Jamok, all,

 

This is truly a global disaster.  Our Bumbling (well put Jamok) President looks and sounds truly incompetent next to the panel of experts he puts forth every day.  BTW, Doctor Fauci is a freaking rock star, so competent, well composed,  speaks with experience and authority and straight forwardness, so refreshing!  As to our Incompetent in Chief, we just need to remember he is the guy that said this is just a flu among the countless asinine statements.  I swear someone is going to make a ton of money publishing every stupid thing he has spoken.

BTW, it pains me to see that New York State accounts for nearly half of all detected cases in the USA, yes, they are doing the most testing of any other state and so they are detecting more folks infected, but this is symptomatic of such a crowded city, and maybe points to what could be folks not heeding the calls of the state and federal officials pleading for social distancing and just plain stay at home.

Speaking of lunacy and lack of responsibilities, our sea-side cities here in Florida (Mayors nor State Governor) have failed to order the closure of beaches and young spring breakers are just partying like there is no tomorrow.  Florida could may be following in the foot steps of New York!  WTF?!?!

One last thing:  New York is our Italy, unfortunately

Stay well, safe and healthy to all of you.

 

I just read that all Hotels in Florida will close by Sunday evening

lt cap, and all,

I don't mean to be alarmist. I've sold about 5% of my stocks to raise cash to buy more promising things. Like a bit of Microsoft, to start. The downsprialing 'pain' has probably been great for all of us. Now, I'm not saying that I'm going to do this - I really need some time to think about it - but I'm mulling doing some more selling - at a maximum, maybe a % across the board, except for those stocks I really believe in, on Monday. Why am I at least mulling this?

1. I think the infection is going to get much, much worse. The NY Times had this wonderful (not the proper word for it) graph of how many people per day, per million population, were being tested. At the time, S. Korea topped the list - 5,000 tests per day. (In today's news I read/saw that S. Korea is doing 15,000 tests per day, so that seems like too large a ramp-up in a short time, but maybe they got a huge delivery, I don't know.) They named all the relevant countries, and Greece was 2nd to last, testing about 125 people per million per day. Guess who was last? Right - The US, who at the time was testing a little over 100 people per million per day. I think the sharp spike we've seen in the last couple of days is an indication of how widespread the infection is. It just hasn't shown up previously because we didn't have the tests available to find those infected, even as doctors pleaded for test kits, among other essential medical items that are still all fouled up by Trump's lack of adequate response. So, I think, the more test kits that become available, the worse this is going to become evident. So even if the basics of the economy were intact, I think the huge fear that is rolling itself out may drown out any good market news, as people really start to panic. (I went out on an 'essentials run' for several hours yesterday. I was one of a minority wearing latex gloves, not to mention a mask. The traffic was pretty brisk. I had lost a valuable hearing aid somewhere along the way, (making this the most expensive bottle of bleach I ever snagged, lol), so I made the rounds of the stores I had been to, to see if I could locate it. The traffic was noticeably much, much thinner (a good thing), with people in gloves, and sometimes masks, shopping. But the majority of shoppers that were out were unprotected. I think the contrast between the two days is only a taste of what's to come. New York will certainly, as LT Cap pointed out, become our "Italy". But then, the whole country may become our "Italy", unless people really get the message (your teenager can easily infect the whole family). Not to mention that things like masks, hand sanitizer, and the other things that one needs are gone. But also, just in watching the difference between last night and today, Walmart's shelves were being emptied of all kinds of cleaner (the whole bleach section had 6 bottles), food, paper towels, all of it.

2. It's worrisome to see the estimates for the economic wreckage from this continually get re-calculated. At first it was the first quarter would be down by .4%, the second, down by 5% (I'm using major bank/analyst figures.) Then, it become .5 and 10%, now, I'm hearing .5 and 20-30% for the second. Some reputable figures, at the extremes, are saying the economic damage and recession will be 'like nothing we've ever seen', given that the worst damage will be to small businesses. And consumer spending is, arguably, what has propped the market up, given that comopanies in general have been reluctant to deplay capex the last 18-24 months. (I liked Mark Shield's comment on the PBS Newshour last night - He said if companies like the airlines want $50 billion dollar bailouts, fine. But that stake should make the government the owner of the airlines. And the CEO's should be paid like other public servants, such as the memebers of Congress - $174k/year. Imagine that, lol.)

Anyway, long story short, I'm really trying to think through both the fear that seems sure to surge and engulf the country as the rise in cases, and deaths, *not to mention the hosptial system becoming  overwhelmed (with dying people in the corridors?)*, and the economic damage may mean we haven't even nearly seen the bottom of this market. If there are opinons among you why we can't equal or surpass the 50% market downturn of 2008, I'd be interested to hear counter-thinking.

Not to be all gloom and doom, but if I'm dead, it doesn't matter how many hearing aids I've lost. Or how much money I've lost in the market. Larry Kudlow (being the drug-addled dandy he is) said unemployment might reach 20% (which was later 'retracted' by and aide, saying it wasn't a 'prediction.' said, just yesterday or so I think, like all the brokers, that this was a huge 'buying opportunity.' I can't really see it. I hope I'm wrong.

BTW, I think the NY Times has the best general coverage of this. You can get a year's subscription for $2/wk. If you have Amazon Prime, used to be, (maybe still) The Washington Post had 6 months free, then $4.99/mo. (which is what I pay now.) They both often break important stories, such as the simulation run by the govt. in 2019 of a severe pandemic, that showed hospitals getting quickly overwhelmed, and 2.2 million people dying.

Lastly - I may not sell more stock on Monday. I'll mull this. Maybe I'll be a deer in the headlights. Maybe I'm quite wrong. Hope so.

We are in uncharted territory here. I hope you're all staying safe, as are we here. Maybe we should all be hoarding TP instead of gold or whatever...

The lockdowns will never work as well in the West the way they did in China and South Korea. There, they used technology to track peoples movements to identify who they may have come in contact with and people can download apps to check their current risk level. I'm sure Google, Facebook and Apple could do the same here, but I doubt the political will is there to try and force what would be called spying, even on a temporary basis.

Trump seriously dropped the ball here re early testing. He bought time with the China air travel restriction, then did nothing with that time because of course he didn't want anybody to be tested anyway. We should already have been in the process of making masks and ventilators, but again he didn't want to prepare because that would spook the stock market. The irony being if we were better prepared we probably wouldn't have had such a fast and big crash.

So how do we get out of a global depression initiating lockdown? The data will show soaring new cases for a while because of Trump's early failure, so that's out as a metric. The data for daily deaths is a lagging one, with an average 18 days from symptoms to death so just as with Italy, everyone dying today caught it before the lockdown. That number will rise for a while too. It doesn't help that many young people are just ignoring it and partying in big groups anyway, feeling safe from it personally while ignoring the harm they can do to other people including their own older relatives. Realistically it's going to be 4 weeks lockdown at least. If it's longer than that, the economy will be in very deep trouble, and tbh I don't see the point of it going longer. What are we supposed to do, stay in lockdown for 12 months until a vaccine? We're going to have to get on with our lives and accept this is part of it.

The antivirals being used now sound promising. If they lower the death rate, and lower the ratio of people needing ICU's and the average duration of hospital stay, coupled with the rapid production of medical equipment, then we can leave lockdown sooner. Same if it seems to be seasonal. With the unprecedented stimulus and zero rates and QE5, a lot of stocks will in hindsight be looking cheap here. I like MSFT especially, also AMZN on dips. I'm still wary of TSLA but after its 100% retracement of the bs move lately, that could have support around $350. I've also dabbled in Boeing, down 75% from their high and sure to get a bailout. Short term though, yeah the picture looks grim. Market technicals are horrendous, we're below long term support lines, and we're coming up to a period of terrible jobs numbers and economic data, and company after company taking down their own guidance. It's easy to make a case for the drop from the highs being 50%, I won't argue against that.

At least this should hopefully secure Trump as a single term. Already we're seeing Joe Biden ads highlighting the terrible lack of leadership from Trump, including all the false statements he's made about this. Now it turns out a couple of Republican Senators, and the husband of one of them, were selling huge amounts of stock after getting Congress briefings about the virus, while publicly telling Americans everything will be fine, and Burr even warned his rich buddies with the truth. Outrageous. Loeffler even bought stock in a remote work company, looking to profit from it. Trump of course encouraged people to buy the stock market just after it started crashing, and Eric Trump advised everyone to go all in with their 401K's less than a month ago, then later deleted his tweet. They knew how bad it might get, and they encouraged Americans to buy in anyway.

Hopefully people too will realize that the GOP does not have their interests in mind when it comes to their healthcare. Time had an article about the costs of corona treatment, the uninsured woman had a bill of $35K. Even with insurance, people will be on the hook for thousands considering their deductibles and co-pay, and the GOP is still trying to kill the ACA in the SC.

A key data point to watch will be Italy's daily new cases in coming days, and their death rate in the next week or two. I expect the US to follow their trends.

worldometers.info/co...italy/

Jester,

At the risk of appearing panicked, I keep asking myself this question: Why can't this rival the great depression, when stock prices fell by 80%? The Dow futures are already off 5% as we speak for the open. Trump seems to make everything worse, by his reluctance to do what's necessary. (*Not* invoking the act that lets the govt. direct what needs to be made because he wants Republican 'market forces' to magically know what's needed and do the right thing? What?) Minuchin saying unemployment could reach 20%. (Then, semi-retracting it thru a flunkey, saying it 'wasn't a prediction.') The Democrats want accountability for bailouts, and the Republicans want to make their buddies whole, if not richer. The Republicans have scheduled a vote 5 minutes after the market opens. If it fails.....how much does the market lose tomorrow? 

At least in the depression, people could go to food lines. That may be a death sentence this time around. How do you provide for people's needs when 'social distancing' is the norm? Who is going to organize all this effectively? 

And, as I've said before, if small businesses get wiped out en masse, what economic base will be left. Can we trust companies to use the money to retain workers, or use to money for the survival of the company?

I've not decided anything. ANd I may not do anything. But I've done some figuring of what, after a drop in the markets tomrrow, what taking 30% and 50% out of the market would look like for my financial positions. 

As we all know, Trump's first words for the aid package was to bail out the hotel and cruise industries. He refused to say if his hotels would accept aid, whining about not getting credit for forgoing his presidential salary. With this crazy jerk at the top, why would we believe that there will be a sane, effective response?

Not to mention, as I also said, as testing ramps, infected citizens spike, as hospitals (who have been begging for supplies - to little effect) become overwhelmed - why not a Great Depression 80% haircut in the market before it's over.

Ok boomer (or Cassandra if you like), I've had my say :-)    But can the market stand more political incompetence?

I just heard another news blurb where Trump was saying that "you're going to see (the economy, the market) come back very fast. Very fast. There's a lot of pent-up demand." 

Not to mention that there is a worldwide container-lockup, as Chinese officials don't want to unload containers until they're sure they're not importing the virus again.

 

Jamok,

I think you were well in fear mode there along with the market. Hopefully you feel better now after the last few days. I hope everyone here is keeping safe, including your family and friends.

I wouldn't be at all surprised to see a test of the recent lows in the next few weeks. Tomorrow mornings unemployment numbers should be grim, and probably worse than expected. The virus situation in NY especially is also dire. I don't think parts of the country are doing enough either, especially Florida. The shutdown really needs to be all over, all at once, for at least 3-4 weeks. We're also coming up to earnings season. Nothing but bad news for a while, unless investors are pinning hopes on Italy showing a slowdown in new cases and deaths. Let's see how they fare when they try to open up again.

I doubt we'll see 50% or more drops from the highs. The stimulus is just so much. 0% rates, QE5 forever with $587BN bought by the Fed in the last week (!!!!!!), and this $2TN stimulus. Even if people are unemployed, that's a lot of money being added to the system. The projections of everything returning to normal later in the year look optimistic to me, especially as more people see a more personal impact from the virus in the next few weeks, whether it's someone they know who is suffering, or seeing images on TV of packed ICU's and so on. We'll all have to continue being careful until a vaccine. I know I'm not heading to a cinema or dine-in restaurant any time soon after the shutdowns end.

There is light at the end of the tunnel. Trump wants to be reckless and open things up too soon, however I do expect warming weather to help slow the virus transmission. Studies have been done on the ideal climate for it to thrive. This applies more to the Southern US than the NW or NE though, sorry Jamok. I cannot believe the Republican mantra that grandparents should be willing to die to save the economy though, wow. Memories of Logan's Run.

Trump will probably try to get everything opened too soon, more people will catch it and die, but he'll take no responsibility and blame the States for any future outbreaks. The market will care more about the economy being open for business than some people dying. All in all, we're just another brick in the wall.

Jester,

Yes, was certainly in 'fear mode', and the last several market days have helped relieve that. In the end, I only sold off 5% of my stocks (who would've thought the oil co's would rebound so greatly), so I'm basically pat. Or, a deer in the headlights - same effect.

I agree that we may go back and test the lows. Based both on the economy (how many people feel like testing out a $50k Ford F-150 that twelve other people tried out that day?), and especially how small business actually survives this. (Open restaurants with few customers?)  The package certainly helps.

But also given how uncoordinated the medical response has been is concerning to me. It is possible that, if caes skyrocket as seems likely, if hospitals get overwhelmed and patient start dying in hospital corridors, that may over-ride any decent economic news. (Some doctors are seriously considering 'code blue' protocols where a patient goes into respiratory or cardiac arrest, to 'Do Not Resusitate', regardless of what they or the family wants - done under the rubric of too dangerous for heathcare workers to flood the room, and the cost in masks and other protective equipment would be too great. (O.K. Boomer.)

There is this: The 3 million unemployment applications barely made the market blink. And, in the next several months, a lot of numbers may be scary, but meaningless, in terms of valuation of companies - e.g., is a 25% hit to GDP in Q2 really different than a 35% hit? If Ford sells 40% fewer vehicles in March than February, would 55% fewer make a difference? My point being that there is the possibility that, with lack of clarity, the 'talking heads' on CNBC can spin any scenario they want to, plausibly. 

Or, maybe the numbers do matter. Kind of like when a co pre-announces bad results and gets hit badly. When the CC comes around, even though everyone knows the numbers will be bad, it seems to me the majority of the time the stock gets hit again on the actual news. That would make for a very rough Q2 as numbers will be miserable for most. 

So, yes, the current 'partial V' in the stock market has me less panicked. Much less. If I have my wits about me, which is questionable, if the rally stalls out, I ought to consider selling some stock and raising cash. That would seem to be the rational thing to do, as our ability to respond to the virus is hampered by bad decisions, supply problems, and goofy ideas like getting America back to work asap so the hospitals will certainly become overwhelmed.

It's interesting to see how many different 'truths' can be manufactured out of a lack of clarity: On CNBC, two medical 'experts' appeared - (I think they were medical people, I wasn't watching closely) - one said that if we start to go back into work, perhaps the death toll will be 40,000. The other said if we do that, the death toll would be 400,000, minimum (or maybe it was 400,000 and 4 million) - doesn't matter, the point is that there are some very different scenarios out there, all based on lack of critical information. Including some medical folks who are endorsing Trump's wishes to trade lives for economics, which is scary.

Lastly, the ususal - The Republicans make a big stink that maybe giving unemployed $600/wk. would give them more $ than working. At the same time that the 'priviledged class' are better protected than anyone. Rand Paul, when asked how he got tested for the virus on demand, transgressing the 'rule' that only the symptomatic should be tested to conserve preciously small supplies, refused to answer the question. When Trump says, 'We're all going to be ok", it makes me wonder who is included in 'we.'

I recommended your post because it was good, but mostly because you referenced Logan's Run. I hope we all get to Sanctuary soon!

I was in Cancun from Mar 14-Mar 20 and it was dead. We came back a day early due to closing of borders and such. Had no issues with social distancing as we were at a resort that cost money. They had 50% cancellations the week we were there. I never saw bunches of college kids, but they would probably have been at a cheaper place. I remember those days.

I have been holed up every day since returning and I am now teaching and working online the rest of the semester so no plans to go out.  Ohio has been leading the way in terms of shutting down. I did not vote for Gov Dewine but he has been great through this and the chief medical officer Dr Amy Acton is even better - and not hard on the eyes. 2pm in Ohio each day is now Wine with Dewine. 

Hope you all stay safe!

 

Jester,

Well said.  I think the much-expanded testing will work against his wishes.  The USA map is looking pretty red, just a couple of weeks ago the center of the country was looking like it could fare better, but it is beginning to look like this thing is spreading even there, even with the fact that they are more isolated and much less dense than the coastal cities. It is just a matter of time before there is trouble there, maybe with the exception of places where truly no one wants to go/visit.  Farmers may actually do far better than anyone else.

That said, Trump has been steadfastly ignoring the glaring data (when does he not?), so he will push until Fauci and company yell at him that he is freaking crazy in pursuing this.

BTW, we are number one in corona virus cases! MAGA!

 

BTW, I watched a town hall on CNN last night, in the last half hour they interviewd Bill Gates, his views not surprisingly, where on the scientific side and while he was diplomatic, it was clear that he did not agree with the course of action that the administration took at the start of this problem stateside, nor did he agree with re-opning parts of the US.  

It was refreshing to listen to his views, he is someone who has been on both the biz side as well as on a Foundation that dedicates itself to the well being of humanity.