tede02

My wife in I live about 30 miles outside Minneapolis where it the landscape really transitions into rural communities. What's kind of surreal about this event is you read the news and it feels like a frantic crisis, almost like war-time. Then I go for a walk at home, see the migrating ducks and geese, other wildelife, etc. and it's as if nothing is happening. Just another peaceful spring day. It's just a strange contrast.

I'm not out of the woods yet. Closing is in 30 days. But it's a non-contingent offer and buyer has already been underwritten for a conventional loan. Also, the buyer is a city employee so I'm guessing his paycheck is going to keep coming. Not sure what his wife does. I won't be one-bit surprised if larger events, like a nation-wide shut-down, delay the closing. At this point, the delay would actually help me because I need to find temporary housing for about 30 days before closing on my new place in late May.

On Wednesday morning last week, I woke up with an elavated heart rate. The coming economic blow of what's underway seemed to have hit me. I'm in the middle of real estate transaction. Buying a higher priced home for the area I live in (exurbs of Minneapolis). I told my wife, we need to get our house listed ASAP before the waves of unemployment hit. The last thing I want is to be stuck with our home, or have to sell with prices sliding. Our current home is considered affordable for the area (<$400k). I knew we had fundamental factors in our favor from the standpoint of extremely tight supply like the rest of the country. Low interest rates also helps. But I was deeply worried that the economic uncertainty may have already majorly damaged demand. I wasn't planning on listing until mid April but we scrambled to list last Friday. Despite my worries, the house sold in a little more than 24 hours for full asking price. Only give was closing costs. We would have had multiple offers if we waited but the offer we received appears extremely solid and likely to close. Long story short, demand for so-called "affordable housing" remains extremely strong at least in this area. It kind of amazes me how commerce persists despite major uncertainties.

It seems like many states and the federal government are taking a wait and see approach as the number of confirmed cases grows. Based on everything I've read, a national shutdown should have started last week if there was going to be any chance of significantly slowing the spread down. It looks like we're too late. By the time the president announces a national shelter in place, the numbers are going to be off the charts. My personal expectation is the US is a week or two behind Europe. The only upside is it might be over faster. My wife works in healthcare and they are preparing for an onslaught. One large hospital in the Minneapolis area has apparently been working to convert an entire floor to ICU beds. Many countries have effectively shelter in place . Germany has is for a couple days and they have escalated compliance today. It’s too early as there seems to be some weekend reporting effect (with lower numbers on weekends) but the numbers of new infections have begun to show promising trends and so far, the Heath care system is holding up. I think people have come to realize the seriousness last week and compliance has improved, which wasn’t the case in Italy at all. US is still in the exponential growth phase so who knows how it ends. This is purely based on the narrow observations in my own life and social circle, but I don't think enough people in the US are taking it seriously which means it's probably going to get ugly before people do take it seriously. The next 4-6 weeks are going to be nerve wracking.

It seems like many states and the federal government are taking a wait and see approach as the number of confirmed cases grows. Based on everything I've read, a national shutdown should have started last week if there was going to be any chance of significantly slowing the spread down. It looks like we're too late. By the time the president announces a national shelter in place, the numbers are going to be off the charts. My personal expectation is the US is a week or two behind Europe. The only upside is it might be over faster. My wife works in healthcare and they are preparing for an onslaught. One large hospital in the Minneapolis area has apparently been working to convert an entire floor to ICU beds.

Romney must be reading the message board ;) https://www.cnbc.com/2020/03/16/coronavirus-stimulus-romney-proposes-1000-for-every-american.html

I don't need the money either. But we don't have time scew around with the administration of figuring out who is in need vs. who isn't. Get the money in the public's hands quickly.

Strongly agree. 20,000-60,000 die in the US every flu season. 61 deaths so far from covid-19 (25 from a single life care facility in wash). and we are shutting down the nation. ignorance is bliss. The problem with this is the consensus is the disease is many multiples more deadly than the seasonal flu. If you're a healthy adult under 50, perhaps your risk of death is very low. But if you catch the disease and spread it, others are put at risk. If this thing infects nursing homes around the country, the toll could be terrible. I keep hearing people make comments to the effect of, "This is nothing more than the common cold so who cares." I'm worried that the situation is going to be way worse in the western world because people aren't taking it seriously. In Asia, they had the SARS situation which apparently was quite bad from a human and economic perspective. Countries like Taiwan and Singapore learned those lessons and, from what read, have aggressively moved to mitigate this thing and it's working.

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion. P.S. No, I'm not advocating Andrew Yang's UBI.

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

Home with one of my kids today because daycare lady is on vacation. Decided to go shopping to stock on some things after listing to Joe Rogan podcast with Michael Osterholm. I didn't go crazy but just bought some extra stuff that we'll use up either way. You could feel a mild sense of fear in the two stores I stopped at. Some shelves were in-fact empty (toilet paper and pasta to name a few). The cashier I spoke with said it has been crazy for a few days. Sales have spiked up to holiday levels. All these grocery stores and discounters will probably pay a price within 6-12 months after people have hoarded and there becomes a huge glut of inventory sitting in people's homes. Pretty amazing times.

On the consumer side, my observation is mortgage lending is no where close to being excessive. But I've read a lot about auto lending getting shaky. The credit card issuers have also been more aggressive in recent years. I distinctly remember, post financial crisis, I got literally zero credit card offers in the mail for a number of years. Now they show up every week.

Looks like they are down again. Of-course, on a day of high volatility.

Thanks. Been sitting on hold trying to figure out what was going on. The minute I want to go all in shorting Tesla, the website crashes...LOL.

I was just looking at a company that has usecured bonds, maturing in 2021, trading at $0.55. Although I know hardly anything about energy, the deep discount and the fact that an investor I highly respect holds the bonds made me look into it. The company is generating free cash flow and has been gradually paying down its highly leverage balance sheet the last few years. Upon closer look, as much as 60% of the long-term debt comes due in 2021. Obviously the company will have to refinance a huge amount of debt for the bonds, which only represent 2% of the debt, to be paid at par. I don't think I'll touch this because I just don't really understand all the dynamics. But I may follow it to conclusion out of curiosity. At the end of the day, it seems like the question is how likely is it the company is able to refinance. The energy patch in general confuses me. I'm generalizing, but most of the companies generate no profit or cash-flow for shareholders. All the capital is just plowed back into the ground. From a stockholder's perspective, it's like, what's the point in expending all this energy (no pun intended), on companies that make no money. Is Fed policy (low rates) the driving reason why banks and the bond market continue to lend?

I was thinking about this further this evening, specifically the massive US outperformance over the last 10 years. One huge force driving the domestic markets has been the collection of tech/software businesses which have collectively created literally trillions in market value. It's extraordinary to think about. Mark Andreeson famously wrote a piece in the WSJ (2011 I believe) which said something like "software is eating everything." I actually read the article the day it was published in the print edition of the WSJ. Unfortunately I wasn't smart enough to see or understand the future as he was describing it. Would be interesting to see a study on how much impact, say, the 10 or 20 biggest tech names have contributed to the market surge. Obviously the recovery of the big banks has been helpful too. I keep thinking if you don't have these tail winds, and others like falling interest rates & QE, the next 10 years are going to be a much different story.

The story is really a lot worse. The Stoxx 600 index has gone no-where since the year 2000. Peaked around 400 in March of 2000. Currently the index sits around 416. Additionally, the front page of the B section in today's WSJ shows China's Shanghai has gone nowhere in ten years. In-fact, -6.9%. I keep wondering if we're due for a period of stagnation in the US.

Washington: A Life by Ron Chernow. Longest book I've read at 800+ pages of very dense reading, but it was amazing. The book persuaded me that George Washington may be the single most important person in American history.

I worry that a warming planet may very well exacerbate these very problems. The challenge, admittedly, is we just don't know. My personal view is, why would we risk finding out by doing absolutely nothing.

Gundlach's presentations are always very interesting and extremely detailed. Plus, I get a kick out of his demeanor/attitude. Here's a few funny stories I came across: https://www.businessinsider.com/jeff-gundlach-mel-gibson-in-whole-foods-2013-5 https://www.bloomberg.com/opinion/articles/2019-02-26/howard-marks-adds-to-legend-of-jeffrey-gundlach

Yes. Since most of us probably have no clue what we are talking about on this subject, it would seem to have more in common with the Politics section. ;D LOL. Probably spot on. One analogy that always struck me goes as follows. No one can prove that taking steriods resulted in Barry Bonds or Mark McGuire hitting any specific home run. But it's obvious to anyone that steriods greatly contributed to the over all increase in volume. The same concept is true for climate change. It's a trap to single out any one storm or extreme season. But is it really a leap to conclude that putting millions of pounds of heat trapping gas into the atmosphere every hour, 365 days per year, is going to have some meaningful consequences? My dad read a book a few years ago on dark money in the political system. He said one part of the book talked about how a lot of people who worked for the tobacco industry to cast doubt on the addictiveness and health risks before the big 1990s settlements quickly found new work in the energy sector muddying the waters on climate science. It's quite evident that these efforts have been effective. I personally worry about this issue. The risks are totally unknown. In some ways it's shocking to see how dismissive a significant segment of the population is. In other ways it's not surprising at all. I see people cover their ears and hum regularly when facing unpleasant news. All that said, I'm actually rather optimistic that we will solve this challenge. I find innovation in the energy sector very interesting and read about it regularly. I'm no expert, but from what I gather, the technical solutions actually already exist. The problem is the world economy was built around fossil fuels. So you have the challenge of converting existing infrastructure and systems and changing established habits. And of course you have all these entrenched interests, just like in healthcare, that will fight like hell to protect their economic interests.

Am I missing something? Relatively costless policy changes???? Aren't the proposals massively costly? In the trillions in terms of the US economy. The real question is what are the costs of doing nothing? If sea levels were to rise 10-20 feet, CAT 5 hurricanes become the norm, more extreme droughts, etc., what is the price tag of that? Additionally, if you read about mass extinctions throughout world history, it's commonly theorized that sudden climate change (warming and cooling) has been a major factor. https://en.wikipedia.org/wiki/Extinction_event. This isn't a 50-100 year problem (more like 50-100 million yrs), but illustrative of the potential scope.

One REIT that puts out a ton of financial detail and commentary in the 10k is Public Storage (PSA). You can tell the CEO is a Buffett fan. You can learn a lot about real estate just reading the annual letter. Separately, I found a cheat sheet online that is handy for REIT terminology (page two for REITs). Lists the most common key metrics such as FFO and NOI, definition and strengths/weakneses. There is a fair amount of lingo to learn when evaluating REITs. Cash_flow_metric_cheat_sheet.pdf

This is probably spot on. Also, maybe you get another Ross Perot type who brings a megaphone to the issue.

LOL. That should have been one of my choices.