SharperDingaan

That's the one. Other interesting bits ... If the Coronavirus has taught us anything, it’s that supply chains essential to life in America should not be outsourced. Move energy and pharmaceuticals and all other essentials back home. We’re safer that way. You’ll be creating homegrown jobs and we won’t have to kiss anyone’s backside. Not mentioned is the shale industry bail-out being discussed. The domestic o/g supply chain will be controlled by the majors, via bankruptcy buy-outs funded through QE dollars. Leases pass into more disciplined hands, and the oil gets bled off responsibly - to leave the underlying gas fields. SD

Would you buy in anticipation of such a tariff, SD? Already have. Not to talk the book but look at WCP, IPL, MTL, etc. on the TSX. WCP has cut its dividend 50%, cut its capex spend, pays monthly, and has a cash yield of 17%+. Tariff wall goes up, the dividend gets restored, and its 35%. Nothing else happens and you double your money in 2 yrs. SD

The US, Canada, and Mexico make up roughly 24% of global oil consumption. The EU is another 15%. Net the two regions together, and they are largely self-sufficient in the supply of oil/gas. Most folks expect the emergence of a tariff wall around these regions within the next few months. Most likely a NA tariff first at around USD 62 WTI. EU to join later at a pegged Brent-WTI spread. We end up with a cartel of supply (Opec+), plus a cartel of demand (The West). Game changer. We live in interesting times. SD

Just so that it might inspire others ... My partners and I have done very well swing-trading the markets. So far we're up roughly 3x YTD, on a little skill, and mostly luck. Comes normality again, the cash yield on our FI portfolio will be beyond stupid. I have partnership involvement in 2 businesses, a craft brewery. and a small blockchain IT shop. We haven't laid off anyone in either of the businesses, but we have temporarily converted everyone onto an hourly pay, and cut back hours by around 50%. We have applied for wage subsidy assistance, and partners contribute their pay as seed money towards a monthly 'hardship fund', that employees can contribute to as well. Every 2-weeks, we have an employee draw, and the winner decides who gets the money. The brewery still makes a little beer, but our main product today is hand sanitizer, with a >60% alcohol content. We only have 3 coders, and have taken a similar approach. We continue to pay what we can, but in today's world, our coders now apply their skills wherever they see their best fit. Partners give guidance, but the coders run with it. Comes normality again, we return to routine business. We have done a few other things as well, but prefer to remain anonymous. The takeaway is that this is the time to 'walk the talk'. Reputations are being built, and comes the 'new normal', today's investments will come back to you many times over. Your biggest assets are your brains, your employees, and change. Now is the time to blow the barn doors open, grab change by the cohones, and squeeze! Good luck SD

Our credit-card and cash spend, across all family units, is similar. Down 50-75%. We're just not eating out, buying entertainment, or just buying things period. Subscription services pretty much cost the same every month, no matter how much you use them. Volume levels are down everywhere, but there is still a lot of work going around the essential services. Supply chain, trucking, packaging, farming, etc. Nobody can work 24/7, food still has to move, we still have to pack it, farm migrant labour is still required, etc. Lot more people doing daily 2 hr hikes just for the exercise and mental sanitation. Starting to notice the improved fitness, and a couple of pounds come off the waste line! SD

'Greed is good, greed works ....' Courtesy of the Capitalist Pig! SD

A great many small to medium sized business owners are in denial. They can see their businesses collapsing, have frozen, and it is costing them their life's work. Paying the minimum wage (or less) just buys you minimum effort, it does NOT give you the right to infect an employee with a virus. Your service staff just vote with their feet, and if this is your business, you go under. Collapse. Of course there are always those on minimum wage, (or less), with little choice but to accept the virus risk. But if you want them, you now better pay up, as a great many other employers are paying their front-line staff an extra 15%+, in addition to providing protective gear. And if you're a bar, or a restaurant, you're a high risk employer ....... the market is telling you to temporarily shut down, and if you refuse to listen, the market will do it permanently. Collapse. Many of these businesses are bedrock republican supporters, so the push for a rapid restart and an end to income support, is hardly surprising. Bribe your politician to 'do something', or collapse; how many you kill in the process really doesn't matter. Fortunately. enough other people disagree, to stall the process. We saw the same denial around the 2007 mortgage crises. Authority (banking infrastructure) insisting that people wouldn't default (refusing reality) because it wasn't in their interests. The resultant implosion produced the GFC. SD

For those who know squat. TTEN on the TSX If you think you can do better than this basket, for the same risk, then good on you. SD

Some observations ..... Ask your neighbours how much time they spend listening to the media/news these days?, have they cut down the amount of time? and why? Most folks aren't listening more than an hour/day, and because it's too negative. It is widespread, and it is an active changing of the channel. People moving on. Most people use spreadsheets to substitute for experience. You have a brain for a reason, it is time tested, highly adaptable, and it works extremely well in changing conditions. You exist because many, many prior ancestors used their brains to avoid getting killed before passing on their genes. So if someone is reaching for spreadsheets, versus brains ...... what does that really tell you? An economic restart, the day after Easter isn't going to happen. It is little more than distractive false hope, and Pablum for the masses. You can't make people do business. You can't shut down media coverage, the 'death cafe' jokes, the pictures from the ICU's and the morgues. C'mon 'granny killer' show us how this economy versus a few deaths thing works, by DEMONSTRATING it! If Bo Jo, and Trudeau can do it, why can't you? SD

Sounds like to me that it was well worth it for the "opposition party" to have pushed back and revised this. The money is just funded through a 3rd party, that relends to the Trump organization. Smart language would have required that the loans be convertible into majority ownership of the underlying credit, against covenant based triggers. Miss a payment, the assets go to the state, and the remaining loans re-rate enough to permit a repo State owns both the assets and the debt. Elegant. SD

It is foolish to believe that the economy can be saved by descending into something worse than a 2nd world country with hundred thousand if not millions dying. It makes no sense and is more than foolish thinking. There isn't going to be an early restart, and the economy is NOT going to suddenly 'snap back' to what it was, What happens when we see images of the people on respirators, the medical staff collapsing, the full medical and cruise ships, the empty closets of supplies, the trucks removing bodies .... in NY, SF, LA, etc. Messaging that 'Covid-19 is no worse than vehicle fatalities' - is not going to drown out the images and calls of 'granny killer'. Economy versus 'granny killer', which message wins ?? It is much more likely that Trump RE is being pushed to collapse, within weeks/months at best. Push through an economic re-start, and maybe they recover; Trump loses the presidency but keeps the empire. Continue as is, and Trump loses BOTH the presidency AND the empire. When business people see their businesses collapsing - they typically do stupid things. Is that not EXACTLY what we are seeing here? Floating trial zeppelin balloons. SD

Wuhan essentially went from early January through to early March. Crash and burn, but done in 2 months. Canada is talking 3-4 months. Essentially early March through to early June. Slower, but more manageable. Add 2-3 months to hire up and get the N/A-China supply chains flowing again - we're 'done' early September. You can still get Covid-19, but odds are there will be a ventilator for you. Mortality risk does not go away. Until then, it's swing-trade time. Buy the 1,000 point drop, resell on the bounce, holding periods < 1 week. It's only 'buy and hold' if you don't get the bounce ... so only buy/sell quality, and the more mania the better. Keep taking gains off the table, pay off all your debt, or just sit in cash. Heresy, or gambling to many. but so be it. We have no problem with ruthlessly exploiting Mr Markets daily gyrations. We'd far rather, just give 10% of the growing cash heap to the people who really need it. Different strokes SD

No reason to buy until we see 1) either a curve flattening, or 2) an oil deal. The news hasn't started reporting yet on the thousands unable to cope, the suicides, the domestic violence, collapsing medical staff, or those losing their businesses. It will really go ballistic when the military medics/field hospitals, and the body removals start being reported on. SD

I see the same thing but I don't understand it. How can bond funds and stocks sell of at the same time? One thing is clear, the jig is up for the central banks. We used to own some of those bond funds ;) After recent events, there is more downside than upside to continued ownership. Cash is far preferable. There is zero incentive to buy an equity until it is known whether curve flattening is working. Results should be out in about 2-3 weeks. And if the collective stream of bids progressively dry up .... equity prices should fall a lot further. Hence, happy to wait. SD

Think about this the other way If you had naked puts on some of these companies, your gains are currently so big; that there is a real possibility that counter-parties are not going to be able to make good on them. And in many industries, if you are a wise C-suite manager; you WILL have naked puts on the major competitors in your industry. If you manage to keep your company afloat, via a combination of laying off people and cutting back - how are you going to deal with the fortune you've just made? Can't exactly spend it, even if you had to send friends in low places around to collect :( SD

As at 8:10 EST Dow Futures are down 821 points, largely offsetting yesterdays gains. To most people it's pretty clear that monetary policy is done. We need different execution, and leadership. Not even lower rates. Lenders are just being rationale; the credits are such utter sh1te, that it's far better to just let them collapse. Lend nothing further, cut losses, and try to recover as much as possible on the dollars already lent. CB execution would go a lot further, if they simply bought up the material portion of junk bond issues at cents in the dollar, and swapped the debt into majority equity positions. The reduced debt re-rating the remaining bonds high enough to permit open market operations. The majority equity positions enabling industry consolidation. Maximum employment, with minimum intervention. US Shale is the main source of US junk, and it is collapsing. Airlines, and hotels/casinos are about to join them. Contagion. That combined debt is so large, primarily junk, and so spread around, that you cant be sure if your banking counter-party is still going to be there. So the prudent thing is not to lend, rendering monetary policy ineffective. It's time leadership stepped up to the plate. SD

1.5K/month isn't enough, you'll need closer to 5K/month, and to every working person in the US for 6 months+. Sure, some will not need the money. Just tax it back from income at a 100% tax rate, for all incomes between X & Y. It's extraordinary times, and its called leadership. SD

I think it's time we stop saying Trump this and Trump that. It should be "the GOP" or the "Trump-led GOP". This person could not be in this position or remain in this position without the GOP support, his circle of enablers. Agreed, but some passing observations first. This is a time when leadership carries the day, and the US doesn't have any. In the American system the star of the show carries the crown, and the thorns; there are no exceptions. The president hires to fire, the GOP hires the president to fire. We 'the people' hire/fire the GOP, once an election cycle, just the way the founding fathers planned it. The virus will pass, but the economic party of the last decade, is now over. We aren't going to be doing monetary policy, or globalization, the same way anymore. Additionally, a great many people are going to lose their livelihoods, and be in need of a 'new deal'. It was the peoples 'cries for change' that both drove Brexit, and brought Trump to power; and that change is now here. As at 9:44 am the Dow Jones is down 2,250 points, has already tripped a circuit breaker, and may well trip a second by end-of-day. May we all survive the coming weeks and months. SD

As at 9:36 pm, Dow Jones futures are down 1,045 points. Trump would seem to be trying to beat his record last week of 2,000 points in 20 minutes. The US has done very little to flatten the viral infection curve. What are the odds that the projections now indicate loss of control? hence the political panic. Trump is on record stating that Covid-19 is under control, this is going to kill a lot of the elderly, and people will want someone to blame. The China experience suggests that the virus will be over shortly before the US election. All we see is a drowning man, grabbing at anything that might keep him afloat. The USD is not just a currency, it is also the worlds reserve currency. Cutting rates to zero, simply forces everyone else to cut their rates to zero, or further. It adds little net value, except deter Trumps bankers from foreclosing on the family real estate. More drowning man reaction? Most recognize that US Shale will have to be bailed out, but it is not practical unless it’s the majors consolidating the industry, and using QE dollars. It may well save 2/3 of all the industry jobs, but are Texans still going to vote for Trump after that? And in the same numbers? We live in interesting times. SD

Really dumb question ... If you get the virus, and then get over it with no ill effects (ie: you're healthy), are you now immunized against that particular strain of virus, or can you get it again? The ask is because if you're now immunized, the areas where this virus has been, must now be developing a progressively more robust herd immunization as time goes on. It becomes progressively harder for the virus to spread in those places, hence the numbers of new infections/deaths drop like a brick. It would also explain why authorities have been mass quarantining in the millions. The aim is large numbers of mild cases that do not require assistance, to create a herd large enough upon exit, that it makes it harder for the virus to spread. If you can't quickly and reliably make and administer large quantities of vaccine, isn't this the next best mass alternative? SD

And today we have this ..... White House likely to pursue federal aid for shale companies hit by oil shock, coronavirus downturn https://www.washingtonpost.com/business/2020/03/10/trump-oil-bailout/ Money talks. You do what your biggest donors tell you to do. Exxon, etc. What are the odds the message is to 'negotiate' a stable price, and lend them the money, to consolidate the industry. There will be some employment loss, but everybody goes back to making money, and Trump can be the hero. Campaign contributions are for a reason, and its collection time. SD

The obvious solution is to make the US part of OPEC+, and settle on both a price and a supply quota agreement. Maybe USD 60/bbl. so that everyone who supplies makes some money, and those that don’t, go out of business. It seems pretty clear that Russia is concerned about gas market share, and that OPEC is concerned about the volume of light liquids. Shut in some of the US shale, and both go down in a big way. More importantly, the remaining US shale consolidates under the majors, and ongoing production stays down as long as the USD 60/bbl. is maintained. Until the end of the month, there is still 1.7M bbl/d of supply being held off the market. OPEC claim they need an additional cut of 1.5M bbl/d, however the market believes that the entire 3.2M bbl/d plus surplus is already in the market, hence the contango. Negotiate an agreement between now and the end of the month, and we’re going back up. If you want to get re-elected in November … you are going to negotiate. SD

As at 10:31 pm EST the Apr price for WTI futures is USD 30.65, down USD 10.54, or 25% !!! And the pre-market DOW futures is down 1,254 points, or 4.86% https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html https://money.cnn.com/data/afterhours/ Good luck to us all. SD

This isn't going to last long. Nobody makes enough money at this level, and it isn't going to bankrupt US shale unless it goes on for at least 4-6 months. All it does is allow the refineries to max out their on-land and at-sea storage, while borrow costs and storage are dirt cheap. Then as/when prices rise it will be on diminished volume until the storage is worked off. Friends helping friends, ensuring lots of cheap gasoline is available just before the US election? However, Aramco is down 19% since issue, and continuing to fall. At some point Aramco is going to buy the issue back, and the lower the price, the better. It'll be a very profitable swing trade, and will go some way to offsetting the opportunity cost of flooding the market. The Russians either do as asked, when asked, or take the opportunity loss; which do you think is the more likely? SD

How many sellers do you know, who can actually pay for their goods. AT THE TIME THEY BUY THEM? Virtually no one can. They need 5, 10, 30, 60, 90 days etc. to re-sell the goods and raise the cash to pay for the purchase. If you cant sell, or sell enough (mass/individual quarantines) during the credit period; you cant pay, and bankrupt. If you survive the first shock, you credit is severely restricted, and you can only reorder in small quantities that turn over rapidly. If/when life returns to normal, you can then only slowly order more as you progressively profit from every inventory turn. A credit crunch, ending hundreds of thousands of little businesses, world wide. All a monetary authority can do is target the big suppliers, and inject enough liquidity into them to fund a minimal additional 30 days of credit sales. Inclusive of the payroll of those workers whom you told to stay home, and quarantine. China didn't just pull the size of the 174B, post lunar new year injection, out of its ass. Each of Europe, the US, and SA, are going to have to do something similar. The mystery is if/when the US goes to negative rates, how the world reacts to that, and if it occurs within months of a US election. Europe is closer to zero, a lot sicker than the US, and they are going to have to at least match/exceed US rate cuts. We're having the 1,000 point sell offs for a reason. Hence our comment that the most coronavirus-resistant investment is cash. Alternatively gold or platinum, but it's heavy and comes with a commission cost ;) SD