Futures Limit Down

[Viking]

What does the board think of Ben Bernanke making references that this isn't a depression and something similar to a natural disaster and will be a sharp but a short recession and a sharp rebound? If you take his comments along with Bill Gates of opening up the economy in 6-12 weeks then things could start to look somewhat back to normal in the summer.

If the market discounts the future and the market bottomed 3 months before the real economy in 2009, maybe the market could bottom as early as April. I would be surprised if we don't hit at least 40-45% down if not 50% before the bottom but if the duration is going to be months and not years, then maybe the bottom is as close as April.

On the other hand, it seems like sectors of this hit we will be feeling the after effects for years, at least for poor countries. Emerging markets looks particularly worrisome.

 

I agree with pretty much everything you wrote. I think it is crucial to keep the timeline to reopen the economy as short as possible and in order for that to happen, new infection rates will need to come down.

 

I think the key moving forward will be how quickly each state is able to pivot to the next stage of the battle: aggressive testing in volume and contact tracing (like South Korea, Singapore and Taiwan). Is this model 4 weeks away from being implemented or 8 weeks away? Big difference for how big the economic contraction is and what the recovery looks like on the other side (V or U).

 

In my province (BC) it does not look like it is on anyones radar (the South Korea model) so my guess is we are in lock down for at least another 6-8 weeks.

[Casey]

What does the board think of Ben Bernanke making references that this isn't a depression and something similar to a natural disaster and will be a sharp but a short recession and a sharp rebound? If you take his comments along with Bill Gates of opening up the economy in 6-12 weeks then things could start to look somewhat back to normal in the summer.

If the market discounts the future and the market bottomed 3 months before the real economy in 2009, maybe the market could bottom as early as April. I would be surprised if we don't hit at least 40-45% down if not 50% before the bottom but if the duration is going to be months and not years, then maybe the bottom is as close as April.

On the other hand, it seems like sectors of this hit we will be feeling the after effects for years, at least for poor countries. Emerging markets looks particularly worrisome.

 

I agree with pretty much everything you wrote. I think it is crucial to keep the timeline to reopen the economy as short as possible and in order for that to happen, new infection rates will need to come down.

 

I think the key moving forward will be how quickly each state is able to pivot to the next stage of the battle: aggressive testing in volume and contact tracing (like South Korea, Singapore and Taiwan). Is this model 4 weeks away from being implemented or 8 weeks away? Big difference for how big the economic contraction is and what the recovery looks like on the other side (V or U).

 

In my province (BC) it does not look like it is on anyones radar (the South Korea model) so my guess is we are in lock down for at least another 6-8 weeks.

 

 

Disagree with Bernanke unless the natural disaster was something that left a lingering fallout a la nuclear accident, and what natural disaster shuts down the entire United States and Europe and others all at the same time?

 

Here is how I've been thinking things play out:

 

April - Rest of US cities go through the early part of the curve. NYC reaches peak and daily counts start moving downwards. Florida is a shitshow as are rural areas unlucky enough to get an outbreak. Can't re-open yet.

May - Growth of daily confirmed cases levels off in the second batch of cities. Cities are still doing >100 cases for most of May. Economically getting very painful. Can't re-open yet though.

June - Still in a "soft lockdown" with cases trending downward. Pressure to re-open things, and we'll probably try to do it.

July - Same as June with less and less cases. During June & July stores that didn't close permanently open back up to reduced thresholds of people.

Aug - New Normal

 

75% cash right now fwiw. I can't see the economy doing well during the next 5-6 months and there's the chance we get a double-dip outbreak in fall with a more depleted economy and healthcare system. SP 2000-2200 in the next couple weeks I'll add to some things.

[rb]

What does the board think of Ben Bernanke making references that this isn't a depression and something similar to a natural disaster and will be a sharp but a short recession and a sharp rebound? If you take his comments along with Bill Gates of opening up the economy in 6-12 weeks then things could start to look somewhat back to normal in the summer.

If the market discounts the future and the market bottomed 3 months before the real economy in 2009, maybe the market could bottom as early as April. I would be surprised if we don't hit at least 40-45% down if not 50% before the bottom but if the duration is going to be months and not years, then maybe the bottom is as close as April.

On the other hand, it seems like sectors of this hit we will be feeling the after effects for years, at least for poor countries. Emerging markets looks particularly worrisome.

 

I agree with pretty much everything you wrote. I think it is crucial to keep the timeline to reopen the economy as short as possible and in order for that to happen, new infection rates will need to come down.

Well now pretty much the consensus seems to be that it'll be a recession. But consider that this is a moving average. A couple of weeks ago most ppl thought we weren't even gonna go in a recession. I was probably among them.

 

Now I don't see how we don't even get a normal recession even under the best circumstances when we open. A drop in durable goods. Think about it, you went through a layoff, it's a freaking virus, you don't know if it comes back again or not, whether you get laid off  again or not. Are you gonna go out and buy a new car or washing machine? My guess is that for a lot the answer is no. So a recession.

 

I'd like to add that we recently haven't been doing very well with the recessions. So let's say that the best case scenario is we have a 2001. Sure! But honestly 2001 didn't feel that freaking good.

[Spekulatius]

What does the board think of Ben Bernanke making references that this isn't a depression and something similar to a natural disaster and will be a sharp but a short recession and a sharp rebound? If you take his comments along with Bill Gates of opening up the economy in 6-12 weeks then things could start to look somewhat back to normal in the summer.

If the market discounts the future and the market bottomed 3 months before the real economy in 2009, maybe the market could bottom as early as April. I would be surprised if we don't hit at least 40-45% down if not 50% before the bottom but if the duration is going to be months and not years, then maybe the bottom is as close as April.

On the other hand, it seems like sectors of this hit we will be feeling the after effects for years, at least for poor countries. Emerging markets looks particularly worrisome.

 

I agree with pretty much everything you wrote. I think it is crucial to keep the timeline to reopen the economy as short as possible and in order for that to happen, new infection rates will need to come down.

Well now pretty much the consensus seems to be that it'll be a recession. But consider that this is a moving average. A couple of weeks ago most ppl thought we weren't even gonna go in a recession. I was probably among them.

 

Now I don't see how we don't even get a normal recession even under the best circumstances when we open. A drop in durable goods. Think about it, you went through a layoff, it's a freaking virus, you don't know if it comes back again or not, whether you get laid off  again or not. Are you gonna go out and buy a new car or washing machine? My guess is that for a lot the answer is no. So a recession.

 

I'd like to add that we recently haven't been doing very well with the recessions. So let's say that the best case scenario is we have a 2001. Sure! But honestly 2001 didn't feel that freaking good.

 

There is no way we are going to avoid a recession. The Economic numbers this quarter and next will probably be the worst on record.

 

Futures down 1.4% so far. Not too bad.

[Viking]

What does the board think of Ben Bernanke making references that this isn't a depression and something similar to a natural disaster and will be a sharp but a short recession and a sharp rebound? If you take his comments along with Bill Gates of opening up the economy in 6-12 weeks then things could start to look somewhat back to normal in the summer.

If the market discounts the future and the market bottomed 3 months before the real economy in 2009, maybe the market could bottom as early as April. I would be surprised if we don't hit at least 40-45% down if not 50% before the bottom but if the duration is going to be months and not years, then maybe the bottom is as close as April.

On the other hand, it seems like sectors of this hit we will be feeling the after effects for years, at least for poor countries. Emerging markets looks particularly worrisome.

 

I agree with pretty much everything you wrote. I think it is crucial to keep the timeline to reopen the economy as short as possible and in order for that to happen, new infection rates will need to come down.

 

I think the key moving forward will be how quickly each state is able to pivot to the next stage of the battle: aggressive testing in volume and contact tracing (like South Korea, Singapore and Taiwan). Is this model 4 weeks away from being implemented or 8 weeks away? Big difference for how big the economic contraction is and what the recovery looks like on the other side (V or U).

 

In my province (BC) it does not look like it is on anyones radar (the South Korea model) so my guess is we are in lock down for at least another 6-8 weeks.

 

 

Disagree with Bernanke unless the natural disaster was something that left a lingering fallout a la nuclear accident, and what natural disaster shuts down the entire United States and Europe and others all at the same time?

 

Here is how I've been thinking things play out:

 

April - Rest of US cities go through the early part of the curve. NYC reaches peak and daily counts start moving downwards. Florida is a shitshow as are rural areas unlucky enough to get an outbreak. Can't re-open yet.

May - Growth of daily confirmed cases levels off in the second batch of cities. Cities are still doing >100 cases for most of May. Economically getting very painful. Can't re-open yet though.

June - Still in a "soft lockdown" with cases trending downward. Pressure to re-open things, and we'll probably try to do it.

July - Same as June with less and less cases. During June & July stores that didn't close permanently open back up to reduced thresholds of people.

Aug - New Normal

 

75% cash right now fwiw. I can't see the economy doing well during the next 5-6 months and there's the chance we get a double-dip outbreak in fall with a more depleted economy and healthcare system. SP 2000-2200 in the next couple weeks I'll add to some things.

 

I am more optimistic on the timeline. Trump just announced social distancing to extend for the month of April. That is very good news. Now all the governors need to get their lock downs in place. This gives all jurisdictions 4 weeks (April) to also get their testing and contact tracing apparatus in place. I see a scenario where the US could start to reopen in a limited sometime in May (if all goes well). I am starting to wonder if the 35% decline we saw last week was not the bottom :-)

[wescobrk]

How many are concerned about the amount of unemployment insurance is higher than a lot of jobs that people are losing their job from?

Why would someone go back to work when we reopen and risk their life working at Walmart when they can stay home and watch netflix?

 

Munger always talks about how important incentives are.

[clutch]

How many are concerned about the amount of unemployment insurance is higher than a lot of jobs that people are losing their job from?

Why would someone go back to work when we reopen and risk their life working at Walmart when they can stay home and watch netflix?

 

Munger always talks about how important incentives are.

 

I agree. In Canada, you get $2000 per month for 4 months if you were laid off due to COVID-19 regardless of your income. And after that, you can collect your regular employment insurance.

 

I'm pretty sure many people will choose to stay home for a while...

[rb]

Invariably there will be some of that. But I don't think it matters too much.

 

1. When open there won't be the old economic capacity. So some of these people should be on umemployment. Having some money is good. Also these measures are temporary and they taper off.

 

2. I don't think people on this board understand that demographic well. Take clutch's example. Well in Ontario the minimum wage is about 2,300 per month. So the 2,000 EI is still below minimum wage. So if I would work for minimum wage I would say sure. Why would I work for $300 bucks a month (pre-tax). May as well chill. But for these people $300 a month actually matters. So yea, I think a lot of them will go to work for 300 a month.

 

3. $2000 a month really sucks for a lot of places in Ontario.

 

Anecdotally I know someone who doesn't make a lot of money and has a sizeable investment portfolio. She got laid off due to COVID and went on EI. What's she doing right now? Applying for jobs. Why? Because she wants to get in front of the other ppl that will apply for jobs.

[Santayana]

In the US minimum wage works out to $290/week.  Getting an extra $600/week on top of normal unemployment payments will motivate many to stay home as long as they can.

[Viking]

How many are concerned about the amount of unemployment insurance is higher than a lot of jobs that people are losing their job from?

Why would someone go back to work when we reopen and risk their life working at Walmart when they can stay home and watch netflix?

 

Munger always talks about how important incentives are.

 

The virus will be with us until a vaccine is available. 12-18 months? If you are older or have underlying conditions it is rational to avoid work (all situations where you will be exposed). Nothing to do with work ethic. Or wanting to watch Netflix. Lots of shades of grey.

[clutch]

Invariably there will be some of that. But I don't think it matters too much.

 

1. When open there won't be the old economic capacity. So some of these people should be on umemployment. Having some money is good. Also these measures are temporary and they taper off.

 

2. I don't think people on this board understand that demographic well. Take clutch's example. Well in Ontario the minimum wage is about 2,300 per month. So the 2,000 EI is still below minimum wage. So if I would work for minimum wage I would say sure. Why would I work for $300 bucks a month (pre-tax). May as well chill. But for these people $300 a month actually matters. So yea, I think a lot of them will go to work for 300 a month.

 

3. $2000 a month really sucks for a lot of places in Ontario.

 

Anecdotally I know someone who doesn't make a lot of money and has a sizeable investment portfolio. She got laid off due to COVID and went on EI. What's she doing right now? Applying for jobs. Why? Because she wants to get in front of the other ppl that will apply for jobs.

 

If you have anyone in your family household who is of old age or vulnerable, I highly doubt the decision will be based on the financial situation. It's not worth the $300 per month to take a risk of catching the virus from work and spreading it to your family members. And unfortunately, many of the low wage workers are in such a situation.

 

[Casey]

How many are concerned about the amount of unemployment insurance is higher than a lot of jobs that people are losing their job from?

Why would someone go back to work when we reopen and risk their life working at Walmart when they can stay home and watch netflix?

 

Munger always talks about how important incentives are.

 

What you speak of could happen some, but the list of things that concern me more is pretty long.