Viking

Viking, You bet it's real. Denmark was next [in the meaning, it has already happened]. Denmark is almost shut down totally right now. It's nearly impossible for me to describe what's being going on here over the last one or two weeks [well, that is : without totally spamming this topic]. The best place to look to get a feeling of how things have evolved over the last couple of weeks here is to actually look at the WHO sit reports - the latest, and then also grab the one a week before that. [Denmark has been climbing the list in the section for European countries for about every day in the last week with a "good clip" [ : - / ]]. - - - o 0 o - - - The Danish government has been ramping up extremely agressive on countermeasures within the last few days - so agressive, that it has been almost breathtaking. John, yes, i saw what was happening in Denmark the past week and thought of you :-). The speed of everything is surprising me. Hope all is well :-)

Holy shit. King Donald is going nuclear. If you do not do what he wants, you are going to be replaced with a yes man. Strong message to send to public service in a timeof crisis. Financial markets are going to have a shit fit if he demotes/fires Powell right now. But we know Trumps play book. He KNOWS what needs to be done. And if a public official does not do what Trump wants they are gone. There will be no ‘independence’ moving forward. The virus has not even hit the US yet (in numbers). If he starts doing these sorts of things when times are good (trust me times are good right now) just imagine what he is going to do when times actually start to get bad? Yes, i know this is all priced in to stocks... (sarcasm). The more desperate Trump gets the more financial markets are going to sell off. Trump says he has the right to dismiss or demote Fed Chairman Powell - https://www.marketwatch.com/story/trump-says-he-has-the-right-to-dismiss-or-demote-fed-chairman-powell-2020-03-14

Ok, this is getting real in Europe. First Italy, now Spain Is in complete lockdown. Next country? How long before this is the measure we see in the US? Washington State likely within the week? Sounds like Trump is going to hit Washington State with a travel ban. Close the state borders with national guard troops? This sounds like National Enquirer material... Breaking: Spain announces nationwide lockdown as coronavirus cases surge The decision, announced by Spanish Prime Minister Pedro Sánchez in a televised address Saturday, means residents will only be permitted to leave their homes for essential reasons, including for medical appointments or to buy food. All events including religious services will be halted, and schools and universities closed, he said. The measures will remain in place for a 15 day period but could be extended. The announcement comes as Spain emerges as a new hot spot of the global coronavirus pandemic.

In the current environment, where every company is getting killed, why would you not want to keep it simple and buy the number 1 or 2 player in each industry? To some extent you can almost start throwing valuation models out the window (too many moving parts to be useful). I am starting to look at market cap as a criteria. And the more predictable their business model the better (fewer nasty surprises moving forward).

So with all the travel bans being implemented does this essentially mean the world is going to lock down? Does this mean global travellers are essentially stuck in their current country for the duration of the travel ban? Countries that do not get on board with a ban are??? We seem to be getting closer to a tipping out as this virus impacts Europe and the US. The speed of the lock down is unprecedented. And the crazy thing is thing is we are still in the early innings. It’s like a freight train, building up speed. Exclusive: U.S. to add Britain, Ireland to European travel ban - airline, U.S. officials - https://finance.yahoo.com/news/exclusive-u-add-britain-ireland-161415994.html

Lots we still do not know... What do we do with workers who are over 60 (in the high risk group)? The companies that feed America brace for labor shortages and worry about restocking stores as coronavirus pandemic intensifies - https://www.washingtonpost.com/business/2020/03/13/food-supply-shortage-coronavirus/ The companies that feed America and provide basic staples are bracing for labor shortages as the novel coronavirus pandemic intensifies, which could leave them without enough workers to manufacture, deliver and unpack groceries in stores in the coming months. As the virus spreads, supermarkets and distribution facilities face a difficult choice: how to keep shelves stocked with essentials while keeping their workers safe. Already, some chains are rationing products as shelves empty out of pasta, rice and frozen vegetables and anxious customers wait in long lines for toilet paper and bottled water — in scenes similar to those seen before a hurricane, yet this time unfolding on a national scale.

Ok. So now, in North America, we start the next phase: lock down. Coming soon to a state/province near you. Washington State is in the lead. Washington State is closing all K-12 schools from March 17 until at least April 24. So 5 weeks to start. (By ‘lock down’ i mean measures that Washington State is taking right now... there are lots more than just school closure). My question: how long will states, once it gets serious, remain in lock down? 6-8 weeks? The benefit of slowing the spread is heath care can cope. This also lengthens time needed to contain the outbreak. Same for international travel: banned for 8 weeks? And then what measures are necessary to ensure the virus does not re-cluster? How long are they needed? Like one person per table at a restaurant. Or at work, 6’ between people. I am trying to understand the eventual economic impact on each country the virus will have. Here are two summaries of how the virus has been handled to date: - South Korea: https://www.scmp.com/week-asia/health-environment/article/3075164/south-koreas-coronavirus-response-opposite-china-and - Germany: https://www.spiegel.de/international/germany/inside-germany-s-piecemeal-response-to-corona-a-f376b3f9-625f-4a6a-8e7d-04bd48be20b2 PS: has anyone aware of web sites that cover the economy in China? I would like to understand how quickly they are ramping back up.

Doc, i was the same. And then the more i read it looks like the whole event was pretty much staged by Trump. Bottom line, US is pretty much in the same situation it was 10 minutes before the presser started. And what impeccable timing right before markets closed. Trump got what he wanted: The stock market averages up 10% and lots of ’busy’ press. Yes, what was discussed looks promising. The big news for me is how the Federal Government seems getting out of the way and essentially letting states handle their own response. Sports/businesses are also taking the lead. Trump had no choice, the train was leaving the station and he needed to get on. Better late than never. I am shocked with how fast the ex-Federal Government response has been. The NBA annoucement was a game changer. Washington State is also moving fast; great because their case count is looking it might be ready to shift into the next gear.

Sold about 1/2 of my positions today just before the close (that i bought just yesterday). What an amazing bounce the last 20 minutes of trading today. The President certainly timed the presser today perfectly. It was very encouraging to hear what the plans are. Let’s see what the reality is next week.

OK, Bloomberg is reporting that perma bear David Rosenberg is starting to nibble on dividend paying stocks...

Greg, i could not disagree more about Trump. This guy is a control freak. And an image freak. And he has really bad judgement. People who disagree are punished. He has surrounded himself with yes men. The US response is severely handicapped. He sets the tone for the whole response and he is toxic. 45% of the people in the US think he is a god... At the top sure. But from what I’ve seen that states are basically ignoring him and moving ahead and even somewhat surprisingly, companies are taking the initiative as well. Trump is only so powerful. He is a figurehead. Which worked until it lost confidence. Cuomo the other day basically said, they don’t care what Washington is doing. Death rates, ex the nursing home, aren’t that high. If, and this is a big if, there have already been cases for months, I think that’s a pretty good indication that at least for now, it’s more manageable than what we see in Italy. I think we will have a microscope on Hanks and the basketball player. Two small cases but having a spotlight on how these unfold could be a little reassuring(or devastating). Here is one of 100 examples from just the past week: When he spreads his misinformation people listen to him and this hurts local efforts. FYI, do you think Trump calling the Governor of Washington State a snake was helpful? Did that help Republicans in Washington State get behind the Governors requests? No. That matters.

Greg, i could not disagree more about Trump. This guy is a control freak. And an image freak. And he has really bad judgement. People who disagree are punished. He has surrounded himself with yes men. The US response is severely handicapped. He sets the tone for the whole response and he is toxic. 45% of the people in the US think he is some kind of god... When he spreads his misinformation people listen to him and this hurts local efforts. FYI, do you think Trump calling the Governor of Washington State a snake was helpful? Did that help Republicans in Washington State get behind the Governors requests? No. PS: yes, i am seeing lots of good things... but i am confident Trump will continue to impede what really needs to be done.

VZ, T.TO, GOOG, PFE, BRK, SAP.TO

Ok. We just went from the Disney Stage to the Friday the 13th in 1 weeks time... unbelievable. Tomorrow could be a bloodbath. S&P Futures are down 900 (7:20 PST). Hello capitulation? The key now is at what point do Republican Senators put their big boy pants on and, with House Democrats, start to do what needs to be done. First step is jointly demanding that the President handle the crisis properly or get out of the way. Too much at stake for the nation.

Calculated Risk blog has put the US on recession watch. This guy is very good. He called the housing crash back in 2007-08 almost perfectly. He is also very balanced with his analysis and does not pull punches. Going On Recession Watch - https://www.calculatedriskblog.com/2020/03/going-on-recession-watch.html I'm not forecasting a recession, just moving to Recession Watch for the first time since 2006. Note: In early 2007, I moved from Recession Watch to forecasting a recession that started in December 2007. As I noted in Predicting the Next Recession, the usual leading indicators are not useful if there is "a pandemic, significant military conflict, disruption of energy supplies for any reason, a major natural disaster (meteor strike, super volcano, etc), and a number of other low probability reasons". The reason I'm moving to Recession Watch now is a combination of the COVID-19 pandemic, and the response to the pandemic of the current administration. Leadership is key in a crisis. Information should be clear, transparent, and accurate. Action should be proactive.

My country (Canada) has just entered the next phase (confirmed community transfer). My Province (BC) yesterday announced its first death and the Health Minister was fighting back tears. Sounds like the Federal Government will be making some announcements tomorrow. What is going on in Italy was lead story on the news tonight; the more graphic examples people get the more quickly they will understand/accept social distancing measures (school closures, event cancellations etc). At my sons hockey game on Saturday the virus was a topic of discussion in the various parent groups (dads and moms). The consensus was that the world was over-reacting (my wife passed on the chatter from the moms group). “Its just like the flu.” was said over and over... I would love to see some of the measures from South Korea implemented in BC (aggressive testing and communication); anything to slow this thing as much as possible.

Doc, yes, my (obviously terrible) attempt at sarcasm. I think the situation, and therefore the news flow, will be getting much worse in the US. My guess is this will trigger the computers to sell. I did notice, for the first time on Monday, genuine fear in the voice of more than a few of the business TV media people. Some were also visibly angry with Trump and his efforts to date. I was shocked. I wonder if we are not getting closer to a tipping point where real panic sets in.

Yes, that was a pretty good press conference. No sugar coating, stating what is known and admit was it not. Simply factual and forward looking. Compare this to Trump’s press conference yesterday. It was a clown show with a bit of campaigning and boasting thrown in. Spek, I was thinking the exact same thing about Trump. It really is mind boggling. PS: I also owe you a thanks. When you posted about 2 weeks ago that you were busy selling a bunch of stuff due to your concerns it aligned with what i was thinking at the time and likely helped with my decision. :-)

OK, we know Washington State is at the epicenter of the outbreak in the US. The Governor gave an update today. Start watching at the 11:30 mark if you are pressed for time. It is sobering stuff. He clearly knows what is coming and he is trying to get the people of Washington State on the same page. My hat goes off to anyone in public service at this time. - https://komonews.com/news/coronavirus/inslee-up-to-64000-coronavirus-cases-in-wash-by-may-if-we-dont-take-action He is estimating Washinton State has at least 1,000 cases as of today but admits they really do not know. He said they expect the number (whatever it is) to double every 5 to 8 days. He said they are looking at all measures to slow the outbreak. He said if they do not find a way to slow the outbreak it will simply overwhelm the state's medical system. He said (a couple of times) that what the state does will be based on science. He telegraphed that much more will be coming perhaps as soon as tomorrow. He clearly is trying to quickly educate and get the population behind the measures that are coming. Good for him for being transparent and moving as quickly as possible. I noticed that confirmed cases in the US have just ballooned to just under 1,000. We could be at a tipping point as we watch confirmed cases double every 3-5 days until social distancing/lock-downs policies in the US are announced. The good news is we all know the stock market is forward-looking and prices reflect everything that is currently known. So not to worry over the next couple of days as this plays out as expected. (Edit: My poor attempt at sarcasm.)

Ok, this is an investing board and everyone wants to know where the stock market goes from here. What is the key measure Trump is using to inform himself how well he is doing? My guess is the stock market. It fell as low as - 20% yesterday (not good, need to do something) and was up today (good day, doing the right thing). I want to be fair, Trump also has mentioned testing. He has repeatedly said the numbers are low, ‘nothing to see here’ kind of thing. My guess is the US will need to start to ramp up its response in the coming weeks in a major way. What is going to get Trump on board? One thing. Lower stock prices. What number will finally get Trumps attention? 25% decline? Probably not. 30% should do it. What a crazy, crazy world to even contemplate this :-) PS: i would love to hear from someone who is familiar with Soros and reflexivity and how they are triangulating the virus, US response, Trump and the stock market :-) PS2: by mentioning Trump i am not trying to politicize the discussion. He is the President and appears to be very involved in execution of the total US response. He looks to me to be the key single figure. So to discuss what is going on and where it all goes from here your assumptions about what the President does are key.

Thank you for posting... so perhaps, with effort, the virus can be contained. Great news!

How can you have a highly contagious disease that spreads rapidly that wil over load health systems all over world killing millions and after 4 months has been attributable to 4090 deaths? The first part of that sentence doesnt mesh with the last. Can anyone please recitfy this for me? And no quaranteening isnt doing it, either are standard precautions for reasons I have exhausted discussing before. Testing isnt doing it either, thats bullshit, and if you dont believe me flesh out for me how even a 1% false negative rate or 99% sensitivity would not make high volume testing completely useless. The more you test the more false negatives you get!!!!! I have no dog in this fight, no money to be made, no axe to grind. Orthopa, I think you and many other people are lost in the weeds on this whole issue. i say this will all respect; our mental models are what they are. My focus is on the big picture and what think will happen in the future. Not what i think should happen. Big, big difference. What do all of these governments have in common? China, South Korea, Japan, Taiwan, Singapore, Iran, italy (i could list many more) etc. they have nothing in common. But wait, yes, there is one issue where they are on the same page: their eventual response in dealing with this virus. There is much to learn here for people and countries; but like my teenage kids, ’the teacher appears when the student is ready, not the other way around’ (to my frustration sometimes). Big picture: The US is not ready, specifically Trump. Watching this thing unfold in the US it reminds me of how an outbreak was likely handled in the medieval ages where you had a despot in charge of things. Mistrust of science (no testing); misinformation; followers loyal to king (above nation), self serving and paranoid leader; situation spiralling out of control (look at bond and stock market the past few weeks). King Donald is firmly in control. His number one priority is reelection. I see no examples in other parts of the world where this approach has lead to a successful approach in dealing with the virus. But Trump might be right; i just don’t think his approach will work. We will know in about a month. Why are all the countries listed above dealing with the virus the same way? Are the politicians in every one of those countries stupid? Are they misinformed? They are 1 to 2 months into the battle with this virus... maybe they know something we do not? Health care is important to people the world over. Getting proper health care is important. People also do not want to die, including those who are old or in the high risk groups. Politicians/leaders are the same the world over. In my Political Science 101 course from 30 years ago the professor asked students what causes revolutions. People answered ‘poverty’. No. ‘Treating people like shit’. No. What causes revolutions is when expectations are not met. Americans, just like every other person in the world, expect the government to look after them when they are sick. BINGO. Someone better tell King Donald... The natives are getting restless...

Here is a summary of something I posted on another thread: The science - we know very little about this virus. But we do know enough: it is highly contagious and it spreads very easily if precautions are not taken; and it is very bad for seniors or people who are deemed ‘high risk’. Real world examples - we already have lots of information of the impact of the virus on other countries, their response and the health and economic fall out. Every country where it surfaced made the decision that it had to be contained regardless of the economic cost. Read this last sentence again. The sooner the country comes to this decision the Better the health outcome and the lower the economic cost. And the effort the first 2 or 3 weeks is a key (clusters, if allowed to form, make containment much more difficult and raises the cost significantly). The virus did not hit every country in the globe at the same time; it started in Wuhan, China, and then spread to Asia and Europe and then (I think… this is my guess) to North America with a 2 or 3 week lag (perhaps due to Trump’s travel ban?). My view is we can see the future here in North America. History does not repeat but it rhymes (I think Mark Twain said this). China and Europe can provide us with lots of examples of how our future will likely turn out. It has so far. Two weeks ago we know 2 cases of ‘community spread’ were discovered in the US. Cases of community spread mean the walls have been breached and are a big red flag. What I also learned 2 weeks ago was the US had completely screwed up the testing for the virus. Testing did not happen (test kit was faulty). Then when the testing did start it was much too restrictive (so much so it was almost useless). And even today, two weeks after community spread was discovered the US is still not testing everyone who need it. Political leadership is the key factor in the response. Because this affects the speed and scope of the response. With great planning, coordination, effort and sacrifice on part of all players the spread of the virus can be slowed greatly and perhaps even stopped. Look at China’s or South Korea’s reported cases; they have fallen dramatically. Now look at the effort they put in place and just as importantly what they are doing today to keep reported cases low. Testing… who cares? Testing is at the core of the whole virus response for a country. Facts and science drive the response. Without testing, as the doctor on CNBC said a week ago the US is ‘flying blind’. Bottom line, the US has squandered the 2 or 3 week head start it was given. In addition to testing, the US has messed up in some other important areas. I have no idea where this virus is going to go in the US. Maybe a white swan comes out of the wood work to save everyone. But based on what i have seen the past 2 weeks and what i am seeing from political leadership, the relevant federal departments and the inability of the system to hold anyone accountable it does not look good. My uninformed guess is it will get worse and when it gets worse enough the US will finally mobilize to contain the virus. We will only know more in 2 or 3 weeks; until then, everything people say about everything (eventual response, magnitude, economic impact) is simply an uninformed guess. As Mark Twain said: "its not what you know that gets you in trouble, its what you know that ain't so." Two things mobilize all people the world over: health and money. As the health part of the equation rapidly deteriorates in the coming weeks politicians will finally see Jesus. Imagine a Senator or Representative telling their elderly constituents “we could do more but the cost is a little too high. Sorry 15% of you are going to have to die. But the rest of us are better off so i am sure you understand.”

Here is an update from Washington State (Sunday). Gov. Inslee considering ‘mandatory measures’ to combat coronavirus - https://www.kiro7.com/news/local/gov-inslee-considering-mandatory-measures-combat-coronavirus/QO4YWHGEL5CDZGBYG7YOMUXSFI/ When asked if the next step was quarantine, Inslee responded, “Not necessarily quarantine, but reducing social activities that are going on, and we need to make decisions about that looking forward.” Leading coronavirus researchers, like Samuel Scarpino at Northeastern University, said those measures worked wonders for China. "Seattle is much earlier on in the outbreak than anywhere in China. However, because these pathogens can spread and grow very rapidly in terms of the number of cases, we need to be taking decisive action now to prevent a scenario where we end up having sizeable number of cases in the thousands in the Seattle area," Scarpino said in a Skype interview. While the governor’s spokesperson said no final decision has been made about mandatory social distancing measures, Inslee said his team will be looking at models of future infection rate, which will factor into any future decisions on such measures.

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID. What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction. I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity. The virus has not hit the US yet. At least in people’s minds. Testing is still not being done in large numbers, especially in hot zones like Washington. So the reported numbers are low and everyone feels good. Think of where Italy was about 2 weeks ago. Think about where their stock market was and what people were saying. Look at what is going on now... big change. What a surprise! So far Viking, out of everyone, I have to give you the most credit for your prescience with respect to timing. You've been adding modestly it seems, but still mostly cash. Regardless of what the reason was, you've been right about exit/entry so far. What do you see as the driving factor though? It still sounds like corona, but earlier you indicated, with which I agree, that today was predominantly an oil related shellacking. Last week we seemed to have swings because of the Sanders defeat. But overall I think most merit is given to the "we just needed an excuse to correct" reasoning? Curious to your thoughts going forward. Greg, in a nutshell as much as possible I have tried to let science, real world examples and probabilities inform my decision making. And to focus on the big picture / big rocks (not get stuck in the weeds). The road ahead: I think there is a good chance that Washington State has a cluster of virus cases (many still undetected due to lack of testing). If true, a lock down in Washington State is very possible. We will know in about another week or two. Given the lack of testing being done for weeks now there is a good chance that other clusters may be seeding in more US states. We will only know more in a couple of weeks as testing ramps up nationally. If more clusters are found more lock downs are very possible. And the economic consequences if this happens are severe. The virus has a head start and it does not look good. With respect to Coronavirus: The science - what i quickly learned is how little we know about the virus (and this is still true today). But we do know enough: it is highly contagious and it spreads very easily if precautions are not taken; and it is very bad for seniors or people who are deemed ‘high risk’. And, with great leadership, planning, coordination, effort and sacrifice, the spread of the virus can be slowed greatly. Real world examples - the focus of much of my reading has been what the virus is doing to other countries and economies. Here we already have lots of examples and good information. What I quickly learned is every country where it surfaced made the decision that it had to be contained regardless of the economic cost. Read this last sentence again. The sooner the country comes to this decision the lower the economic cost. And the effort the first 2 or 3 weeks is a key (clusters, if allowed to form, make containment much more difficult). The virus did not hit every country in the globe at the same time; it started in Wuhan, China, and then spread to Asia and Europe and then (I think… this is my guess) to North America with a 2 or 3 week lag (perhaps due to Trump’s travel ban?). My view is we can see the future here in North America. History does not repeat but it rhymes (I think Mark Twain said this). China and Europe can provide us with lots of examples of how our future will likely turn out. It has so far. Two weeks ago we know 2 cases of ‘community spread’ were discovered in the US. Cases of community spread mean the walls have been breached and are a big red flag. What I also learned 2 weeks ago was the US had completely screwed up the testing for the virus. Testing did not happen (test kit was faulty). Then when the testing did start it was much too restrictive (so much so it was almost useless). And even today, two weeks after community spread was discovered the US is still not testing everyone who need it. Testing… who cares? Testing is at the core of the whole virus response for a country. Facts drive the response. Without testing, as the doctor on CNBC said a week ago the US is ‘flying blind’. Bottom line, the US has given the virus a 2 or 3 week head start. In addition to testing, the US has messed up in some other important areas but this is already too long. We will only know more in 2 or 3 weeks; until then, everything people say about everything (eventual response, magnitude, economic impact) is simply an uninformed guess. As Mark Twain said: "its not what you know that gets you in trouble, its what you know that ain't so." The guy driving the bus (Trump) said today that the US only has 500 positive tests... and that informs him that the US response has been perfect. The number of positive tests is what has been driving the administrations response to date.