Tuesday, May 05, 2020

Why can't we not be sober.....

I just want to start this over.

Tool - Sober
Confusing double negative aside, the tone of this song strikes me as appropriate.  By the end of this decade the US might be running a debt of $30 trillion which makes one wonder - if debt doesn't matter, why did we ever pay taxes? Why not just run $5 trillion deficits forever? Oh, because eventually your currency becomes worthless and you end up like Venezuela or Zimbabwe.

I just want to go back to 2000 and start this over.  Fewer interventions after the dotcom bubble, fewer interventions after the Great Recession, smaller deficits during the "recovery years" of 2012-2017 and of course, fewer bailouts during the COVID19 crisis.
Wealth inequality is very real and becoming worse in the United States. After rising throughout the 90's during the bull market, the share of wealth held by the richest 1% of Americans (if you have to ask you aren't in this category) plateaued around 27-28% in 1998 and stayed fairly flat through the recovery 2012-13 (rising to around 29% at the end of the first Obama term). 

This was when the economy should have hit a natural air pocket (in 2013 and 2015 in my opinion) but the Federal Reserve kept extraordinary measures in place to support the markets.  The result was rising in equality from 2012 to 2016 which led to the rise of candidates Bernie Sanders and Donald Trump.  This inequality has only worsened in the past 3 years and will likely be at an all-time peak by the time of the November elections. :/
via @hermmohawk

The rising wealth of the 1% has come at the expense of the middle class.
via @rudyhavenstein

Flying in the era of COVID19: This is one airline's approach to flying safely....well as safe as it can be putting humans in a metal tube and hurling them through the sky at 550mph.
You might ask "How can airlines that need all of our bailout money, operate at 50% of capacity?".  My guess will be price hikes - 100%-200% right off the bat.  Airlines will hope business customers will keep them afloat, but what business is going to voluntarily overpay for travel expenses right now?  A few will, but I think this is a dangerous game for the airlines to play.  After an initial bounce from the open, they might see the impact that Zoom (or whatever video conference software becomes the de facto market leader) has had on marginal travel.

Since Day 1 when discussing COVID19, I've said that the US would have a tough time with the virus because we struggle with individual rights vs. doing something for the good of society. The US represents 4% of the world's population but 33% of confirmed and REPORTED cases.  Obviously, not all testing and reporting is the same but that is a failure of epic proportions.

via www.worldometers.info
The markets shrugged off a 4% decline overseas on Monday and soared back toward that magic 2900 number again on the S&P 500.  This isn't advice but the markets feel very directionless here.  Most sharp investors want to short between 2925 and 3000 or buy between 2600 and 2700.  Sitting in the middle of that range means that the market is prone to unexplained swings.

I know valuations no longer matter because that's not how we measure stocks but consider the fact that the median estimate for 2020 earnings is now 110, stocks are trading at 26 times earnings which is more expensive than their 2020 peak.  If you use Goldman's WORST CASE scenario of $70 stocks are trading 41 times earnings.  Remember, stocks are traditionally considered cheap around 10 times earnings.  Hmmm, 10 x $70 is a lot less than 2870 (like 75% less).... something to ponder.
Quote of the Day:
"My conservative friends don’t think states and cities deserve help. My progressive friends think certain businesses don’t deserve help. And my libertarian friends don’t want anyone to get help. These are the seeds of long, slow, painful recoveries."
via NYTimes.com
Daily Dose of Humor:

via @mom_tho
Marriage is having separate tubes of toothpaste because your spouse squeezes it wrong

via @darlainky
I quit watching How to Get Away With Murder a few seasons back because I didn’t feel like I was learning anything.

via @portmanteauface
How quintessentially American is it that a nation of adults who struggle with tenth grade math spontaneously and collectively learned the ancient art of breadmaking just to avoid the risk of going one single day without eating carbs


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