many other securities available right now. One can sleep well at night knowing that they do have a great balance sheet, stable utility and insurance earnings (Geico probably has a great year because people are driving less) and he might be able to snap up and elephant for a good price. There is a lot of value in that.

I think it's much higher than 2%. The reality is many people are sick and not dying of pneumonia - I would assume a portion of posters on this very thread are experiencing symptoms as well as the rest of the population, or had experienced symptoms in Jan/Feb and recovered. The first reported US case was January 21. This is an incredibly fast transmitting virus. The odds are, cases existed prior to Jan 21. And further, the odds are that the spread of this virus across the US was much faster than official reports claim. This is due to lack of testing i.e. lack of timely, accurate information. But ultimately, I agree w/ the principle of: better safe than sorry. For the obvious reason, and for the secondary reason as it provides a "trial-run" on a global basis for future pandemics. I am about 20% cash btw. If I didn't suffer from biases like anchoring and all that stuff I would think about 1/3 cash is the ideal amount right now. https://www.nejm.org/doi/full/10.1056/NEJMoa2001191 Question for you guys as I havent seem to be making any friends swimming against the tide! Above is the NEJM article on first case of corona virus. This is what I don't understand. First US case was January 20st, with 4 days of symptoms and as I have read this is a very fast transmitting virus. Some have said this is very fast, some fast, symptoms take a while to show up, agree. Please reconcile this for me. It has been exactly 2 months since this gentleman returned to the US from wuhan China. Is it out of the way to assume that there was community spread with this gentleman? 4 days of cough, fever, flew on a plane? Lets just work on that premise. Now I have become lost with all of the projections, graphs, charts, etc. Pick whatever model you want. My question is this: Its been 2 months since that virus was officially detected in a known area. I'm not aware of this so please help. Is there overload in the area where this gentleman was? Are there people dying? What does it look like? Are they running out of ICU beds? How is california? They were not far behind and have a HUGE population! I know there can be a delay in symptoms but isnt 2 months long enough for this virus to really get going, especially with lockdown, social distancing just happening now? The consensus for the origination of coronavirus is late November in Wuhan. It did not become a big deal until 2 months later. The way exponential growth works is that when you start with small numbers, it takes time for them to snowball into significant numbers. Once significant numbers are attained, then the growth becomes impactful and felt in a very real way. Berkshire Hathaway was a company not on too many people's radars in the 1960s and 1970s. Eventually it became impossible to ignore. Thanks, but I wasnt asking about Berkshire Hathaway. Can anyone else help on this? Orthopa, I am not an expert, but it is impossible to predict what happens when a single person gets infected. It’s jut random walk static’s, maybe that person is asocial and doesn’t have many contact and might remain the only person. Maybe this person is a social butterfly and gets into contact with a lot of people that are vulnerable and it spread like wildfire and he becomes the infamous patient zero. Just about could happen. The way statistics works it is easier to predict what happens when a larger number of people get infect (100 is probably a reasonable number) since the law of large numbers makes random fluctuations less important. I also think that 100 infections (based in some articles I read) in a cluster is the point of no return when an infection most likely can’t be contained any more because these 100 people generally have so many interactions during their incubation period that it is basically untraceable . Again, am not in the medical field or an epidemiologist, but just from a basic understanding of statistics, I think what I wrote is directionally correct. I also think Dallal is correct that the way exponential growth works, it takes time until the number is in the 100,000 or millions when it become really a factor in a country with the US population. If 1 million people are infected, chances are that each of us will know someone who is infected, if it’s just 10k, chances are that few of us are in the same situation.

Irrresponsible and Unbelievable. I just talked with my brother in Germany. Germany is in a virtual lockdown. Some places area till open but practice social distancing and patrons at the coffee house sit a table apart. many places aren’t even open any more. His daughter has the final test (Abitur) next week Tuesday supposedly, but she isn’t even sure it’s going to take place or may be rescheduled. This brings life on hold , because without this Abitur exam passed, you can’t apply at the university. Rules are being made up as we go. Another interesting tidbit from my brother, who sells wood/lumber wholesale is that the Chinese are back in the market with huge orders. He can’t make sense of it, but heard from other folks in different trades that they apparently restarting their factories so there are orders for other stuff as well. Wood is dirt cheap so maybe they are taking advantage of the low prices or there is more stimulus? No idea, but interesting nevertheless.

Interesting - spat over US government attempts to entice a German biotech company working on infectious disease vaccines to develop a vaccine exclusively for the US: https://www.cnbc.com/2020/03/15/coronavirus-germany-tries-to-stop-us-luring-away-firm-seeking-vaccine.html #MAGA? I guess that’s the government equivalent of people hoarding hand sanitizer?

I wholeheartedly agree with this.

Let's push this idea further. There has been a financial environment shift since the 2007-9 episode in the P+C world with most companies adapting to the 'cheap' capital environment, settling with lower ROE and gradually increasing P/B ratios. During the same period, FFH reported a very lumpy ROE, with an overall slight underperformance overall based on that metric and the market perception is resulting in a declining P/B ratio. FFH continues to differentiate itself from the pack (float investment side) and the question is how it will perform going forward. An interesting feature is that 'cheap' capital has resulted in resistance to harden the market (ie tolerate higher combined ratios) and has resulted in very low returns on the fixed income side of the portfolio (float). https://www.macrotrends.net/stocks/stock-comparison?s=roe&axis=single&comp=WRB:TRV:CB Is FFH better positioned at this point compared to peers? Is the answer in the risk management section? I don’t think that FFH is position better than its peers. It has improved its underwriting to the point where it probably is in the better 50% bucket of the industry, but it’s not in the top 10% either. It’s the investment side where they have been lacking. They make very contrarian investments as detailed by Stubblejumper. It seems that they want to jump 10 foot hurdles, where a one or two foot hurdle would suffice as an insurance company. Stelco, BlackBerry, RFP etc are all deep underwater. Part of the reason is they their aspirational goal of a 15% ROE is just too high. TRV is an example that have a bit above underwriting and just takes whatever they can get in terms of investment returns in bond markets without taking much risk (equity and real estate seems ~5% of their float) and they can get ~12-13% ROA. Excessive capital is burned off via stock repurchases and some dividends, It’s a model that works and boring in a good sense. FFH Model has too much risk (as evident by the wings in book valued) for the returns it is generating.

https://twitter.com/reformedbroker/status/1238867417851461639?s=21

You can’t make this up. I am certain it is timed to get the stock market to close up, as the news conference started late at around 15:20 or so. Another positive news, I got this email today, which eases many of my concerns. Got to love NH - Boston is shut down, MA schools are shut down, the grocery stores are a zoo and overrun by the mob, but the NH liquor stores remain open: