Spekulatius Posted April 30, 2020 Posted April 30, 2020 On top of that, we have Buffet and Munger not buying anything after the big market drop. Has this ever happened before? At the same time, we also have all kinds of 0 experience "investors" taking out their credit card, taking mortgage forebearance etc. to trade in the market. I've personally been contacted by a few college classmates who have never traded stocks now wanting to catch this opportunity of a decade to make money. I have to wonder if Buffet and Munger are smarter or these 0 experience day traders. The market has provided ample opportunity for those who missed this in March to cash out with the S&P now where it was in October 2019. There should be no valid excuse for these people if they lose their shirts. https://www.wsj.com/articles/coronavirus-turmoil-free-trades-draw-newbies-into-stock-market-11588158001 “I feel like everything that I buy, I watch pretty closely and if it’s something that’s not doing well, I’ll generally try to put [that money] into something that is doing well instead,” https://www.bloomberg.com/news/articles/2020-04-29/firemen-and-romance-writers-faces-of-a-fierce-rebound-in-stocks “I’m a complete noob when it comes to stocks,” the mother of high school senior twin boys said while sheltering at home. “It’s not thousands and thousands of dollars that I invested, but it’s a start. We’ll see what happens. I hate to say it, but it’s like gambling, isn’t it?” More accounts were opened and dollars invested at E*Trade in the first quarter than in any prior full-year period, according to a company statement. The brokerage added 329,000 retail accounts and over $18 billion in net retail assets. Haha who would have thought that having everyone stay at home and enjoying free trades supports the stock market. Seems to me that we need everyone to stop working via a forced lockdown to get the SP500 to new heights. Apparently, the economy isn’t needed any more.
Liberty Posted April 30, 2020 Posted April 30, 2020 New Bill Gates: https://www.gatesnotes.com/Health/What-you-need-to-know-about-the-COVID-19-vaccine
Viking Posted April 30, 2020 Posted April 30, 2020 At some point the reality of what is happening from an economic perspective (devastation) will matter to financial markets. What is happening is new so it is not surprising that people are not able to grasp the significance. It is like standing on a beach and the water is running out into the ocean and you know the tsunami is coming. Do you run for high ground? No. Ignore the facts and stand paralyzed waiting with curiosity to see what happens next. After all, the sun is shining and it really is a beautiful day! And nobody else looks worried. :-) European Slump Is Worst Since World War II, Reports Show - https://www.nytimes.com/2020/04/30/business/europe-economy-coronavirus-recession.html?action=click&module=Top%20Stories&pgtype=Homepage FRANKFURT — Europe is in the midst of a downturn not seen since the end of World War II, and the worst is yet to come, the president of the European Central Bank said Thursday after the release of a barrage of dismal economic data. “The euro area is facing an economic contraction of a magnitude and speed that are unprecedented in peacetime,” Christine Lagarde, the president of the central bank, said as she warned that the eurozone economy could shrink by as much as 12 percent this year. In a bid to prevent another financial crisis, the bank’s Governing Council decided Thursday to effectively pay banks to lend money and vowed to do whatever was necessary to counteract the economic impact of the coronavirus. ...Under certain conditions the central bank will allow commercial banks in the eurozone to borrow at a rate of minus 1 percent provided the money is passed on to businesses and consumers. The negative interest rate means that banks could borrow up to 3 trillion euros, or $3.3 trillion, without having to pay all of the money back.
Liberty Posted April 30, 2020 Posted April 30, 2020 New video by CGP Grey with good advice on how to not go crazy and deteriorate too much mentally and physically in lockdown Spaceship You:
Guest cherzeca Posted April 30, 2020 Posted April 30, 2020 https://thehill.com/opinion/healthcare/494949-we-can-protect-the-most-vulnerable-and-reopen-the-economy
patience_and_focus Posted April 30, 2020 Posted April 30, 2020 On top of that, we have Buffet and Munger not buying anything after the big market drop. Has this ever happened before? At the same time, we also have all kinds of 0 experience "investors" taking out their credit card, taking mortgage forebearance etc. to trade in the market. I've personally been contacted by a few college classmates who have never traded stocks now wanting to catch this opportunity of a decade to make money. I have to wonder if Buffet and Munger are smarter or these 0 experience day traders. The market has provided ample opportunity for those who missed this in March to cash out with the S&P now where it was in October 2019. There should be no valid excuse for these people if they lose their shirts. https://www.wsj.com/articles/coronavirus-turmoil-free-trades-draw-newbies-into-stock-market-11588158001 “I feel like everything that I buy, I watch pretty closely and if it’s something that’s not doing well, I’ll generally try to put [that money] into something that is doing well instead,” https://www.bloomberg.com/news/articles/2020-04-29/firemen-and-romance-writers-faces-of-a-fierce-rebound-in-stocks “I’m a complete noob when it comes to stocks,” the mother of high school senior twin boys said while sheltering at home. “It’s not thousands and thousands of dollars that I invested, but it’s a start. We’ll see what happens. I hate to say it, but it’s like gambling, isn’t it?” More accounts were opened and dollars invested at E*Trade in the first quarter than in any prior full-year period, according to a company statement. The brokerage added 329,000 retail accounts and over $18 billion in net retail assets. Haha who would have thought that having everyone stay at home and enjoying free trades supports the stock market. Seems to me that we need everyone to stop working via a forced lockdown to get the SP500 to new heights. Apparently, the economy isn’t needed any more. What if some version of it is actually true? That is, stock market is sort of decoupled from main street as most of the stock ownership is primarily in the hands of top 20% in the income distribution. And these are the people least affected by the current events. The most affected areas are retail, restaurants, certain low wage factory jobs, and other low income service jobs requiring people to people interactions relative to other professions. And this will be true irrespective of lockdown or no lockdown because in each scenario, people are going to avoid interactions hence disproportionately affecting the same group of workers.
Gregmal Posted April 30, 2020 Posted April 30, 2020 On top of that, we have Buffet and Munger not buying anything after the big market drop. Has this ever happened before? At the same time, we also have all kinds of 0 experience "investors" taking out their credit card, taking mortgage forebearance etc. to trade in the market. I've personally been contacted by a few college classmates who have never traded stocks now wanting to catch this opportunity of a decade to make money. I have to wonder if Buffet and Munger are smarter or these 0 experience day traders. The market has provided ample opportunity for those who missed this in March to cash out with the S&P now where it was in October 2019. There should be no valid excuse for these people if they lose their shirts. https://www.wsj.com/articles/coronavirus-turmoil-free-trades-draw-newbies-into-stock-market-11588158001 “I feel like everything that I buy, I watch pretty closely and if it’s something that’s not doing well, I’ll generally try to put [that money] into something that is doing well instead,” https://www.bloomberg.com/news/articles/2020-04-29/firemen-and-romance-writers-faces-of-a-fierce-rebound-in-stocks “I’m a complete noob when it comes to stocks,” the mother of high school senior twin boys said while sheltering at home. “It’s not thousands and thousands of dollars that I invested, but it’s a start. We’ll see what happens. I hate to say it, but it’s like gambling, isn’t it?” More accounts were opened and dollars invested at E*Trade in the first quarter than in any prior full-year period, according to a company statement. The brokerage added 329,000 retail accounts and over $18 billion in net retail assets. Haha who would have thought that having everyone stay at home and enjoying free trades supports the stock market. Seems to me that we need everyone to stop working via a forced lockdown to get the SP500 to new heights. Apparently, the economy isn’t needed any more. What if some version of it is actually true? That is, stock market is sort of decoupled from main street as most of the stock ownership is primarily in the hands of top 20% in the income distribution. And these are the people least affected by the current events. The most affected areas are retail, restaurants, certain low wage factory jobs, and other low income service jobs requiring people to people interactions relative to other professions. And this will be true irrespective of lockdown or no lockdown because in each scenario, people are going to avoid interactions hence disproportionately affecting the same group of workers. Its very possible its true on some levels. The price of a Picasso doesnt crater because theres an economic slowdown, neither really do sports teams and plenty of other assets. The stock market reached 2007 peak when? Wasn't it like 2012 or 2013? While many folks didn't get back to life from pre GFC til years later; some never did. My personal hunch is that we're probably setting the stage for the last leg of the bubble blow up. Indeed, forcing people to sit home, the dates actually coinciding with the massive rally(IE since they've stayed home theres been little to do but trade stocks and everyone is making boatloads of money), just wets the appetite no different than a newbie winning their first hand of blackjack. That said its ignorant to just immediately write off other possibilities as well.
Liberty Posted April 30, 2020 Posted April 30, 2020 The market is forward looking, and in a DCF, the next 1-2 years are only worth a certain amount.. So considering the massive stimulus and negative real interest rates, the market isn't being that crazy. I think it's inconvenient for many to not have had the prices go as low as they wanted, but the market has always been hard to predict and won't always go down when the economy is bad or go up when the economy is good. If it was easy, we'd all be richer.
Spekulatius Posted May 1, 2020 Posted May 1, 2020 Looks like some contingency are put in place after all by our supreme leader: https://apple.news/AYVZcXZ0WSNCZ9DfJmFf3LA
clutch Posted May 1, 2020 Posted May 1, 2020 "WHO emergency expert says Sweden could be ‘future model’ for coronavirus policy" https://www.nydailynews.com/coronavirus/ny-coronavirus-who-emergency-expert-20200430-rsa3s3lm6bfk3fjofw3oezzrxu-story.html
Cigarbutt Posted May 1, 2020 Posted May 1, 2020 ^The above link (apple.news) also mentions the resiliency (lack of) of the health care system. Healthcare, almost by definition, is a very low productivity area and this aspect has been underlined with the recent pandemic. In the last few years, some have wondered at the absent productivity paradox in relation to various technologies, automation and artificial intelligence. The virus has considerably burdened the system (broken supply chains, safety procedures, awkward basic equipment, long cleaning phases in between cases) that will take a long time to dissipate and may not go back to the old normal. Tele-consultation is on the rise but, just like with the recent application of electronic records, it is being realized that the development is ill suited for a large number of applications and rarely result in a net positive result, at least at this point, in terms of a productivity enhancement activity. The positive mostly came from resiliency at various levels with elaboration of various evidence-based guidelines, protocols and simple clinical algorithms. It seems that the present level of organization is not ready, at large, for positive productivity steps as it labors to supply basic protective equipment to employees and often faces drug shortages. Of course, productivity improvements will come and the virus could have been a trigger but it may take a while. I was getting ready to short Surgical Partners (SGRY) before the virus as its innovation was mostly financial engineering in nature and its focus was not on end customer value enhancement. It looked like it was ready to be reorganized but was saved by central junk bond buying authorities. In order to know how this will play out, one has to wait until the other side. https://marginalrevolution.com/marginalrevolution/2020/04/the-decline-of-the-innovation-state-is-killing-us.html it looks like some are ahead of the game for body bags and i guess somebody can run a twitter feed on that or whatever.
UK Posted May 1, 2020 Posted May 1, 2020 "WHO emergency expert says Sweden could be ‘future model’ for coronavirus policy" https://www.nydailynews.com/coronavirus/ny-coronavirus-who-emergency-expert-20200430-rsa3s3lm6bfk3fjofw3oezzrxu-story.html https://www.cnbc.com/2020/04/30/coronavirus-sweden-economy-to-contract-as-severely-as-the-rest-of-europe.html Nonetheless, data released from the country’s central bank and a leading Swedish think tank show that the economy will be just as badly hit as its European neighbors, if not worse.
samwise Posted May 1, 2020 Posted May 1, 2020 Sweden hasn’t got much of an economic advantage by staying open, nominally. Time will tell if they have gained time and get through this recession faster. Their estimate for GDP are -7% and -10% in the scenarios they published. So keeping your shop open doesn’t help if almost nobody comes. They expect a bounce next year. https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/monetary-policy-april-2020--the-riksbank-is-supporting-an-economy--in-crisis/ Edit: compare to Denmark modelling three scenarios where the GDP is down 3 to 10%. http://www.nationalbanken.dk/en/publications/Documents/2020/04/ANALYSIS_No%204_Danish%20and%20international%20economy%20hit%20by%20pandemic.pdf
Guest cherzeca Posted May 1, 2020 Posted May 1, 2020 some of what I have been reading suggests that it is not the case that swedes did not reduce social interaction and commerce, but rather that the Swedish govt did not see fit to order them to do it. the Swedish govt thought they could rely upon their populace's willingness to do this of their own accord, and it was right.
clutch Posted May 1, 2020 Posted May 1, 2020 It seems plausible that Sweden will have a similar economic downturn as that is largely tied to people's behaviors and trades. If you listen to their top epidemiologist, Johan Giesecke, his main argument is that you will have a similar number of deaths at the end regardless, whether you are in a FORCED lockdown vs a voluntary one. And that there is no need to take such a draconian and authoritarian measure -- which could become a threat to free democracy. His interview: I don't think he mentions economy even once...
Spekulatius Posted May 1, 2020 Posted May 1, 2020 some of what I have been reading suggests that it is not the case that swedes did not reduce social interaction and commerce, but rather that the Swedish govt did not see fit to order them to do it. the Swedish govt thought they could rely upon their populace's willingness to do this of their own accord, and it was right. Yes, I think that’s essentially correct. Due to different starting points and vulnerability, the same thing did not work in Italy , Spain so more stringent measures had to be taken to get the situation under control. I would call Sweden a success in a sense that their citizens support their strategy and the cost has been in their opinion ( which is really all that matters ) acceptable.
Liberty Posted May 1, 2020 Posted May 1, 2020 some of what I have been reading suggests that it is not the case that swedes did not reduce social interaction and commerce, but rather that the Swedish govt did not see fit to order them to do it. the Swedish govt thought they could rely upon their populace's willingness to do this of their own accord, and it was right. The US is clearly not Sweden, though, right?
clutch Posted May 1, 2020 Posted May 1, 2020 some of what I have been reading suggests that it is not the case that swedes did not reduce social interaction and commerce, but rather that the Swedish govt did not see fit to order them to do it. the Swedish govt thought they could rely upon their populace's willingness to do this of their own accord, and it was right. The US is clearly not Sweden, though, right? I think this is a fair point as the people's behavior might be the single most important factor in containing the virus. It probably explains why many Asian countries were able to contain the outbreak. Having said, what now for the US? We see that as soon as the measures are lifted, people quickly go back to their normal behaviors, e.g., what happened on California beaches.
Liberty Posted May 1, 2020 Posted May 1, 2020 Sweden now has one of the highest per capita COVID death rates in the world, higher than the US, and about 6 times higher than neighboring Scandinavian countries. This suggests that a non-interventional approach is imprudent. Taleb: DYNAMIC vs STATIC While the wisdom of a tail-risk decision under asymmetries is not to be decided after, comparative numbers for Sweden are much worse. Sweden's numbers are growing at ~50-150 a day, Norway's 1-5. So expect the ratios to soon be 4000-6000 vs 220-250 for Norway. Also: "Vitamin D Insufficiency is Prevalent in Severe COVID-19" https://www.medrxiv.org/content/10.1101/2020.04.24.20075838v1
LC Posted May 1, 2020 Posted May 1, 2020 Also: "Vitamin D Insufficiency is Prevalent in Severe COVID-19" Perhaps Trump was onto something when he suggested to shove sunlight where the sunlight don't shine ;D ;D ;D
Liberty Posted May 1, 2020 Posted May 1, 2020 "A militia group stands in front of the governor's office." Nice suppressor on that rifle. WTF is wrong with people? ::) https://www.theguardian.com/us-news/2020/apr/30/michigan-protests-coronavirus-lockdown-armed-capitol#img-1
muscleman Posted May 1, 2020 Posted May 1, 2020 https://english.kyodonews.net/news/2020/05/37be03e4d191-over-117-mil-people-may-make-trips-in-china-during-may-day-holiday.html More than 117 million people are likely to make trips in China during the five-day May Day holiday that started Friday Nothing to see here guys. All new infections in China are now reported like "xxxx city got 30 new cases and that's because a foreign guy came over irresponsibly". I think a 2nd wave is coming. My friend recently went to a good restaurant in Wuhan. Still no one there. Her family was the only one. Where is the pent up demand after this is all over? We have this on top of the most historical asset bubble. Just keep that in mind.
DooDiligence Posted May 1, 2020 Posted May 1, 2020 The Washington Post, citing two people with knowledge of internal discussions, reported on Thursday that some officials had discussed the idea of canceling some of the massive U.S. debt held by China as a way to strike at Beijing for perceived shortfalls in its candidness on the COVID-19 pandemic. Trump's top economic adviser denied the report. "The full faith and credit of U.S. debt obligations is sacrosanct. Period. Full stop," White House economic adviser Larry Kudlow told Reuters. Asked whether he would consider having the United States stop payment of its debt obligations as a way to punish Beijing, Trump said: "Well, I can do it differently. I can do the same thing, but even for more money, just by putting on tariffs. So, I don't have to do that." www.nytimes.com/reuters/2020/05/01/business/01reuters-health-coronavirus-usa-china.html
clutch Posted May 1, 2020 Posted May 1, 2020 I think a 2nd wave is coming. Why would anyone think that a 2nd wave was not coming? (when lockdowns are lifted)
Recommended Posts