alwaysdrawing

I am using the 1929-1933 depression as the guidepost. I think this current situation is like layering the 1918 flu pandemic on top of the 1929 end of the long term debt cycle. I see persistent high unemployment and deflation coming, and I think things will be worse if we open up too soon and let the virus run wild. I hope there is a way to open in a limited way, but even that means a depression IMO.

I think most people would also rather have a few difficult months than lose their parents/uncles/friends/coworkers/etc. It's not just the old, but those with other health issues, which includes obesity, diabetes, heart problems, compromised immune system, etc, and a lot of things that affect people of all ages. Some people act like "underlying health condition" means "not a real person who deserved to die anyway" when it's pointed out that a victim had some other illness... I guess people tend to see it all as statistics rather than think about their mom or favorite mentor. What proof actually is there that shutdowns work? Most of South East Asia countries (Taiwan, Japan, Singapore, etc) never had any shutdown and their numbers are low. Italy had lot of shutdown and their numbers are high. Empirically what proof exists that shutdowns work? Limiting social contacts clearly leads to slower progression of respiratory infections--there are just fewer chances to catch it. I think shutdowns are just a formal way of trying to require social distancing to lessen the load on the health care system. Based on what we've seen in Italy and NY, I really don't want to see what unmitigated spread looks like. Japan is now shutting down Tokyo FWIW, as cases are rapidly growing there. Ultimately, even epidemiologists think that we will need partial re-openings and then closings again if hotspots form again. The experts are saying that this will continue to burn until we have a vaccine or gain herd immunity. With most places only around 1-5% of the population estimated to be infected (which is multiples of the confirmed caseloads), and rising r0 estimates, herd immunity is a long way off. I don't think that the estimates of much higher incidence (50-100x confirmed cases) are credible.

Neat idea and hardly(to my knowledge) a crowded institutional idea either. How do look at structuring this in a cost effective manner? I gave it a quick glance and put it on the "take a look at" reminder list for later. But briefly, couldn't you construct a cheaper expression with an outright short and some calls to hedge? Or is this a "big expected downside so go really far out of the money" situation? I just buy long out of the money puts.

This is an interesting problem for clothing retailers, or anyone else that sells seasonal goods. How far in advance does the typical clothing retailer acquire inventory, e.g., by mid-march I assume most winter clothing is already gone. Is the mid-march inventory primarily spring or summer clothes? Either way, it seems like there is going to be alot of out-of-season clothing around. Would off-price discounters benefit from that? Also, someone's going to have to eat most of that. Will brands take some of it back? Maybe off-price can buy tons of stuff cheap, but who wants Easter stuff after the holiday? How many people just don't need new swimsuits at any price if they are cancelling their trip to Hawaii? Plus, we were at all time high consumer sentiment in February....how's consumer sentiment now? All of my friends are delaying or cancelling vehicle/house purchases, and sticking to the necessities, even if they have money. Who is going "shopping" even if stores re-open? And to what extent was BURL's target market (women with incomes $25k-100k) affected financially?

PA added another 0.4% yesterday, bringing the total to over 23% unemployment. Not sure what the unemployment rate was before all this in PA. Let's say the average age of CV death is around 80 total coronavirus death count 240 today current unemployed 1,500,000 or 23% so for every 1 CV death - there are 6250 unemployed in PA I'd love to hear your "adjustment" to get to the true figure and cost And what is the real tragedy - the number of unemployed (destroying lives) or the tragic early death of someone due to having CV? Unemployment was 4.7% in February (308,900/6,558,000) I don't really see how society could go on normally if 1%+ of the population was dying all around them. I also think if we "open up", doctors will walk off the job as they won't be able to handle what would happen to the health care system. The way doctors describe it to me is that this is a sliding scale where deaths under normal health care system resources are over 1%, and as capacity is reached deaths will increase as the number of patients who could have been saved, but cannot due to lack of resources (ventilators, trained staff, etc) climbs significantly. I think basically no matter what we are headed towards a severe recession, and I think re-opening will not change that, but will in fact make things worse as the virus will spread uncontrolled until people are ordered back home or just quit and don't go to work. I don't really see a world in which people go back to restaurants/bars/theme parks/planes/hotels/cruises at any normal levels in any case, and thus the gains from closing down is increasing the health improvement by better social distancing. Lots of the layoffs would be happening no matter what the govt did regarding "stay at home".

I'm buying puts on BURL. Retailer with 100% of stores closed indefinitely, with no sales on website, because they closed it last year (!), and trading for over 20x trailing profits. If they are closed for months, they will have stale inventory, a cash crunch, and are definitely not going to earn anything like last year's profits, and will almost certainly make significant losses. The valuation, which has only receded to levels seen last year in 2019, is still pricing in both profitability and growth, neither of which is likely. I highly doubt they will be able to survive if coronavirus keeps them shut down for long, and even if they re-open, it seems unlikely they will be returning to the same level of sales, to say nothing of profitability. My guess is shares trade down 75%+ over the next year, if they survive at all.

PA added another 0.4% yesterday, bringing the total to over 23% unemployment.

Looks like the weekend numbers were, once again, a lull in reporting.

This chart is from Reddit User Barnst, and this was his description of the sources:

By my calculation, PA unemployment is up to 22.6% as of today. PA is one of the few states that publishes daily unemployment claims data. https://www.uc.pa.gov/COVID-19/Pages/UC-Claim-Statistics.aspx Feb unemployed: 308,900 New Covid unemployment claims: 1,179,326 Total unemployed: 1,488,200 Total PA labor force: 6,558,000 Unemployment rate: 22.6% If other states are proportional, there would be an additional 4+ million unemployment claims for last week when the data is reported on Thursday. Obviously that's an extrapolation from one state, however claims in certain states (notably TX, FL) have been low the past few weeks due to issues with those states filing systems. I would guess 4 million +- 1 million is a pretty good guess for last week, and claims are still not slowing. In the last two days, unemployment has risen in PA by 1.6%....in two days.

if getting back to normal is no covid-19 virus in circulation, then we can all go back to the Stone Age now. but after every flu season, when millions are infected and 10,000-50,000 die in US of pneumonia etc, we get back to normal without missing a step. this is easy peasy. Imagine still comparing this to the flu this is the flu. similar infectious rate, similar mortality rate, similar pathology (respiratory illness). less than 2% who die do not have another underlying condition. average mortality age is over 75. insufficient data to compare symptomatic rate. this is the flu. Not the flu

Putin playing hardball. Let's see if POTUS can finally leverage all his hard work in cultivating a beautiful relationship with Putin where they say "nice things" about each other into something tangible. Even if that happened, it wouldn't be enough to fix the 30 mbpd oversupply. Any it won't happen, because everyone needs as many dollars as possible from their oil. They can't afford to cut production, and they can't afford to cut and have the rest of the cartel cheat.

Dalal--we are seeing the world in a very similar way these days. Ships going to earn their market cap in a year. You guys are 2 weeks late on the tanker trade. Tanker storage does not make much sense at anywhere near today's day rates. You really need oil to reverse everything it has done in the last 24 hours Skate where the puck is going. Nothing changed by Trump's tweets except a spike to spot. I don't see how there won't be a massive oversupply of crude for the foreseeable future. Day rates move around, but the overall thesis is pretty good if you believe there will be a significant oversupply. Not a major fan of tankers FWIW, but think the trade makes sense. I'm having trouble with this one as the thesis seems very obvious. If everyone knows that Wayne is going for a backdoor tip-in, and they just let him skate there, then is he really in that great of a scoring position? I agree. The tanker storage trade is no secret. It's all over Bloomberg TV, FT, etc. I was in the trade and when I saw all the media attention I got nervous and had my finger on the trigger. Sold the second trump tweeted. I don't see any way that cuts get anywhere close to the 20 million barrel/day oversupply. Would add on an OPEC cut announcement next week, as I just don't see how the necessary cuts are at all credible. Might not work out, but if the oversupply persists, tanker companies will have a P/E of 1 during supercontango. I'm not quick on the trigger based on spot rate changes. There is a structural problem that I don't see any way to address.

Dalal--we are seeing the world in a very similar way these days. Ships going to earn their market cap in a year. You guys are 2 weeks late on the tanker trade. Tanker storage does not make much sense at anywhere near today's day rates. You really need oil to reverse everything it has done in the last 24 hours Skate where the puck is going. Nothing changed by Trump's tweets except a spike to spot. I don't see how there won't be a massive oversupply of crude for the foreseeable future. Day rates move around, but the overall thesis is pretty good if you believe there will be a significant oversupply. Not a major fan of tankers FWIW, but think the trade makes sense.

Dalal--we are seeing the world in a very similar way these days. Ships going to earn their market cap in a year.

Herbert Trump going down on his own incompetence, his election chances falling as fast as bank stock tangible book values.

I use a Microsoft Surface 3 Laptop, and it's the nicest laptop I've used in a long time.

I'm seeing anecdotal evidence that ad rates are down 50%+ on Facebook already. I believe both revenue and profits are in for a significant decline at the major ad firms (Google, Facebook, but also TTD and others).

I think your analytical skills are not of the highest order. Can't speak to your intellectual capacity, however you have continuously minimized the threat of COVID and used your credentials as a cudgel to push your agenda. The data clearly shows you were wrong about a large number of undiagnosed cases of coronavirus in Jan/Feb, which you repeatedly claimed. Meanwhile, Dalal has been posting good info for weeks, and I don't care what his profession is. Credentialism is unnecessary.

Flu season looks like a blip on the NYC Influenza Like Illness data tracker. So much for orthopa's theory--deaths and illness rates now clearly indicate no widespread incidence back in Jan/Feb. https://weinbergerlab.shinyapps.io/NYC_syndromic/

to be clear...are you buying puts to hedge your holdings if we go down. Or are you selling puts to back in to some positions if we go down? I am buying puts as speculative bets on price declines on companies in which I own no stock.

Backing up the truck on puts. Adding to existing positions on retail stores, exterminator services, dental equipment makers, a life insurer, a highly levered car maker, and long dated market puts. The stimulus is unfortunately likely to be the last good news coming in the next few weeks. We will see unemployment numbers tomorrow (estimate of 1.4 million job losses last week, high estimate of 4 million. I'd guess higher than even that, and will continue to get worse). NYC still has at least 3 weeks until peak cases, and there are new hot spots in GA, LA, TX and more. The idea that things would be back to normal by Easter borders on the farcical. The decreasing new cases in Italy is a second derivative effect, and it is a good sign, though not nearly as good as the market thinks. Cases are still increasing, and we still do not know when Italy can re-open on a partial basis, to say nothing of a return to normal. If there is a partial return, there will likely be future outbreaks that need to be managed. That will hopefully be manageable, however there will still be a very significant double digit hit to the economy in the good case. $1200/person stimulus will not even cover a month of rent or mortgage for most Americans. Folks haven't even had to make one rent payment during this crisis--April 1st will be the first one. Businesses are starting to run out of cash, and are making plans to lay off employees and are considering bankruptcy as an option. It's basically impossible to overnight go to 0 revenue, and SBA loans and enhanced unemployment insurance might be helpful, but will not structurally fix the issues of over-capacity in many industries. Similar to GM in 2008, any bailouts will likely still result in bankruptcy if the business operations cannot return to a sustainable level quickly, and unfortunately, the health crisis is still likely to get much worse before it gets better. Big picture, I think we will be facing partial lockdown for many months, as any "return to normal" will mean an overwhelmed health care system. The stats have been remarkably similar so far, with 80% mild cases, 15% requiring hospitalization, and 5% requiring ICU. If the health care system is overwhelmed and care must be rationed, many more of the 5% ICU and some of the 15% hospitalization cases will become deaths. That's the importance of flattening the curve, and we will see in NY over the next few weeks what can happen if that doesn't happen. I see a long term significant shock to the economy, and do not see any type of V shape recovery in the short or medium term. I think we see much more pain ahead in markets, and worse, in health outcomes. Hope I'm wrong, but I see dark clouds in the immediate future.

We are woefully unprepared w/r/t PPE. First we need masks for front line HCWs, then for the general public. The amount needed in hospitals is staggering, and it will be months before they have an adequate supply, because production increases are linear, and virus spread will be exponential. This is one more reason why the curve must be flattened--HCWs will refuse to work without PPE, and if that happens, we are talking about total collapse of the health care system.

Another thing about ICU capacity, is that even during normal times, ICUs are mostly run at capacity: https://www.latimes.com/california/story/2020-03-20/coronavirus-hospital-bed-icu-pandemic? This is a quote from a friend of mine, who is an MD/PhD at a major medical center, from a week ago:

It's still early innings in NY, however what I'm seeing and hearing is getting pretty scary. The difficulty is that each week will be getting worse--I don't think you need precise data to know what's coming is very bad, and on the worse side of epidemiologist predictions. The NYTimes had a couple helpful pieces on the current situation: https://www.nytimes.com/2020/03/20/nyregion/ny-coronavirus-hospitals.html? This shows three scenarios--I think the "some control measures" outcome is a very "optimistic" case for the US right now. https://www.nytimes.com/interactive/2020/03/20/us/coronavirus-model-us-outbreak.html