Wednesday, April 22, 2020

Some folks inherit star-spangled eyes,

They send you down to war.
When you ask them "How much should we give?"
The only answer is "More, more, more...."

CCR - Fortunate Son
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Markets:
What's become the norm for the stock market a 2% bounce today occurred on virtually no news.  I wish I could provide more color around why stocks act the way they do right now, but it should be evident to anyone watching, that stocks are not a reflection of economic activity.  They are not forward looking instruments or whatever BS line you are being fed on TV.  They are video game  and you aren't given the cheat codes.

Also, it's good time to revisit what we mean when we talk about the markets.  The 5 largest companies - Microsoft, Apple, Amazon, Alphabet (Google), and Facebook - carry the same weight as the 350 smallest companies in the S&P 500. 

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Also, I've tried to talk about relative value of stocks before.  The value that you get for a stock is it's price divided by earnings.  For the whole market, it's the market price divided by total earnings.  Slowly earnings forecasts are starting to fall, so the denominator is going down while the price has risen over the past month.  The result? At the market peak in February, you were paying 19 times earnings for the stock market - expensive by historical standards.  Today, you are paying 19.6 times, ie, as we've stalled the economy, lost 22 million jobs and sent countless companies heading toward bankruptcy.....Stocks are MORE expensive today than they were at the all-time peak two months ago.

Oil prices stabilized a bit but they remain incredibly volatile. It's worth noting that somewhere between 40-50% of US oil producers will go bankrupt if oil stays under $30 for a prolonged period of time (say through the fall).
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COVID19

Testing:
Where we are - about 1 million tests a week.
Where we need to be - 30 million tests a week.

Tracking/Tracing:
Where we are - less than 2,000 people in the US working on this.
Where we need to be - 100,000 - 300,000 analysts working on this.

Small Business Loans
Where we are - the vast majority of the first wave of $350 billion went to banks largest customers.  Again, this is the problem with public/private partnerships without oversight.  If you trust a corporation to do the right thing, they will do the right thing for themselves. Another new round of financing of $320 billion is set to be passed this week ---- think about that for a moment $670 billion in money blown in 2 months which is like 85% of the TARP Bailout in 2008 and no one has any idea where it's going.

Where we need to be - I'm torn on this because this feels like throwing money on campfire.  An extra month of rent or payroll is not going to make a difference for a lot of small businesses.  If you operated your business on the edge and you can't weather 3-6 months being shutdown, then maybe your business wasn't viable in the long run.  I don't love the fact that many large corporations sucked up the first $350 billion, but without oversight that money is gone. 

Our Cultural Divide
Where we are: We have a divided society and no way unify our culture.  I'll point out that all of the "re-open" America protests are basically the work of one guy in Jacksonville.  He bought all of the websites, populated the state sites and started the conversation on social media.  For all of the talk of protests, states like Maryland reported that they had more media inquiries about the protests than they had actual protesters.  However, perception is reality in our society now and the perception is that red States are full of people who need a hair cut so, they are going to start opening up despite the fact that we hit new all-time highs yesterday in cases and deaths. 

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Where we need to be: there's no fixing this, the best bet is to draw a new border from NJ to Michigan/Minnesota and let the Northeast and the West Coast join Canada (we can merge Montana/North Dakota with Alberta/Saskatchewan and give it to New TexFlorida or whatever the new country will be called).

#Sarcasm (sort of). 
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via @perlhack
Canadian smoke detectors are just a voice saying “Sorry, I don’t want to alarm you but…”

via @billforpa14
I mean you have to admit it's hilarious that the people who have spent their entire lives stockpiling beans & ammo and publishing newsletters about preparing to shelter in place during a global crisis are the ones having meltdowns because they can't go to the cheesecake factory.

via @Whatevah_Amy
Working from home would be fantastic if everyone would stop calling and emailing me.

Cheers!

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