Friday, March 20, 2020

And just like that, it's over...

We tend to the wounded. Count our dead."

- from Yorktown, Hamilton the Musical


Thanks again for all of the shares - I suppose I should breakdown and get a Fakebook account to enhance my reach but you are all doing a great job of helping me reach as many people as possible.


Quote of the day - 

"If your entire economy collapses because you need to manage a pandemic for a few weeks, maybe the problem wasn't the virus".

Obviously, I'm being a little dramatic for effect but screens were green all over yesterday and we are rallying again this morning so....

Markets - Right now everyone is still operating with the mindset that this will be just like every other correction.  You pick the bottom and will be rewarded handsomely. 

We were poised on Thursday to bounce of a technical point on the charts and we did nicely (though they sold the market pretty hard at the end of the day). Again, if this gets going to the upside, it has the potential to be an epic 20-30% rally in just days, so I understand the appeal of wanting to pick the bottom but this a world for ultra-high speed algorithmic traders and the few humans with no life outside of staring at their screens for 23 hours a day.  The average investor should stay miles from this sort of market.

One final note - this crisis will not pass while the credit markets continue to implode.  I try to keep these discussions high level so I won't get too far into the weeds, but the investment grade and high yield debt markets continue to implode which will draw all of the liquidity from the Fed leaving nothing to support stocks. 

On the bailouts - let's see so far I've heard that all of these industries need their bailout...

* restaurants
* hotels
* casinos
* airlines
* Boeing
* the candy industry (I'm not kidding - see this - the Candy lobbyists want their money too!)
* cruise lines
* oil companies,
* etc, etc. 

As one lobbyist put it yesterday "We are at the spaghetti on the wall point of the crisis.  Let's see what sticks."  Reminder, these politicians are spending YOUR money (well, actually, they are taking out 30 year mortgages in your name because our Fed government has no money to spend right now). 

Remind them of that with a call or email or tweet to your Congressional leaders - locally that is @RepStefanik @SenSchumer or @SenGillibrand.  Send them my way if you'd like and I'll have a frank conversation with them.

I'll reiterate my opinion - the best thing in the long-run for consumers and employees is to let these over-leveraged, mismanaged companies file for bankruptcy reorganization.  While in reorganization, the companies will continue to operate and their financial condition will eventually improve leading to better wages and lower prices for consumes.  The only people benefiting from a bailout are the management teams and their investors who enabled them.

COVID19 update:

I do not have any unique insight beyond what everyone else is reporting.  California going into a state of "shelter in place" means that those measures are coming sooner than later to NY in my opinion.  As one doctor in NYC put it "We have no idea what's coming but I'm worried that by next week NYC becomes our Wuhan or Lombardy." That should scare us all.

One reason why is shown below:

Image
While this isn't a scientific study, only showing a 7% decline in foot traffic is troubling (though to be fair this was through 3/13 and I think by 3/20 the numbers will look much different).  Especially for a virus with a 14 day incubation period. 

* Virus Fatigue - this article highlights one of my greatest concerns that I expressed earlier this week.  After another week or two of isolation people may start breaking containment and then we will see a resurgence of cases.  This creates this never-ending loop of outbreak/containment and society will start to fracture.

* China - This is major concern of mine that I keep hearing from people in the know - China is fuming right now.  Remember that amazing trade deal? Yeah, neither do they.  This virus will eventually fade into the background but the Chinese remember people who wronged them 1000 years ago and they will remember the way the rest of the world responded to this crisis.  One of the brightest minds I know is warning that we are running the risk of prompting the first cyber World War.  I think the odds are incredibly low, but in his opinion antagonizing the Chinese every day on national TV moves us one step closer to a US vs China/Russia/Iran/N.Korea cyber war.  If you think self-isolation is bad, imagine it without electricity, internet access or cell service. 

Okay, that's enough doom and gloom to hold you over until the weekend!

Stay safe and stay home!

Cheers!

No comments: