Author Topic: US Economy, the stock market , and other investment/savings strategies  (Read 480847 times)

DougMacG

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Re: US Economy, the stock market: Coronavirus?
« Reply #1400 on: February 18, 2020, 12:06:43 PM »
Trying to answer my own question, here is the Shanghai index for the last 3 months:



Stocks in China kept going up at the announcement of the virus, peaked in mid January.  Bottomed out (for now) around Feb 1 and is up since then.  This tells me there is no panic now. 

What news of spread or trajectory makes this change?

There are fewer than 2000 deaths known worldwide so far.  Far lower even in China than auto accidents, cancer, etc.
https://www.worldometers.info/coronavirus/
The economic scare then has to do with the travel bans, quarantines and shut downs of economic activity.  I'm surprised this hasn't shown up in the numbers yet.

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1401 on: February 25, 2020, 11:41:39 AM »
 :-o :-o :-o

Crafty_Dog

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Wesbury on Corona Virus
« Reply #1402 on: February 25, 2020, 12:24:39 PM »
Time to Fear the Coronavirus?

Monday, fear over the Coronavirus finally gripped investors, as both the Dow Jones Industrial Average and the S&P 500 index fell over 3% - the largest daily declines in two years. These drops wiped out all the gains for the year.

Frankly, it's amazing to us that the market had been so resilient! Maybe it's because recent history with stocks and viruses is that markets overreact leading to significant buying opportunities along the way. Over a 38-day trading period during the height of the SARS virus back in 2003, the S&P 500 index fell by 12.8%. During the Zika virus, which occurred at the end of 2015 and into 2016 the market fell by 12.9%. There are other examples, but they all passed, and the market recovered and hit new highs.

Will this happen again? Our view is that it is highly probable.

We aren't trying to be immunologists, and that may make our points moot, but there aren't that many immunologists in the world and the World Health Organization says this is not yet a true pandemic. We're just economists, but looking at the data, and having perspective is always important.

This whole thing is a human tragedy and we would never take human life and suffering lightly. And looking at data can make people appear cold, when in reality all they are trying to do is understand the situation. There are currently 80,088 confirmed cases and 2,699 deaths from the coronavirus COVID-19 outbreak as of Monday. This is a big number and is still growing, but the pace of growth looks to be slowing.

Much of the pessimism surrounding the virus focuses on the Chinese under-counting the number of infected to save face. However, it's important to note that a shortage of specialized test kits has caused health officials in many countries to rely on observable symptoms for diagnoses, and because coronavirus mimics the flu and pneumonia in its early stages, it's also possible that authorities may be over-counting as well.

Instead of looking at it from a total confirmed case perspective, we think the number of total active cases provides a better look into what is happening. This measure takes total confirmed cases and subtracts deaths and recoveries. This gives the total amount of people who have the potential to spread the virus further.

According to Worldometer, which aggregates statistics from health agencies across the world, total active cases peaked about a week ago at 58,747 and have since been declining. Even with all the new cases we are seeing in South Korea, Italy and Iran (where data is suspect). There have been 30,597 cases with an outcome (2,699 deaths and 27,898 recovered). In other words, the total active cases now stand at 49,923, a drop of 15% from the peak on February 17th.

One death is too many, but to put that number into a little bit of perspective, according to the World Health Organization, in the United States alone for the 2019-2020 season, there have been at least 15 million flu illnesses, 140,000 hospitalizations and 8,200 deaths. Imagine if everyone with an internet connection followed the spread of this annual flu, case by case, hour by hour.

It's true that the death rate from Coronavirus appears to be around 2% in China, which is much higher than the death rate from the normal flu, but like the flu increases with age. However, outside of China the death rate is far less than inside China, roughly 1%. And, there is already a drug that will combat COVID-19 moving toward first phase clinical trials. It took three months for this to happen in 2020, versus 20 months for SARS back in 2002/03 - a testament to advances in drug technology.

From a macro-economic point of view, the real question is how will this impact the US economy over the coming year. In short, our view has not changed. The US we believe is relatively insulated, with a fantastic health system. The US started the year with solid economic data and so far, nothing has changed. In fact, with all the data we already have on hand, we are expecting around 2% growth in Q1. Most of the impact to the US from the corona virus will come in Q2.

Capital goods exports to China along with imports from China are sure to be depressed given the struggles to reopen factories abroad. Most Chinese factories are still only operating at about 50-60% of capacity. Shipping giant Maersk has already said it has cancelled more than 50 trips to and from Asia. With China being home to seven of the world's busiest container ports there is bound to be some impact. Inventories in the US will be depleted more rapidly, but once the virus subsides, expect faster accumulation of inventories in the second half of the year.

Revenues and earnings from companies that are highly exposed to China will definitely be affected. China being shut down for a month will have a global impact. But lower earnings in the first half of the year should be made up by a strong rebound in the second half of the year with payback from lost months. Demand remains strong and there has been no visible impact yet on the job market as shown by initial unemployment claims. Supply disruption is the issue. We suggest looking through any earnings weakness as we expect it to be transitory.

One small nugget of good news is that many companies had already been shifting supply chains from China due to the Trump Tariffs. If they weren't considering it before they will be now as they realize the importance of diversification. Expect this trend to accelerate moving forward.

The US consumer is on solid footing and will continue to be one of the key drivers to US economic growth in the year to come. We believe, just like all the other viruses we have seen over the past decades that have dissipated, the Coronavirus will be no different. Some have suggested that the 1918 Spanish Flu, which killed hundreds of thousands in the US could happen again. No one knows, but 2020, is not 1918. Technology and news move much faster and the US rebounded from the Spanish Flu when all was a said and done. We suspect that any drop in earnings or economic activity will be short lived, and more than made up for in the year to come. Don't panic, stay invested.

Brian S. Wesbury - Chief Economist
Robert Stein, CFA – Deputy Chief Economist   

G M

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Re: US Economy, the stock market: Coronavirus?
« Reply #1403 on: February 25, 2020, 05:30:09 PM »
What does everyone here think about market implications of this so-called Coronavirus?
1.  Medically, how does this end?

When the infected die off. Based on the information available, expect something similar to the 1918 Spanish Flu as a best case scenario.


2.  Mathematically, how is this expanding?  Remember, information from China is likely false, understated.

Yes. China is lying it's ass off. Look how rapidly it's gone global. Unless you are in an underground bunker, this will reach where you live.

3.  Economy of China:  If the economic impact only hit with a huge recession in China, how does that affect our markets, my 'growth stock funds'?

The whole global debt-based economy is fixing to go up in flames. We never fixed the core issues from 2008, and now a giant black swan has arrived.

4.  If the virus hits epidemic levels elsewhere, what is that economic and market impact?

TEOTWAWKI

5.  If stock markets start to panic, how far does it go.

1934

I am thinking I should be in an all cash position now and buy back in at the bottom.  That is against my nature but it is too late to panic after everyone else already has.

Some cash, some gold and silver and a whole bunch of guns, ammo, food and water. Beans, bullets, and bandages. Hospitals will become death zones. Avoid getting sick. Expect the cities to burn.


Ideas, advice?

Liquidate your urban real estate now.

G M

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DougMacG

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Re: US Economy, the stock market: Coronavirus?
« Reply #1405 on: February 26, 2020, 10:09:58 PM »
Thank you GM for this response. 
I liquidated (most of) my stock holdings last week.  Not because of my fear of the virus, but because of my fear of other people's fear of the virus.  I don't see how you can have economic activity frozen in place and not have market (over)reaction to it.

Liquidating the illiquid is another matter, but the long process is started.

I would like to buy back in when the market bottoms and the peak virus scare is over.  Someone please say when.

G M

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Re: US Economy, the stock market: Coronavirus?
« Reply #1406 on: February 26, 2020, 10:35:21 PM »
Thank you GM for this response. 
I liquidated (most of) my stock holdings last week.  Not because of my fear of the virus, but because of my fear of other people's fear of the virus.  I don't see how you can have economic activity frozen in place and not have market (over)reaction to it.

Liquidating the illiquid is another matter, but the long process is started.

I would like to buy back in when the market bottoms and the peak virus scare is over.  Someone please say when.

Those left alive will know. The biggest threat isn't the virus, it's the second and third order effects of the virus on the global economy and the nation-state components of the global network.

ccp

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1407 on: February 27, 2020, 09:18:01 AM »
"I liquidated (most of) my stock holdings last week.  Not because of my fear of the virus, but because of my fear of other people's fear of the virus."

Looks like a good move.

"I would like to buy back in when the market bottoms and the peak virus scare is over.  Someone please say when."

IF and When Trump wins re election ?

 :-o

G M

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1408 on: February 27, 2020, 09:47:14 AM »
"I liquidated (most of) my stock holdings last week.  Not because of my fear of the virus, but because of my fear of other people's fear of the virus."

Looks like a good move.

"I would like to buy back in when the market bottoms and the peak virus scare is over.  Someone please say when."

IF and When Trump wins re election ?

 :-o

If not, the gruel will be free in the re-education camps.


Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1409 on: February 27, 2020, 11:25:00 AM »
Real GDP Growth in Q4 was Unrevised at a 2.1% Annualized Rate To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/27/2020

Real GDP growth in Q4 was unrevised, coming in at a 2.1% annual rate, matching consensus expectations.

Upward revisions to inventories and net exports were offset by downward revision to business investment and consumption.

The largest positive contribution to the real GDP growth rate in Q4 was net exports. The weakest component, by far, was inventories.

The GDP price index was revised down slightly to a 1.3% annual growth rate from a prior estimate of 1.4%. Nominal GDP growth – real GDP plus inflation – was revised down to a 3.5% annual rate from a prior estimate of 3.6%.

Implications: Not much "new" news on GDP. The second reading for real GDP growth showed the same moderate 2.1% annualized pace of growth that was estimated last month, but the mix of revisions versus the previous estimate were slightly less positive. Business investment was revised lower, led by equipment and software, along with consumption, led by non-durable goods. Meanwhile revisions to inventories and net exports were revised higher. "Core" real GDP, which strips out inventories, net exports, and government purchases, rose at a tepid 1.3% annual rate in the fourth quarter and is up at a 2.5% annualized rate in the past two years. Today's reading on growth, an unemployment rate at 3.6%, and inflation readings hovering around 2% all show no need for more rate cuts. Nominal GDP growth – real GDP growth plus inflation – is up 4.0% from a year ago, and up 4.4% annualized in the past two years, much too high for short-term interest rates well below 2.0%, even with Coronavirus fears. Currently the market is expecting three rate cuts this year, the first one coming in March. Further cuts would be a mistake. We expect real GDP to grow at a 2%+ rate in 2020 with slower growth in the first half relative to the second. The tax cuts enacted in late 2018 and the deregulation coming from Washington, DC will continue to support the US economy.


Crafty_Dog

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Stratfor: Kung Flu implications for Europe
« Reply #1410 on: February 28, 2020, 01:55:28 PM »
Stratfor Worldview

What a Coronavirus Crisis Means for Europe
Adriano Bosoni
Senior Europe Analyst, Stratfor
8 MINS READ
Feb 28, 2020 | 18:24 GMT

Two women wearing blue, protective respiratory masks take a tour outside the Colosseum in Rome, Italy, on Jan. 31, 2020, after two cases of the new coronavirus were confirmed in the city.

Tourists wear protective masks outside the Colosseum in Rome on Jan. 31, 2020, amid reports that the new coronavirus outbreak had spread to the Italian capital. As of Feb. 28, Italy had reported 400 cases of the virus and 12 deaths.

(ALBERTO PIZZOLI/AFP via Getty Images)
HIGHLIGHTS
The intensifying contagion will curb Europe's industrial activity and tourism flows while emboldening Euroskeptic calls for tighter border controls....

Europe's stock markets have plunged in recent days, with its largest economies (Germany, France, the United Kingdom, Italy and Spain) now all reporting upticks in cases of COVID-19, the coronavirus that emerged from China in recent weeks. Stocks in European industries reliant on Chinese supplies, such as in the technology sector, have suffered some of the sharpest losses, along with airline and credit card companies, due to the expected reduction of economic activity in Europe. But with the size and scope of the contagion expected to grow for at least several more weeks, these stock market dips may just be the tip of the iceberg as disruptions to Europe's supply chains, domestic consumption and tourism sector — and potentially even border crossings — begin to more acutely affect the bloc's already slowing economy.

The Big Picture

Europe has faced slowing GDP growth in recent months due to external factors, such as global trade disputes. The growing number of coronavirus cases in Europe now risks further impeding economic growth across the bloc and could even place some EU countries on the brink of a recession in the months ahead.

See The Fate of the Eurozone

Italy at the Epicenter

As more European countries announce coronavirus cases, stock markets on the continent are taking a beating. On Feb. 28, London’s Financial Times Stock Exchange 100 Index fell to its lowest level since mid-2016, with stock exchanges in major cities such as Frankfurt, Paris, Milan and Madrid suffering sharp losses as well. The pan-European STOXX 600 index, meanwhile, lost more than 9 percent of its value between Feb. 19 and Feb. 26.

The coronavirus outbreak has so far hit Italy’s industrial north, the country’s economic core, particularly hard. The two regions with the highest number of cases to date, Lombardy and Veneto, account for 30 percent of Italy’s GDP. This will have multiple negative effects on the Italian economy, which was already stagnating prior to the coronavirus outbreak. In early February the European Commission predicted that Italy would grow by only 0.3 percent in 2020;  but a recession this year cannot be ruled out.


Some factories in northern Italy have shut down temporarily amid the outbreak, while others are now operating with a reduced number of workers. With people (particularly in the north) staying home to prevent contagion, the activity in bars, restaurants, shopping malls, supermarkets and movie theaters has also declined in recent days. Several corporate events and international fairs have been canceled or postponed, which will adversely affect host cities' economies. For example, the Milan Furniture Fair, the world’s largest such event, has been postponed from April to June.

The Italian government will likely ask Brussels for more flexibility in the enforcement of its fiscal rules so that it can increase public spending to boost economic growth and grant tax cuts to the areas affected by the outbreak. The European Union will likely accept these measures, though they could end up further adding to Italy’s large fiscal deficit. Because of Italy's high debt levels, the European Union had called on Rome to reduce its deficit, though this will probably now have to wait.

Strained EU Systems

The contraction in industrial activity in northern Italy will also disrupt supply chains across Europe. Italy is one of the most industrialized countries on the continent, and its exports are part of the supply chains of countries such as Germany, Austria and France, where some industries depend on Italian components (such as auto parts) for production. According to a report by an Italian industrial association, coronavirus-related disruptions will become particularly acute if they persist past mid-March.

Along with Italy, China is another key supplier for European industries. The Asian giant provides supplies such as auto parts, microchips and chemicals to European factories. But as the global epicenter of the new coronavirus, China is facing even more severe industrial disruptions. To offset the loss of Chinese imports, European companies could look for alternative suppliers within the bloc. While this could create new business opportunities for European firms, many may not be able to match the competitive prices offered by their Chinese counterparts.

The coronavirus outbreak is also threatening the capabilities of healthcare systems across the European Union. Fearing that panic could collapse their healthcare facilities, some countries, including Spain, have told people to get tested only if they have clear symptoms or have recently visited risky areas, such as northern Italy.

Tourism Troubles

The most immediate effect of the coronavirus outbreak in China was a sudden reduction in the number of Chinese tourists visiting Europe. This is not a minor issue, considering that some 6 million Chinese nationals visit Europe every year. In recent weeks, dozens of airlines have canceled or modified their routes to China, while some have also canceled flights to Italy. Germany's largest airline, Lufthansa, for example, announced a freeze in new hires on Feb. 26, and said it would offer unpaid leave to some of its employees to counteract the economic impact of the coronavirus. The announcement follows Lufthansa's move to reduce flights to Hong Kong and cancel all flights to and from mainland China earlier this month as demand fell. Other European airlines, including British Airways, Finnair and Easyjet, have also said that falling bookings and canceled routes due to the outbreak are hurting their operations.

With Europe now beginning to develop its own cases of coronavirus, several governments have warned their citizens to restrict travel as much as possible. Countries like the United States, Germany, Austria and Spain issued travel warnings for Italy. The virus outbreak will inflict a toll on the travel sectors in other European countries as well, as some of the most prominent virus cases have taken place in popular tourist destinations. Several countries have already canceled or postponed cultural, business and sports events.

As new cases of coronavirus continue to emerge in Europe for at least several more weeks, political pressure on national governments to introduce border controls will grow.

This is especially concerning for Southern Europe, where tourism represents a significant source of economic activity. While the calculations vary, tourism represents around 16 percent of Spain's GDP, 13 percent of Italy's, and almost 10 percent of France's. Coronavirus cases in high-profile tourism destinations such as Spain's Tenerife Island (where 1,000 people were locked down for days after some hotel guests tested positive for the virus) risk cutting into this crucial revenue stream. Such disruptions, combined with travel warnings by governments and growing fears of contagion, will probably result in an overall reduction of travel in Europe in the coming weeks. If the outbreak continues into late March, it could disrupt travel around Easter in mid-April, one of the most active periods of the year for tourism in Europe.

Border Controls

The coronavirus outbreak risks putting the passport-free Schengen area under stress. So far, the European Commission’s official position is that there is no need to reintroduce border controls on the continent. But as new cases of coronavirus continue to emerge in Europe for at least several more weeks, political pressure on national governments to introduce border controls will grow. Opposition parties will use the coronavirus crisis to accuse governments of not doing enough to protect their populations. The virus will offer nationalist-oriented parties in particular even more fodder to attack EU institutions and demand tighter border controls. The leaders of Italy’s League Party and France’s National Rally have both already demanded the reintroduction of border controls, blaming the Schengen area for facilitating cross-border contagion.

The reintroduction of border controls, however, would risk further harming the economies of the Schengen countries by slowing the transportation of products and the movement of workers and tourists across borders. The World Health Organization has also spoken against the introduction of unilateral restrictions to travel, as it's not a given such efforts would reduce contagion. Indeed, Italy suspended flights to China, but it still became the European epicenter of the coronavirus outbreak in Europe.

Every Member for Itself?

While the expansion of the coronavirus across Europe will continue to dampen economic activity across the continent for weeks, a cohesive, coordinated reaction by the European Union is unlikely. On Feb. 24, the European Commission announced a 232 million euro ($244 million) package of measures to combat the coronavirus outbreak in Europe. The package allots 114 million euros to support WHO efforts; 100 million euros for diagnostics, therapeutics and prevention research; 15 million euros to support rapid diagnosis and epidemiological surveillance in African countries; and 3 million euros for repatriation flights of EU citizens from Wuhan. However, this is far from a package meant to stimulate the European economy. The European Central Bank, for its part, is running out of tools to boost growth: interest rates are already at record low levels and new programs, such as the expansion of the bond-buying quantitative easing, are controversial in the eurozone.

As a result, individual countries will, for the most part, be left to their own devices to respond to the virus, though financial and political realities will limit their ability to do so quickly and efficiently. Already-high levels of debt and deficits will constrain southern European governments' room for action, while many of the more fiscally conservative governments in northern Europe will be wary of funding an expensive stimulus package aimed at countering the outbreak's economic impact. External factors will also play an important role here, as a slower-than-expected economic recovery in China could further delay Europe's economic recovery by producing ripple effects on global supply chains and trade.

Crafty_Dog

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Wesbury: January personal income; Wesbury to appear on Varney
« Reply #1411 on: February 28, 2020, 01:59:37 PM »
second post

Data Watch
________________________________________
Personal Income Rose 0.6% in January To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/28/2020

Personal income rose 0.6% in January (+0.3% including downward revisions to prior months) versus a consensus expected 0.4%. Personal consumption increased 0.2% in January (+0.1% with prior revisions), lagging the consensus expected +0.3%. Personal income is up 4.0% in the past year, while spending has increased 4.5%.

Disposable personal income (income after taxes) rose 0.6% in January and is up 4.0% from a year ago.

The overall PCE deflator (consumer prices) rose 0.1% in January and is up 1.7% versus a year ago. The "core" PCE deflator, which excludes food and energy, also rose 0.1% in January and is up 1.6% in the past year.

After adjusting for inflation, "real" consumption increased 0.1% in January and is up 2.7% from a year ago.

Implications: Consumers started the new year – and the new decade – on a healthy note, as both income and spending moved higher in January. Personal income rose 0.6% in January, matching the largest monthly increase in more than a year. Within income, the gain was led by government transfers (January includes annual cost of living adjustments for Social Security as well as payments related to the Affordable Care Act's refundable tax credits), as well as private-sector wages and salaries. Higher incomes, in turn, continue to drive spending, which rose 0.2% in January. Spending on services led consumer purchases higher in January, in particular outlays on restaurants and hotels, while spending on goods rose as well. With spending up faster than income over the past year, some may be concerned that consumers are getting stretched, but that isn't the case. Households de-levered following the recession, bringing financial obligations (think mortgages, car loans, etc.) to near multi-decade lows as a share of after-tax income. Put simply, the strong labor market has more people working more hours for more pay, which has fueled the growth in spending. And that math - aided by the improved tax and regulatory environment that went in place in 2018 – provides a strong base for continued economic growth in 2020. One area the Fed has been keeping a keen eye on is inflation, which continues to run below its 2% target. PCE prices rose 0.1% in January and are up 1.7% in the past year. "Core" prices, which exclude the volatile food and energy sectors, also rose 0.1% in January and are up 1.6% in the past twelve months. In other words, inflation is still below but not far from the Fed's 2.0% target. While the markets are reacting to fears over the unknown brought about by the Coronavirus, strong consumers, rising wages, tame inflation, and the data on the economy continue to show steady growth. If the Fed is truly data dependent, it will stay the course and leave rates unchanged for the foreseeable future. That said, given fears regarding the Coronavirus and the Fed's tendency to cut rates at any sign of trouble, even if cutting rates will do nothing to cure a virus, we now think a rate cut on March 18th is more likely than not. On the manufacturing front, the Kansas City Fed index rose to +5 in February from -1 in January, while the Chicago PMI index increased 49.0 in February from 42.9. These reports on regional manufacturing activity follow reports from New York, Philadelphia, and Dallas in suggesting that next week's ISM manufacturing report should remain in expansion territory after spending much of late 2019 in contraction. On the housing front, pending home sales, which are contracts on existing homes, rose 5.2% in January after falling 4.3% in December. These figures suggest closings on existing homes should be roughly stable in February.

========================

Wesbury has a major appearance on Varney on Tuesday

MARK YOUR CALENDAR
TUESDAY, MARCH 3, 2020
6:00AM PT * 7:00AM MT * 8:00AM CT * 9:00AM ET


DougMacG

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1412 on: February 28, 2020, 09:37:22 PM »
30 days after sars, mers, and swine flu hit the US, the S&P 500 was ... up.


G M

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1413 on: February 28, 2020, 09:54:58 PM »
30 days after sars, mers, and swine flu hit the US, the S&P 500 was ... up.

This is different.

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1414 on: March 02, 2020, 07:40:48 AM »
Coronavirus Is Different. It’s Rapidly Hitting Supply and Demand.
Fast-spreading disease snarls factories, business travel; White House vows epidemic is ‘not going to sink the U.S. economy’

A worker wore a face mask on a production line manufacturing cables at a factory in China’s Guizhou province on Tuesday.
PHOTO: CHINA DAILY/REUTERS
By Thomas Gryta and Russell Adams
Updated March 1, 2020 2:22 pm ET
SAVE
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TEXT
205
Companies have endured financial meltdowns, civil wars and natural disasters. Now they are confronting a different kind of menace: a fast-spreading virus that has abruptly dented demand and supply across industries and continents.

The novel coronavirus, which has infected more than 85,000 people, has swept through Asia and Europe, disrupted global travel and hobbled supply chains that churn out everything from smartphones to pharmaceuticals. In days, it went from pockets of woe to the top concern of chief executives world-wide.

Conferences are getting canceled, from the CERAWeek energy conference in Houston to Facebook Inc.’s F8 developer gathering in California. Disneyland Tokyo is closed. Auto suppliers are warning of parts shortages. Generic drug manufacturers are paying 50% more for some raw materials.

The organizers of CERAWeek, one of the world’s top annual energy events, announced their decision Sunday citing, among other things, “growing concern about large conferences with people coming from different parts of the world.”

The epidemic’s widespread nature and related uncertainty will put a hold on large corporate investments, mergers and hiring, said Stanford University economist Nicholas Bloom, who has researched the impact of uncertainty on business cycles.


Pharmaceutical workers packed medicines in Changsha, in China's Hunan province, on Thursday.
PHOTO: XUE YUGE/XINHUA/ZUMA PRESS
“A lot of the damage is already being inflicted, purely from major decisions being delayed,” Mr. Bloom said. “I can’t see many firms green-lighting any projects until they can figure out what is going on.”

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Live Coverage: Coronavirus and Business
Larry Kudlow, director of the White House’s National Economic Council, said Friday the threat from the virus for Americans is low and the “coronavirus is not going to sink the U.S. economy.” Some in the Trump administration have accused the news media of exaggerating the situation and causing hysteria, even as the White House tightened travel restrictions over the weekend after health officials in Washington state reported the first U.S. death from the illness.

The virus surfaced as U.S. companies were riding atop America’s longest economic expansion on record, matched by soaring stock-market returns. But profit growth for S&P 500 companies started to cool last year, squeezed by rising labor costs and trade disruptions.

Chinese government gauges of activity in the manufacturing and services sectors plunged to record lows in February, the country said Saturday, dropping into territory that indicates a contraction.

U.S. business activity in February fell to its lowest level in more than six years on fears of the epidemic.

In February, 129 companies in the S&P 500 discussed the coronavirus in their quarterly earnings calls, up from 60 in January, according to a Wall Street Journal analysis of transcripts. There were nearly 600 mentions of the virus in companies’ security filings in the past week alone, according to Kaleidoscope, a research firm.

Executives have talked about how the virus will curb consumer spending on products from Crocs sandals to Gucci handbags. It has slowed production at nickel mines in Indonesia and halted the filming of “Mission Impossible 7” in Venice.

Corporate Caution
Number of SEC filings with coronavirusmentions since Feb. 1
Source: Kaleidoscope
Note: Through Feb. 28
Feb. 3
Feb. 10
Feb. 17
Feb. 24
0
50
100
150
200
250
At the same time, many companies have cautioned it is too early to tell how much the virus might damage business. Economists have struggled to project the extent of the economic fallout, which they say depends on whether the epidemic continues to spread—and on public reaction if it does. While some forecasters have said the virus’s spread in China and elsewhere would slow the U.S. economy in the first quarter, economists expect a swift U.S. recovery from any downturn as companies work to meet pent-up consumer demand after the health threat subsides.

“Every CEO that I know has got to manage an employee dimension, supply-chain dimension, in many cases a revenue dimension,” as well as Wall Street’s needs, said Mike White, who ran PepsiCo Inc.’s international division in 2003 when SARS hit. He now sits on the boards of Whirlpool Corp., Kimberly-Clark Corp. and Bank of America Corp. “We’re still in the middle of the river here,” he said.

Whirlpool cited its sales and supply chain in China and elsewhere in Asia in trimming its first-quarter profit guidance Friday. The appliance maker said the outbreak in northern Italy, where the company has manufacturing operations, would hurt sales there too.

Some companies that have tried to gauge the impact of the virus have had to revise initial estimates. Emerson Electric Co., which makes factory automation equipment, warned on Feb. 13 that the virus would reduce quarterly sales by $75 million to $100 million. On Friday, it put the damage as high as $150 million.

On Friday, United Airlines Holdings Inc. postponed until September an investor meeting that was scheduled for March 5, saying it couldn’t have a productive conversation on its long-term strategy until the epidemic abates. United is offering certain pilots the option of taking April off with reduced pay, according to a letter from the pilot union chairman to members.

Airlines have taken one of the hardest, earliest hits from the crisis. Asian and European carriers have implemented cost-cutting measures to accommodate canceled flights to China and curtailed services to other affected areas such as Italy.

As the spread of the virus in China has slowed, some Chinese factories are reopening, though many are short-staffed and transportation is still difficult. For example, smartphone makers are expected to ship 64 million fewer devices in the first half of 2020, market researcher International Data Corp. said, hampered by component shortages and quarantine mandates.

Zuru Ltd.’s factories have reopened in phases over the past few weeks, after the toy maker installed dividers between workspaces and added sanitation stations. But the Shenzhen-based company is thinly staffed due to restrictions on China travel and was operating at 20% capacity last week, said co-founder Anna Mowbray. “There’s definitely going to be holes on shelves,” she said.


A worker assembling an industrial valve at an Emerson Electric factory in Marshalltown, Iowa.
PHOTO: TIM AEPPEL/REUTERS
The disease is still spreading in other countries. Hyundai Motor Co. on Friday stopped building its popular Palisade SUV and other U.S.-sold SUVs after a factory worker in Korea tested positive for coronavirus. Google said Friday one of its employees in Zurich had been diagnosed, but the office remains open.

China is a key supplier of chemical and raw materials used by many pharmaceutical manufacturers, a potential problem for popular blood-pressure medicines and several older antibiotics that are no longer manufactured in the U.S. Experts believe China is also the only maker of key ingredients in a class of decades-old antibiotics known as cephalosporins, which treat a range of bacterial infections including pneumonia.

Automotive suppliers are warning car companies they could run out of certain parts used in North American factories in coming weeks, particularly electronic components. Hoping to stave off factory stoppages, some manufacturers have taken the unusual and costly step of flying in critical parts by cargo planes.

Some companies have benefited from the outbreak, which has spurred buying of respiratory face masks and disinfecting wipes, propping up shares of some makers of such items. Clorox Co. ’s stock briefly hit record highs last week while the broader market plunged.

“The good news is that the shock from the virus is hitting at a time when households appear to be in good shape,” wrote Bob Schwartz, a senior economist with Oxford Economics.

Mr. White, the former PepsiCo executive, said the long-term economic outlook is solid even as companies face short-term pressures. “Almost every company is going to have an issue with their first-quarter numbers,” he said.

Write to Thomas Gryta at thomas.gryta@wsj.com and Russell Adams at russell.adams@wsj.com

ccp

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stock market rally
« Reply #1415 on: March 02, 2020, 01:10:35 PM »
Is this the Biden - (Clyburn) bounce?

Like all the CNNers - 'oh thank God for good ole Joe'
   he's back to save us from orange man or bernie (or is he?)

If Bama comes our for good ole joe will market rocket another level?


ccp

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1416 on: March 09, 2020, 10:45:25 AM »
Doug

sold stocks prior

looking like financial genius.

 :-D

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1417 on: March 09, 2020, 10:50:15 AM »
For the record, I lightened up some, but of course now I wish I had lightened up more.  That said, here's Grannis:
==================================



Calafia Beach Pundit

________________________________________
Thoughts on market crashes
Posted: 09 Mar 2020 09:41 AM PDT
Back in October of 1987 I was one year into my job at Leland O'Brien Rubinstein (LOR), the firm that was later accused of having caused the biggest stock market crash in modern times (that's a story for another day). Sunday night, October 18th, I remember thinking "tomorrow is going to be very ugly." And indeed it was, as the stock market went on to lose more than one-third of its value in the span of just two months. Last night I thought the same, and this morning the market opened almost 20% below its all-time high registered a bit less than 3 weeks ago.

The Crash of October 1987 shocked the world, but—to me—the most surprising result of all the angst and turmoil was that it didn't precipitate a recession. Indeed, real GDP growth in Q4/87 was a rather spectacular 7%. There's a lot of fear behind the current selloff, but there is also something tangible to worry about, and that is of course the potential of a teeny-tiny virus to upset—and possible even to derail—the global economy. Back in 1987 it seemed inconceivable that we would avoid a recession, and it seems that way now too.

Today's Vix index didn't exist in 1987, but I recall that calculations of implied stock market volatility at its peak were in the neighborhood of 100+. Earlier this morning the Vix shot up to 62, but it's still lower than the all-time high of 90, which was registered in October 2008. We're not at record levels of panic yet, but we're pretty close, and so far the number of American victims of the virus is practically de minimis, but sure to soar.

Scientists are working furiously on vaccines and therapeutics. Markets are consumed with risk sharing—those willing to bear downside risk are being compensated handsomely, while those with low risk tolerances are locking in huge losses. Liquid markets act as shock absorbers for the physical economy, and there is no sign to date that liquidity is drying up. Central banks are supplying needed liquidity, and another round of Quantitative Easing seems like a no-brainer. Fiscal policy, however, is a clumsy tool at times like this; better to let market pricing solve problems by directing resources to their highest and best use.

How all of this sorts in the next few days and weeks is anybody's guess. But it's a sure bet that we are nowhere near the end of the world as we know it.

Here are some relevant charts with prices as of 12:30 pm Eastern time:
Chart #1
 

The current decline in stock prices seems tame compared to other periods of panic.
Chart #2
 

Short-term interest rates have collapsed to near-zero. The demand for safe assets is intense.
Chart #3
 

Credit spreads have jumped, similar to what happened when oil prices collapsed in 2015-16. The market is concerned that sharply lower oil prices will bankrupt many oil producers.
Chart #4
 

Systemic risk is still relatively low, especially in the U.S. market, and liquidity is still abundant. Markets are not freezing up as they did in late-2008. That is a very good sign.
Chart #5
 

The dollar today is pretty close to its average over the past 5 years, and nowhere near being dangerously weak nor worrisomely strong. Oil prices have suddenly become cheap again. Good for consumers, bad for producers. In any event, we've lived through this sort of thing before and the world didn't end.
Chart #6
 

The Vix jumped to 62 at the open, and is currently trading at 53 or so. Options on stocks are extremely expensive for those who want to minimize risk, and extremely attractive for those willing to bear risk. This is the proper function of markets—using prices to shift risk to those who are willing to bear it.


Crafty_Dog

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Wesbury
« Reply #1418 on: March 09, 2020, 10:51:41 AM »
second post

Monday Morning Outlook
________________________________________
A Coronavirus Recession? To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 3/9/2020

No one knows with any real certainty how much, or for how long, the Coronavirus will impact the US economy. What we do know is that it will have an impact. And, after data releases of recent weeks, we also know that the US economy was in very good shape before it hit.

Nonfarm payrolls grew by a very strong 273,000 in January and another 273,000 in February. The unemployment rate was 3.5% in February and initial claims for jobless benefits were 216,000 in the last week of February. Retail sales in January were up 4.4% versus a year ago. In February, sales of cars and light trucks were up 1.9% from a year ago and were above the fourth-quarter average. This suggests that total retail sales for February rose as well.

Industrial production fell 0.3% in January, but likely rebounded sharply in February. After all, hours worked in manufacturing durable goods rose 0.9% in February and colder weather likely lifted utility output.

Housing starts have been particularly strong lately, coming in at an average annual pace of 1.597 million in December and January, the fastest pace for any two-month period since 2006. Yes, part of the surge in home building was due to good weather, so February will likely fall off to around a 1.49 million pace, which excluding December and January, would be the fastest pace of building for any month since 2007.

The ISM Manufacturing index slipped to 50.1 in February from 50.9 the month before, but a level above 50 still suggests growth in factory activity nationwide. The ISM Non-manufacturing index, which measures a much larger share of the economy, rose to 57.3 in February, signaling strength.

Putting all of this data into their model, the Atlanta Fed projects real GDP is growing at a 3.1% annual rate in the first quarter. That's not a typo. However, March data, which isn't available yet will likely bring this number down.

The early economic headwinds from the Coronavirus are coming from slower production in China, which likely led to a big drop in inventories. We expect this to pull first quarter real GDP down to a 2.0% growth rate and we are now thinking growth will be zero in the second quarter. After that, given previous episodes of rapidly spreading viruses, inventory replenishment should boost growth to the 3.5 – 4.0% annual rate range in the second half of the year.

This may seem optimistic, but keep in mind what happened when the "Hong Kong flu" hit the US from September 1968 through March 1969, killing around 34,000 people in the US according to the Centers for Disease Control. During the last quarter of 1968 and first quarter of 1969, real GDP grew at an average annual rate of 4.0%. The "Swine Flu" in 2009 also did not lead to a recession.

However, a much more negative story unfolded in late 1957 and early 1958 when the US was hit by the "Asian flu," which killed almost 70,000 in the US and didn't spare younger people as much as the Coronavirus. Real GDP was growing around 3% annually in 1957, but as the flu started to peak in Q4, the economy shrank at a 4.1% annual rate, followed by an annualized 10.0% plunge in the first quarter of 1958, the deepest drop for any quarter in the post-World War II era (from 1947 through 2019).

But then, right after the plunge, the economy rebounded at a 7.8% annual rate for the next five quarters.

Before the Coronavirus hit we thought the odds of a recession in the next twelve months were about 10%. Now we think they're around 20%. Higher, but not high. There is no precedent for the first social media panic regarding the flu. Either way, here's a simple rule of thumb: if the unemployment rate goes up 0.4 percentage points or more compared to where it was three months prior then the US is probably in a recession, otherwise it's probably not. The jobless rate was 3.5% in December, so unless it goes above 3.9% soon the economy is still growing.

The bottom line is that we've had severe flus before without a recession and when we did have a downturn, the economy bounced back very quickly. The stock market is pricing in a steep drop in profits, which is certainly possible. A strong recovery, which we expect, will reverse this as it has in the past.

DougMacG

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1419 on: March 09, 2020, 02:34:21 PM »
Doug

sold stocks prior

looking like financial genius.

 :-D


Let's go over that genius haiku thing again. :wink:   Except that a genius would know when to get back in, wouldn't have doubled down during the tech crash, wouldn't have stayed out the entire Obama years, etc.

In this case, I was about 30 days late, but so was the market.  I wondered when and how hard the China thing would hit our markets, then noticed it hadn't even hit the Shanghai index yet, even while they were already under lockdown, and immune shots were a year out.

Two things were happening today that apparently scare people in addition to just virus scare.  Saudi declared oil-war on Russia in particular and on OPEC.  Low energy prices along with  excess supplies sound like a good thing to me, but it is going to turn some big stocks and funds downward.  Secondly, we are just getting the large supplies of CVl9 test kits in by the million now and because widespread testing is possible, the number of known cases is going to skyrocket.  If stock prices have now priced in lousy earnings for the current period, "GDP Now' is still at 3% and summer is going to kill or drastically slow the virus, maybe this week is the bottom. 

Stanford and others are closing, gatherings and travels are canceling, maybe the bottom is when the things that closed re-open - and stay open.

In better news, the fatality rates are plummeting with more testing.  No kids have died and the median death age is about 80 - with pre-existing respiratory issues.

The common cold is really 200 viruses and it looks like this will hang around long term like those.

What I knew for sure a month ago was that panic would be oversold by the media in hopes this thing could somehow be blamed on Trump.

While Wuhan Virus was growing exponentially in China and moving outward, Trump was issuing travel bans and quarantines (and building border walls) to protect us.  What was the so-called adult party, the Democrats, doing?  Fake impeachment.  Trying to tie the hands of the President and the administration right in the face of a black swan public health crisis.  Putting [dirty] politics ahead of public health.
« Last Edit: March 09, 2020, 02:41:06 PM by DougMacG »

G M

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1420 on: March 09, 2020, 06:14:44 PM »
"GDP Now' is still at 3% and summer is going to kill or drastically slow the virus, maybe this week is the bottom.

I doubt it. We have a long way to go. Expect things to get much worse here in the next few weeks, and expect waves of the virus to hit globally.

We have yet to see the worst of the virus and the second and third order effects.

DougMacG

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1421 on: March 10, 2020, 04:04:44 AM »
"GDP Now' is still at 3% and summer is going to kill or drastically slow the virus, maybe this week is the bottom.

I doubt it. We have a long way to go. Expect things to get much worse here in the next few weeks, and expect waves of the virus to hit globally.

We have yet to see the worst of the virus and the second and third order effects.

Agree. Maybe a downward turn in the number of cases by late April early May.

G M

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1422 on: March 10, 2020, 09:19:59 AM »
I expect May to be the worst with the first wave.

G M

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Plan on hitting the wall
« Reply #1423 on: March 10, 2020, 05:08:58 PM »


G M

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Re: Plan on hitting the wall
« Reply #1425 on: March 10, 2020, 09:23:55 PM »
https://capitalisteric.wordpress.com/2020/03/10/coronavirus-blunt-truth-part-2-hitting-the-wall/

I hope it doesn't go this way, but hope is not a plan.

Looks like the below link has gone Tango Uniform, so here is the text:


https://www.patreon.com/posts/sars-cov-2-covid-34741277
Mar 9 at 1:38pm
SARS-CoV-2/COVID-19
 

Although it won’t be posted until Monday, I am writing this on Friday, 6MAR2020 (fair warning, any numbers will probably be wrong by the time you read them). 

-------------------------------------------------   

I’ve never—in almost a decade of writing the Mountain Guerrilla Blog—jumped on the worry wagon. I was one of those who pointed out—accurately—that Jade Helm was simply a typical training exercise. I’m the guy who pointed out—in books, for posterity, no less—that seeing armored vehicles and tanks transported CONUS, on rail cars, is not a sign of coming martial law, but is simply the way the military transports shit stateside. I’m hardly a model of prepper paranoia.
 

So, when I say that I’m concerned—not scared, not worried, but concerned—about COVID-19, there must be a reason, right? 

---------------------------------------------------

Sources and Methods

Sources and methods is a term used to describe the process of intelligence collection and analysis. Intelligence information sources and the nature of the information gathered can vary. Sources are the sources from which we get the information. Methods are the tradecraft utilized to procure that information. 

Sources can be other people, which would be referred to as Human Intelligence, or HUMINT. Information collected from photographs, such as satellite overheads, is referred to as imagery intelligence, or IMINT. There’s also signals intelligence, or SIGINT, such as eavesdropping on phone calls, and etc. 

Here’s the thing though...much like the Enigma Project, during WW2, if the opposition learns who/what your sources are, they can stop that flow of information, or worse, they can utilize disinformation, feeding you bad information through those sources. The opposition—or even friendly allies that you need to keep tabs on—can determine sources through a number of methods. 

In some cases, taking advantage of your intelligence collection efforts to stop an attack, or to hit a specific target at a specific time, can be a clue that you intercepted communications (Enigma’s biggest issue was, once we had the Enigma machine, a lot of times, taking advantage of the information collected would have revealed that we had the machine, leading to a loss of that asset). 

One of the humorous things I see a lot is someone posting information, and then a dozen people piping up with, “Tell us your sources!” Now, in some cases, for sure, you might be able to share your sources. If you’re getting your information from newspaper articles, or Internet sites, by all means, share away. But...if someone has actual HUMINT sources, asking them to “cite your sources” doesn’t show that you’re cool and edgy. It shows that you don’t understand how the process works. 

Now...there’s a catch to that. To some degree, if let’s say, Agent X says, “Hey, I’ve got this source, and he’s claiming THIS is going to happen at THIS time, in THAT location,” you’ve got two choices. You can completely disregard it, because you don’t know Agent X, and have no way to determine if he has any ability to vet his sources. If the information he is providing is completely ridiculous, or you have another, known source, let’s say Agent Z, that’s saying, “Nope. Not happening. Not possible!” then taking doubting Agent X’s information is sensible. 

Alternatively, you can decide to say, “Hey, this makes sense. It correlates with the other information we have coming in, so let’s keep an eye on this. This Agent X might have a good source, after all!” 

Finally, if Agent X is a known quantity; either he’s provided information in the past that turned out to be solid, useful, accurate intelligence, or he’s someone who you trust the judgment and experience of, then the sensible approach is to say, “Hmm...I guess I should consider this. It’s got a higher than not likelihood of being accurate, based on Agent X’s track record.” 

Here’s what I’ve got: I can look at a broad array of intelligence sources: I can look at the raw data being put out by different organizations and governments. I can analyze that through both my experience, and basic understanding of numbers and math. I can take the information that people I trust are providing me, based on their HUMINT sources, and determine if I trust MY guy’s judgment enough to trust the source he’s relying on. And, that’s exactly what I’m doing. 

And my conclusion is, there’s a whole lot more to be concerned about this than we’re being told. 

It’s up to you to determine whether you can accept my information as valid intelligence or not, and then determine whether you should allow that to modify your approach to this—or any—situation. But, the idea that I’m going to reveal sources and methods (which a number of emails and Private Messages have requested I do…) is absurd. If you don’t want to accept my information as valid, whether because it contradicts sources you already have and trust, or because it simply doesn’t fit your worldview (which is a whole other issue to deal with), that’s fine. I’m certainly not going to get butthurt over it. I KNOW who/what my sources are, and I’ve already made the determination of which I can trust, and which I need to be wary of (because even the best source won’t be 100% accurate, 100% of the time). And, like I said on FB, in three months, if my sources turn out to be wrong, feel free to call me a paranoid fuckface. I don’t think that’s going to be the case. 

----------------------------------------

A Failure of Imagination 

The second problem that arises is a failure of imagination, which results from normalcy bias. A failure of imagination is a circumstance that occurs when something that seems predictable, but undesirable, was not planned for. 9/11 was categorized, in the 9/11 Commission Report, as a “failure of imagination,” because nobody imagined that a bunch of jihadists would fly planes into buildings. Interestingly, I’ve actually been told, on at least three different occasions, by three different people, that such a scenario was actually hypothesized as early as the late 1970s, by some folks working at SWC (Special Warfare Center). I was still in diapers when this allegedly occurred, but of the three people who told me that, I trust at least two of them implicitly, and one of those supposedly helped write a paper on the idea, so… 

I’ve never planned for a pandemic. In my lifetime, every single impending pandemic has seemed, from the word go, to be much ado about nothing. In fact, when the COVID-19 news first started coming out of China, I took the same approach. Then, as I pointed out last week, I got some information from some trusted sources that made me rethink it. Fortunately, I’ve seldom suffered from an inability to set aside my preconceived biases and look at new information objectively. So, I started looking closer, and finding new information that made me start wondering. Then, I started getting intelligence information from some OTHER trusted sources, and I started thinking more, and started looking harder at the data I was seeing. 

I’m convinced, as are most people who seem willing to say anything, that the second and third order effects from COVID-19 are going to be the most damaging. But...I suspect that is going to be because the first order effects: infection, hospitalization, and deaths, are going to be far worse than anybody is yet admitting. 

I would seriously like to be proven wrong, but I’m extremely doubtful at this point, that I will. 

--------------------------------------------------------   

As I’m writing this (again, on Friday, 6MAR2020), I’m listening to Chris Martenson’s Peak Prosperity (almost) daily Coronavirus update. I just listened to him breaking down the numbers coming out of Italy, and he made the point that they don’t add up to what we’re being told. First of all, worldwide, outside of China, only half of confirmed cases are “recovered,” (and, I point out, nobody is defining what “recovered” actually means, in this case). Second of all, according to the numbers coming out of that country—and I hasten to point out that Italy is a first-world nation, with a commensurate level of medical care available—at least 61% of confirmed cases are requiring hospitalization. That’s a pretty big breakdown in the story that came out of the Chinese data that “over 80% of cases don’t require any medical care!” 

So, where’s the breakdown? China says that 80% of cases don’t require hospitalization, and only 2% die. A week later, Italy has 61% of their confirmed cases in the hospital, receiving care, and WHO has updated the international case fatality rate (CFR) to 3.4%. 

And, I’m paranoid, because I said China was lying it’s ass off about their numbers? 

Here’s what I SUSPECT (with the obvious caveat that I have no way to prove it. This isn’t even from sources. This is just my personal suspicion….): China lied it’s ass off about the numbers, all the way around. They lied about the rate of infection. They lied about the fatality numbers….and they lied about the demographic breakdowns. I suspect a LOT more people in middle-age died than they’ve let on. 

Today, during VP Pence’s daily Coronavirus Task Force briefing, one of the speakers made specific mention of several comorbities that put people at higher risk from the COVID-19 coronavirus: they included everything from existing respiratory ailments, to heart disease, to diabetes. That’s a little different from the early descriptions that this really only impacted people over 80, with respiratory ailments. 

-----------------------------------------------

“It’s just the flu!” is a line I’m still hearing, more often than not, both locally and nationally. While some people are pushing the “It’s all Mass Media hype!” that’s the exact opposite of what I’ve seen in the little mass media coverage I’ve seen of this. Instead, I’ve seen our local media sources making light of the situation: “Gee, do we really have to tell people to wash their hands? Aren’t they supposed to do that anyway!? Har-har-har.” 

I “suspect” that, inside the Beltway, a large number of “very important” people are seeing HUMINT reports and overhead imagery, from inside China, that has them far more concerned than they are—or can, unless they actually want to cause mass hysteria in the population—and I suspect that it pretty clearly shows that the Chinese lied their asses off. 

So, why do I think it’s so much worse than we’re being told it is?

1) Today, POTUS signed a bill into law, providing $8.3 BILLION to fund the effort to contain and control this pandemic (and, with the definition of a pandemic being “(of a disease) prevalent over a whole country or the world,” this is—by both metrics—a pandemic, whether anyone is admitting that yet or not. It’s certainly a pandemic in China, and it’s more than fair to call it an international pandemic by this point, depending on how you choose to define “prevalent.”). That bill passed the House 415-2, and then the Senate (Rand Paul was the only dissenting vote), before being signed by POTUS, in less than a week. When was the last time that happened for a disease? H1N1? Ebola? SARS? MERS? (And, from everything I’ve seen—and I admit, I haven’t gone and read the bill itself—there were no last-minute pork barrel amendments to it).

2)  We’re still being told “It’s just the flu, bro!” but when was the last time that the White House—under ANY administration—established a Task Force that not only met daily, but briefed the public daily, led by the VICE-PRESIDENT no less, for the flu?

“Well, they had to, in order to keep people from overreacting!” Nonsense. Providing daily “Oh, don’t panic, it’s no big deal” briefings is far less effective at achieving that goal, especially with the American public, than POTUS simply saying, “You know what? This is a bunch of nonsense. It’s not that big a deal,” and then dropping it. Everytime a reporter asked about it, he could just say, “It’s the flu, bro!” and drop it. Instead, they established a task force, put the Vice-President in charge of it, and they are meeting daily to manage this. It’s not just the fucking flu. 

3) King County, Washington, which has been Ground Zero for COVID-19 in the US thus far, just bought an entire hotel to use for quarantine of expected COVID-19 patients. But...if less than 20% of confirmed cases need hospitalization, and it’s pretty easy to avoid getting, that shouldn’t be necessary, right? When was the last time a county government bought an entire hotel just to quarantine flu patients? “It’s just the flu, bro!”

4) I’ve heard from several HUMINT sources, in several different states, who work in hospitals, that their hospitals are initiating specific precautionary measures, including full PPE for ALL patient contacts, and testing ANYONE—patient, guest, or employee—for fever or other symptoms, before letting them through the doors. Hell, I’ve never seen a doctor or nurse do more than MAYBE put on a mask and gloves before seeing a suspected flu patient…

5) A number of multi-national corporations: Apple, Amazon, Google, and Walmart, have all placed restrictions on corporate travel internationally and nationally, because of coronavirus concerns. Granted, all of those companies do a LOT of business with China, but...if it’s not THAT contagious, nor dangerous, why are these companies risking shareholder ire and bottom lines, when some basic precautions like washing their hands and not touching their faces so much, could mitigate any risk dramatically. I mean, sure there’s insurance concerns, but...”it’s just the flu, bro,” and I guarantee those companies don’t normally restrict corporate travel because of flu.

6) United Airlines is reportedly (HUMINT source. I could probably look it up and find it online as well, but I trust the source, and I’m in the middle of typing this) cutting 20% of their international flights. They’ve canceled their pilot new hire academy, and will be laying off pilots as soon as the route contractions take place. (The same source just told me—again, this is Friday evening—that he is on a flight to Europe. Half his flight is empty. “Is that normal? For a Friday night flight to Europe?” “Nope. It’s usually fairly full, even this time of year, which is normally a slump time anyway.”

–---------------------------------------------------

So, yeah, I think this is a lot more dangerous, including to those of us who aren’t in our 80s, and/or suffering from co-morbidities, than we’re being led to believe. Sure, there’s only a couple hundred cases in the US so far (an hour ago, as I write this, it topped 300 confirmed), and a handful of deaths thus far (and by all accounts, most of those presented with co-morbities). But...as several epidemiologists have pointed out, we’re 2-3 weeks behind Italy, and we’re not really testing much yet. There are still reports of people showing up—or even just calling—their PCP (Primary Care Providers) or local Urgent Care clinics—in places with known clusters of cases already—and being told, “It’s just the flu,” or “We’re not testing until you need hospitalization.” So, the reality is, we don’t KNOW what the actual number of cases is yet, and we really don’t know how many people are dealing with really severe cases of it already, but have convinced themselves that “it’s just a really bad case of the flu!” 

I expect the number of confirmed cases to skyrocket in coming weeks, as the testing kits become more widely available. HOPEFULLY, that will drop the CFR dramatically...but, we’re also seeing that, from onset of symptoms, death doesn’t occur for 2-3 weeks with modern medical care (recovery generally is apparently taking 4-6 weeks, from a casual search of Internet sources, and I haven’t heard anything counter to that either). I suspect—and again, this is me, not my sources—that we’re just now hitting the start of a big boom, and this is going to completely jump the tracks in the next week or two (honestly, I’d say it’s already jumped the tracks, and turned into a train wreck, but….).

One thing I have heard, from several HUMINT sources, is that organizations are concerned with the short-term effects, but they’re more concerned with what’s going to happen when this picks back up again in autumn. I don’t know about that. Australia is still getting hit pretty good, and it’s summer there, so I’m not so sure that we’re going to have a respite during the summer months. Hopefully. 

------------------------------------------------------   

So, there’s like 5 pages of fear-mongering about the actual first-order effects of this virus. All of that, and just for me to say, as concerned as I am about them, I still agree that the second- and third-order effects are going to be far, far worse. 

Second Order Effects: Medical Care 

According to the Chinese numbers, 63% of medical workers that were exposed to this coronavirus contracted COVID-19. That’s well over half. We’ve—presumably—got asymptomatic carriers walking around, passing this shit around, and there’s already an admitted shortage of PPE. So, what happens to OTHER medical care needs, when half the staff of your local clinics and hospitals go down with this (even if it’s a “mild” flu-like case)? The transient populations of this country, and significant portions of the working poor, use the local emergency room like a PCP office, because they know they legally have to be seen, even if they cannot afford to pay. Emergency Rooms are busy as fuck, on a slow night. 

So, you get in a car wreck, and get transported to the ER (assuming EMS isn’t at below half staffing as well due to exposure…), to find it packed with fuckers, and a harried, overworked staff, because half of their co-workers are out of commission in quarantine….think you’re going to get decent care? 

Or, you get appendicitis, and need surgery, or you slice your fucking hand open cutting your steak, or you’re lighting off fireworks, on fourth of July, and catch a “mortar” in the face (don’t laugh...I saw it happen last year). My mother, as most readers are aware, had a pretty severe stroke last summer. She’s recovering well, but what would the impact have been if the hospital had been at half staff because of quarantine? And, this isn’t a far-out scenario. A fire department in Washington is already under quarantine—presumably for at least 14 days—because they all went into the nursing home where it was present already, and are now considered at risk...Sure hope nobody’s house catches fire… 

In our area, if an ambulance gets called, the local Sheriff’s Department is mandated to respond as well. So, Mom is experiencing really severe flu, puking her guts up. The ambulance is called (because nobody wants her puking in their car?), and the deputy responds as well. When it does finally get to the hospital, it turns out to be COVID-19, and now everybody on scene is quarantined—including the deputies who showed up. How quick before half your local LEO are off the clock, on quarantine? Or, LEO gets a call, and goes hands-on with some homeless dude...who turns out to be carrying the virus...now ALL the cops are quarantined as well...and gods forbid any of them made it back to the office before the test showed that it was coronavirus, and now we’ve got to quarantine the entire fucking police department…

Yeah, there are some potentially scary second-order effects.

----------------------------------------------------------------

Third-Order Effects: Economic and Supply-Chain Disruptions 

One of the things I’m hearing from a lot of people is that they’re only worried about dumbasses like me panic-buying stuff and the stores running out as a result. Well, newsflash kids: We didn’t need to do any panic-buying. When we decided maybe this was real, and maybe it was more concerning than the news and the government was letting on, we made a few last minute purchases to bolster stocks we already had, (and, interestingly, as I looked through those purchases, I realized, none of the stuff we bought came in from China. It was mostly shit like canned foods or frozen meats to supplement what we produce), but...we were ALREADY prepared. I don’t NEED to panic about this, because I’m already prepared to deal with it. 

Here’s the thing though: China is shut the fuck down. Oh, they’re claiming that they’re back at 80% production, in some factories. Like everything else though, if you take what the Chinese are saying, at face value, I’ve got a prime piece of beachfront condo for sale, just South of Tucson. I’ll give it to you at a steal of price too! Between quarantines on products coming out of China, the fact that there’s no way they’re at 80%, let alone 100% production, and won’t be for some time…there’s a pretty solid chance that a significant portion of what you might need to buy in coming weeks and months simply isn’t going to be available. 

This isn’t just—or even primarily—because of hysterical panic-buying (although there will be more than a little bit of that, as there already has been), but because of economic contractions as funding sources simply dry up (have you watched the Stock Market over the last two weeks?). Between shit not coming from China, and shit not being made here either, the economy is legitimately fucked, I suspect, for quite some time. Certainly the consumer economy is going to be hammered. 

Restaurants? Want to bet folks are going to think thrice about taking Grandma out to supper at her favorite diner? Bars? Meh...bars will probably be alright, because people will rationalize their desire to drink. Sporting events? Even assuming state and local governments don’t put restrictions on large scale public events in the interest of public health, I suspect you’ll see a significant decline in the attendance at concerts and ball games. Even if it does turn out that I’m completely full of shit on the actual first-order impacts of the virus, are you going to risk going to a concert, picking it up off some nearby concert-goer, and then passing it on to Grandpa? We already have repeated cases of people who KNEW they were carrying the virus, violating their quarantine and going to concerts...people go to concerts and out to eat at restaurants with the flu all the fucking time. If this is “just the flu, bro!” why would they take it any more serious? 

Let’s look at the Italian numbers though, alongside projected numbers of the American populace expected to contract the virus, and see if we can make a hypothesis:

So, 61% of Italian confirmed cases are requiring hospitalization. And, low-ball figures now are claiming at least 40% of the American population can be expected to contract it (I suspect it’s higher, because I suspect there’s a lot of as-yet unidentified cases floating around out there still). The American population is 331 million. 40% of that is 132.4 million. If 61% of those require hospitalization (and remember, we’re not even LOOKING at the case fatality rate right now...just the number of cases in Italy—a first world nation—that require hospitalization), that’s 80.76 million hospital cases. That’s just below 25% of the American population requiring hospitalization! You think THAT’S not going to have an impact on the economy?
 

According to the American Hospital Association, there are 6,146 hospitals—total—in the United States (and 616 if those are non-federal psychiatric hospitals, so I don’t know how useful those are going to be in an infectious disease scenario….). Amongst those 6,146 hospitals there are a TOTAL of 924,107 staffed beds available. The AHA doesn’t list how many of those beds are full at any given time, but from talking to health care providers, I know it’s pretty significant. Let’s say a mere 50% of them are full (and I guarantee it’s nowhere near that low. NOWHERE near that low. I bet—without finding the stat, it’s closer to 85-90% of them are full at any given time). That leaves roughly 460,000 beds available. Let’s say, for the sake of argument, that of the 80.76 million that the experts and numbers seem to say we can expect—in a first world nation—to need hospitalization (and really, that 40% infection rate is a pretty low-ball estimate, according to most of what I’ve seen from different epidemiologists), occurs over a two-year span. So, we’ve got 40 million people that need hospitalization, per year, with 460,000 beds available…..Uhm….Looks like a whole bunch of other counties better be checking the real estate markets for hotels…. But, again...you think that’s not going to have economic impacts. A quarter of the American population out of work, because they’re in the hospital?

What about the costs? Insurance companies going to be able to afford that? What about the costs of the under- and uninsured? How long can the hospitals eat the cost of uninsured ER visits, at that rate? Especially since we know this is likely to spread far faster among low-income and homeless populations? 

--------------------------------------------------   

Am I being a paranoid fuckface, and worried over what is essentially a non-issue? Maybe. I’d love it, if in three months, you’re all coming on here going, “John, you fucking idiot! Hahahahaha!” But, I genuinely don’t think that’s going to happen. 

I suspect this is going to get ugly. It’s going to get even uglier than it might, because a whole lot of “preppers” are still shoving their heads in the sand, saying, “It’s just the flu, bro! Don’t be so paranoid! Nothing happened last time, with H1N1!” 

You know what else didn’t happen with H1N1? The fucking feds didn’t start a White House Task Force to combat it. They didn’t pass an emergency spending bill for $8.3 BILLION to combat it. We didn’t shut down travel from a major trading partner country for the indefinite future to combat it. First world nations didn’t have 61% of confirmed cases requiring hospitalization to treat it. There weren’t 100,000 confirmed cases, internationally, in like the first three months. 

So, yeah, I’m taking this serious. 

----------------------------------------------------------   

What Is John Mosby doing?

Someone mentioned, on my Mountain Guerrilla Blog Facebook page, “I wonder if John Mosby can just tend to his gardens and livestock and quarantine his family from the world until this thing is over.” 

As I responded then, “No. I can’t quarantine my family from the world until this is over. What I CAN do is pay attention to it, and take as many precautions as possible, including social distancing when possible.”

So, what does that mean? 

1) We double-checked our food storage. I KNEW we had a solid year+ of staples, but I confirmed. We made two shopping trips, and stocked up on some extras of the stuff we normally eat every day. We normally have a solid month of “normal” food on hand, but we pushed that up to three months—not coounting snacks—and my wife started incorporating the staples in already. After cataloging it, we’ve certainly got 18 months, and probably over 24 months of food, on hand. That doesn’t count livestock sources of food, and it doesn’t count the garden, which will be producing food inside of two weeks (if you can count lettuce and kale as food….).

2) I repacked my trauma bag, and we stocked up on cold and flu medicines for us and the kids. In addition, we stocked an entire extra year’s worth of daily Vitamin C doses (and it’s not like we don’t have a fuck ton of natural Vitamin C sources all around us). I’m planning on discussing my PACE plan for medical care in an article, but I’m good on medical, for anything within my scope of practice to treat, and for some level of nursing care, including isolation/quarantine for infectious patients, for some time.

3) We’ve started putting social distancing into practice. We’ve abstained from Judo and Gym visits for the last two weeks, into the foreseeable future. Fortunately, I’ve got a home gym that’s the equal of a Crossfit box, albeit outdoors (and I started on the building frame for it today), including Judo/wrestling mats, so I can work still work with the kids on those skills as well. The kids are homeschooled anyway, as most readers know, so that’s a non-issue. I have my real-life business, but I’ve put most of those projects on hold, except the ones I can do from home/at a distance.

When we do have to go to town, I’ve always been pretty good at social distancing anyway. I can mean mug most people into staying outside of arm’s reach, and I’m not shy about putting my hands up and telling people to back the fuck up, especially with this shit going around. We’ve been keeping the kids home on those trips, and if they do have to go along, keeping them in the truck, while one parent runs into wherever we need to go. Beyond that, lots of hand sanitizer before and after touching anything that others have touched, and not making physical contact with strangers is about the best we can do. 

4) I’ve made it a point to hammer at our people to start battening down their preparedness even more, as well. We dialed in some shortcomings with the communal clan food storage project (which is completely separate, for now, from our family food storage), and I’ve been harping on them to increase their family preparedness for possibly needing to shut-in and self-quarantine at home. Most of the other families send their kids to public school, because of two working parent household requirements, but we’ve been pushing them to consider what happens if/when the schools close down for lengthy periods of time.

5) I’ve provided our people with both my “trigger event” for chaining the gates at the farm, and informed them that, if they show up after that event, they should expect a 30 day quarantine when they arrive.

6) I’ve tried to pass on some of the information I’m receiving to other family, friends, and neighbors. Like most people, for the most part, they’re scoffing at it. “It’s just the flu, bro!” Well, okay. I’ve done what I can do. I can’t cram it down their throats, and it’s not my job to do so. I can only set the example for others to follow, if they choose to step up and try to meet the standards required. 

Beyond that, there’s not much specific we can do, that we’re not already doing, as part of our normal lifestyle. We stay far healthier and fitter than most Americans, because we spend so much time outside, doing physical stuff, and we do well-rounded PT daily, and we eat reasonably healthy (and it’s even healthier now that we’re not eating out at all…). We take vitamins, multivitamins, and extra Vitamin C. We get lots of sunlight and fresh air, and will be eating tons of fresh vegetables in the coming weeks and months. So, if the numbers ARE accurate, we’re less likely to contract the virus, and if we do, we’re less likely to see negative effects from it such as needing hospitalization. 

The fact that most trauma injuries can be treated at home, and then nursed back to health means we have less need for the hospital (I buried a Benchmade folder in my thigh a couple years ago. It was an accident, and I was being a dumbass. Not doing stupid shit, but not using the right tool for the job either. I went to get stitches, but even then the doctor said they probably weren’t necessary, given the rapidity with which I had secured and dressed the wound...I’m not worried about most of the kinds of injuries we’re likely to sustain), and if it’s beyond our ability to deal with, we have a number of nurses and at least one MD in the clan that can be counted on for assistance in a pinch, until/unless they end up quarantined. 

So, the second-order effects, barring something really dramatic, aren’t too much of a concern for me either. I’m really more concerned about the long-term, third-order effects on supply-chain issues, and replacing things we use up. My current plan for that is to simply continue assessing things on a day-to-day basis, and if I notice something that seems like it might wear out quicker than anticipated, or otherwise need to be replaced, I’ll go try and get an extra/replacement. If that ends up not being possible, because of supply chain issues, then we’ll move on to the contingency plan. 

Example: I use my chainsaws a lot. I have two Stihl, pro model saws. I have extra bars and chains for both of them. I have one extra fuel filter for each. I may, next week, go buy a couple extra fuel filters, but I generally don’t need to replace those very often, in my experience, so I’m not super-concerned about it. I’m more concerned about fuel availability. So, I filled every single fuel can on our place. I’ve got a LOT of fuel stored here now. If, two months from now though, I cannot get fuel for the saw? Well, I’ll go back to using my axes and hand saws. Benefit of building a timber frame house, by hand? I learned how efficient it actually is to use hand tools, when you know HOW to use them. 

We’ve got three vehicles on the place. One is in the process of being rebuilt/repaired (it’s been a very lengthy process, as it’s not been a huge priority. It just moved up a notch, but it’s a relatively rare vehicle, and parts are a motherfucker to get in the best of times. I THINK I’ve got everything I need to get it running, but it won’t go back to being a daily driver, because it’s also my best off-road vehicle, and I don’t want to risk normal wear-and-tear if I’m going to have trouble getting parts. If one of the other two go down, well, we’ve got a spare. If all three vehicles go down, we’re back to being infantry. Fortunately, at that point, we don’t have very far we need to go, and if we do...we walk anyway. No big deal. 

So...we’re pretty well set if this does turn out to be as bad—or worse—as I expect. Thus my statement, that I’m not particularly worried. Pandemics are part of the historical trend in dying empires. I suspect we (the US as a nation, not my clan) will come out of this on the other side, with a severely contracted economy, a dramatically reduced population, and a smaller international footprint. Then, we’ll try to convince ourselves that it’s no big deal, nothing has changed (“It’s just the flu, bro!”), and we’ll continue to be the dominant world power that we were 30 years ago. Most of the rest of the world will continue to ignore us—as they’re already doing as much as possible—and in a few years, there’ll be another pandemic that will have a similar effect. It’s just part of the cycle. It is #TheFateOfEmpires. 

That having been said, my job—as I’ve seen it—from the beginning of the Mountain Guerrilla Blog, is to help others, namely you, the readers, prepare better for the things we’re experiencing. Part of that has been providing training guidance for security, through my experiences as an ARSOF NCO. Part of that has been providing preparedness guidance through our combined experiences living, and raising a family outside the normal civilized bounds placed on people by the imperial culture. That ranges from mindset issues to off-grid living. Part of THAT in turn, is helping you understand when something is more than what you’re being told it is. That’s my goal with these thoughts on the coronavirus/COVID-19 issue. I sincerely believe, based on the intelligence information I’m receiving—and analyzing within the limits of my ability to do so—that this is far, far more than “just the flu, bro!” It’s going to have far greater impacts—first, second, and third order, than the vast majority of people—including “preppers” are seeing thus far. I suggest getting your shit dialed as tight as you can, while you still can (and for some of you, that was last week or the week before…). 

For some of you, you’re going to look at this and say, “Meh. Fuck that guy. I’m already prepared!” If that’s the case, good for you! If that’s not the case, and you’re just telling yourself that so you can sleep tonight, well, I feel bad for your dependents. 

For some of you, you’re going to look at this and say, “Fucking doomers! It’s just the flu!” I hope you’re right. You’re not. It’s already been demonstrated, by people that actually make a living studying infectious diseases that it’s not the fucking flu, but well, maybe all these super smart nerds, all over the world, who make their living studying bugs in microscopes, are wrong, and you’re right. I hope so. If you’re wrong, well, for your sake, I hope you’re like the 39% of the Italians who have contracted this and didn’t need hospitalization for it. Or, I hope you’re part of the 30-60% of the population that is projected to probably not contract it at all. I know how much I would wager on an investment that only had a 60% chance of returning a good benefit, and it ain’t much. On a 30% chance? Man, I don’t give money away. 

This is the last article I’m going to write specific about the coronavirus/COVID-19, until the first week in July (April, May, June is three months), when I will return to the subject, just long enough to say either, “Mea Culpa, Mea Culpa, Mea Maxima Culpa,” and apologize to you for fear-mongering pointlessly, or to say, “I fucking told you so!” (and, if something really, really dramatic happens in the meantime, I’ll probably break that promise...like hundreds of thousands of Americans start fucking ending up in ICU). In the meantime, I’m just going to return to our normal programming of security and general preparedness, although, obviously a lot of that will be tied in with the coronavirus/COVID-19, since it’s relevant. For instance, this week, we’ve got an article on medical preparedness. I’m GOING to talk about about infectious disease prevention through PPE, because that’s part of basic medical preparedness. 



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Why market is so volatile
« Reply #1428 on: March 16, 2020, 11:46:28 PM »
Why Are Markets So Volatile? It’s Not Just the Coronavirus.
The market is dominated by computer-driven investors that rely on signals such as volatility and momentum
Michael Pomada, CEO of Crabel Capital Management in Los Angeles MATTHEW SCOTT GRANGER FOR THE WALL STREET
By Gunjan Banerji and Gregory Zuckerman
March 16, 2020 5:12 pm ET

Traders like Michael Pomada help explain why the stock market is going through its most turbulent period in recent memory.

Mr. Pomada was in good spirits as he drove his convertible to his office in Los Angeles’s Century City complex before sunrise on March 9. Investment funds managed by his $4.5 billion firm, Crabel Capital Management, were up about 5% for the year. He wasn’t especially concerned about financial markets or the economy, even though oil prices were tumbling that morning.

Yet, all day, Crabel sold stock futures and other investments, contributing to a 2,014-point, or 7.8%, drop in the Dow Jones Industrial Average.

Two days later, the blue-chip index fell into a bear market-—as Mr. Pomada’s firm continued selling—bringing an abrupt halt to an 11-year bull run that began in the throes of the financial crisis.

Like a growing number of investors today, Crabel relies on preset algorithms to make computerized trades. They are dictated by a series of inputs. And one of the most important of these inputs is the market’s own volatility.

As a result, when things get wild, the computers at Crabel and other firms start selling—helping make it wilder still.

“We need to cut position size when market volatility pops,” even if the positions seem like winners over the long term, said Mr. Pomada, Crabel’s chief executive. “It can feel awkward, but we know we’re doing the right thing from a risk perspective.”

The stock market has been plunging as investors struggle to judge the impact of the coronavirus, a price war in oil and their impact on the global economy. Monday’s fall of nearly 3,000 points in the Dow Jones Industrial Average, or more than 12%, marked the second-worst day in its 124-year history. But those reasons don’t fully explain the remarkable volatility.

High Anxiety
The VIX, known as Wall Street's 'fear gauge,'closed at a record high on Monday.
Cboe Volatility Index
Source: FactSet
As of March 16, 4:14 p.m. ET
RECESSION
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Since the mid-February market peak, the Dow Industrials have closed more than 1,000 points lower on six trading days and rebounded at least 1,000 points four times. Adding to those moves, and potentially hastening them, are technical factors that have little to do with how investors feel about the outlook for companies, earnings and the economy.

In a dramatic shift since the financial crisis, the market today is dominated by computer-driven investors whose machines react to a series of technical and other factors, as well as by more-traditional investors who rely on reams of fast-flowing data. On many days, forces such as the market’s volatility and momentum, derivatives activity and the market’s liquidity—how easy or difficult it is to get in and out of trades—can help drive trading.

In earlier times, when trading was dominated by fundamental investors who scoured balance sheets, studied goods prices and tried to reckon a company’s future profits, market volatility figured in to some extent, but not in any defined way. Now, for many traders a stock is simply a thing that moves, whether the company makes shoes or airplanes or frozen pizza. And how much a stock moves—how sudden and sharp are its swings—is a factor as important as any other in whether to buy or sell it.

On Friday, various momentum inputs directed investors to buy shares late in the day when the market began to climb. Buying by these algorithmic investors, alongside other investors’ bullishness or hedging, sent the Dow Industrials up nearly 2,000 points, or 9.4%, in its biggest one-day percentage gain since 2008, traders said. Most of the move happened in the last 30 minutes, a concentrated burst that drove the index up over 1,400 points.

As 2020 began, investors were optimistic the economic expansion would continue, as calming trade tensions between the U.S. and China and three recent interest-rate cuts from the Federal Reserve lifted stocks to record levels. For years, it paid to buy each dip in stocks and to embrace trades that bet against the return of volatility.

The outlook for investors started turning dire the weekend of Feb. 22, after a surge of coronavirus cases outside China. Fears it could spread globally and tip economies into recession smashed a long stretch of tranquility in financial markets.

The Dow Industrials fell from a record Feb. 12 into a bear market on March 11—defined as a decline of at least 20%—in 19 trading days, the fastest such plunge ever. The S&P 500 suffered a similar drop.

Including Monday’s plunge, the trading wiped $8.28 trillion in market value from the broad stock-market index. Treasury yields plumbed new lows, reflecting furious buying of safe government bonds. Oil prices fell at rates not seen since the 1991 first Gulf War. Investors fled riskier debt, afraid companies that loaded up on credit amid low interest rates would have trouble repaying.

“You’ve gone from an environment where you think you can go into a mini bubble to…we could have a recession starting in March,” said Troy Gayeski, co-chief investment officer of SkyBridge Capital, which oversees $9 billion. “This is a whole new world.”

According to JPMorgan Chase & Co, more than $100 billion of selling during the week of Feb. 23, the worst week since the financial crisis, was fueled by strategies such as options hedging, what traders call “vol targeting”—using volatility as a central input in trading decisions—and other systematic tactics.

Many of the technical trading strategies—which helped buoy markets during its 11-year bull run—have been unraveling and driving volatility. On the way up, as volatility fell, people bought risky assets; now volatility is rising, so they’re selling.

“What you get is that Minsky moment: That stability ultimately breeds instability,” said Charlie McElligott, a strategist at Nomura, referring to the late economist Hyman Minsky’s thesis that prolonged periods of calm can sow the seeds of a painful collapse.

Different technical dynamics can work the other way, too, Mr. McElligott said, creating “a massive violence on upside moves.”

Many of these traders are selling shares and other investments to manage their risks rather than to profit from a tumble. Along the way, they can amplify the very downturns they are hoping to avoid by offloading shares just as the market swoons, adding to the turmoil.


Some of these strategies, such as chasing momentum, also can magnify rallies. Extended rallies often bring lower market volatility, thus spurring computer buying.

Funds making decisions based on volatility, including some with names such as volatility-targeting funds and risk-parity funds, have risen in popularity. Risk-parity funds manage an estimated $175 billion.

Systematically Selling

Systematic funds, which include commodity trading advisors and those that targetvolatility or make 'risk parity' trades, were selling more aggressively relative toothers like active mutual funds and retail investors.

Difference between current exposure and average exposure to stocks over pastfive years
Source: Deutsche Bank
Notes: Figures through March 12; Negative value indicates below-average exposure; DeutscheBank considers active mutual funds, long-short equity funds and retail investors as'discretionary.'
Discretionaryequity holdings
Systematicstrategies equityholdings
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One such investor, Roberto Croce, spends his days tracking thousands of data points on volatility and the intricate relationships between about 60 markets, from commodities to stocks and bonds around the world. Overseeing about $1.3 billion in a risk-parity strategy, Mr. Croce, a senior portfolio manager at Mellon Investments in Boston, buys and sells assets based on how risky they appear at any given time.

He began dumping stocks in early February and kept selling during the week of March 2 as the selloff accelerated.

By then, business leaders were canceling conferences and travel because of the virus. Anxiety was so high that the Federal Reserve’s emergency interest-rate cut on March 3, its first such move between scheduled policy meetings since the financial crisis, did little to soothe markets. On Sunday the Fed cut rates again, to near-zero, as the coronavirus pushed the U.S. closer toward a recession.

“It’s very clear what I have to do when risk rises. I have to reduce exposure,” said Mr. Croce. “That all happens based on the list of instructions that we’ve given to the computer.”

A risk-parity strategy run by Man Group PLC, one of the largest publicly held hedge funds, was cutting exposure to stocks around the world, commodities and credit the week of March 2, according to someone close to the matter.

By March 12, as the Dow dropped 10%, exposure by risk-parity strategies to stocks and other assets fell to the lowest level since 2013, Nomura estimates show.

Fleeing Stocks

Allocation to stocks by so-called volatility-targeting strategies tracked by DeutscheBank hit the lowest level on record on March 12, when stocks had their worst day since 1987.
Source: Deutsche Bank
Note: Figures through March 12. Deutsche Bank tracks a sample of funds. These tactics try tomanage a portfolio's level of volatility by allocating across stocks, bonds and cash.
.%
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That same day, so-called volatility-targeting funds slashed their allocation to stocks to a record low, according to Deutsche Bank strategist Binky Chadha.

Those who trade based on volatility say that their activity isn’t dangerous because they alone can’t move markets, and that it isn’t clear how much they amplify the market’s direction.

They can also help stem the bleeding. Mr. Pomada’s firm reduced some of its bearish oil positions on March 9 because volatility had surged. It had been betting against the market, but moved to buy crude that day, potentially lending support to oil prices as they were cratering.

Additionally, these investors say their strategies are nuanced. “It’s extremely unlikely that a bunch of managers are pounding the market with exactly the same trades at exactly the same time,” Mr. Croce said.

Mr. Croce said he looks to sell shares gingerly so as to not significantly move prices. The signals help him make levelheaded decisions. “Humans like to sell bottoms and buy tops,” he said.

In addition to investors who have been selling as volatility soared, others have been getting out solely because of moves in the value of stock options they have sold.

In recent years, traders big and small have turned to options, which give investors the right to buy or sell shares later at agreed-upon prices, to juice returns. Assets in mutual funds and exchange-traded funds using options strategies have soared to $26 billion from about $10 billion since 2010, according to Morningstar Direct as of January.

In calm markets, when it’s safe to assume most options will never be exercised, some investors sold options just to collect the premium. Banks and trading firms also sell options to investors looking to hedge.

When markets fall and volatility soars, sellers of put options—which give the buyer the right to sell at a certain price, and which typically rise in value as the market falters—can be caught in a bind. They scramble to dump shares and stock futures to try to hedge or to minimize their growing losses.

Data firm Squeeze Metrics estimates that for every percentage-point fall in stocks, trading firms need to sell $30 billion in stocks to hedge their stances. Those same firms need to buy that much when the market jumps one percent. Hence, still more volatility.

In some ways, these trading techniques are similar to “portfolio insurance,” the hedging strategy popular in the late 1980s, when investors’ computers sold stock futures at the first sign of a decline to protect against deeper losses. On Oct. 19, 1987, that tactic led to more computerized selling and a rout of more than 22% in the Dow.

“It’s adding to the severity of these rips up and down,” said Tobias Hekster, who has been trading options for more than two decades and is co-chief investment officer of hedge fund True Partner Capital.

As of Monday, the S&P 500 has moved up or down by at least 4% for six consecutive sessions, the longest streak since November 1929, according to Dow Jones Market Data. The market’s move triggered trading halts for the first time since 1997.

London’s Aspect Capital automatically reduced positions in oil and other assets on March 9. The $7.2 billion firm spread its activity throughout the day, rather than sell at the opening of trading, according to Christopher Reeve, director of risk. That would suggest the firm didn’t exacerbate the collapse in oil prices.

“If markets get more volatile, our positions get smaller,” said Mr. Reeve, whose firm has funds that have both gained and lost money so far this year.

Further magnifying moves is how tough it can be to complete trades in times of stress. Big banks have backed away from trading over the past decade, leaving fewer players in many markets. The trades that get done can move prices more, causing greater tumult.

Tough Trades

It's gotten more onerous to trade S&P 500futures, a crucial market for hedging andmaking directional wagers.
S&P 500 futures available to buy or sell nearthe best prices
Source: Goldman Sachs
Note: Figures as of March 2.
.million
2012
’14
’16
’18
’20
0
10
20
30
40
50
60
70
80
$90

It’s become harder to trade assets from Treasurys to stocks and derivatives during the selloff. The number of Treasurys available to buy or sell near the best prices has dropped and is near levels not seen since late 2008, according to JPMorgan data. It became more onerous to trade S&P 500 futures and stocks, according to Goldman Sachs Group Inc., which said in a March 3 note to clients that the dynamic was contributing to rallies and selloffs.

Dean Curnutt, chief of New York-based brokerage Macro Risk Advisors, said he has considered leading clients away from trading certain stock options because of this concern.

Options are handy when investors are fearful of stock declines and can provide a buffer against losses. If it’s tough to trade them in times of stress, that could leave investors handcuffed.

That was the case recently with options on iShares iBoxx USD High Yield Corporate Bond Exchange-Traded Fund, a high-yield-bond ETF that has recorded steep price declines. “I would call it untradeable. The frictions are so high,” said Mr. Curnutt. “Maybe the best defense is just unwinding your portfolio to return to cash.”

The result? Likely more volatility.

G M

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A grim assessment
« Reply #1429 on: March 17, 2020, 03:15:49 PM »
https://raconteurreport.blogspot.com/2020/03/you-really-have-no-idea.html

TUESDAY, MARCH 17, 2020
You Really Have No Idea



This isn't a ramble. I have a number of lines of thought I've been stewing over at work all weekend, and I'll be going down each one until I'm done.
Let's begin.
           4000
          8000
        16000
        32000
        64000
      128000
      256000
      512000
    1000000
    2000000
    4000000
    8000000
  16000000
  32000000
  64000000
128000000
256000000
512000000

4000 is the number of confirmed cases of coronavirus in the U.S. now.
(That we know about. Reality could be 100,000 or more.)

If that original number doubles seventeen more times, the product is a number larger than the populations of the U.S. (330M), Mexico(137M), and Canada(37M), combined. IOW, it's virtually everywhere in North America at that point. (No, I'm not particularly concerned about the banana republics between Mexico and South America in this regard. They can lump it.)

What I've read is that the outbreak is doubling every 4-6 days. So somewhere between 68 and 102 days from today, the shit sandwich on this continent reaches full maturity.

If the spread of the disease is moving at that rate.
If the current voluntary measures don't halt that growth, or even slow that pace.
If it doesn't run out of people stupid enough to keep doing things to spread it.

With the above caveats:
May 22nd, to June 26th, give or take.
It crests 100M cases a week to two earlier.

Long before then, we'll have a great view of how lethal it is, and how many cases are serious. So by somewhere between mid-May and Mid-June, we'll either have metric f**ktons of people requiring hospitalization, and dead, or not. How much better or worse it is then will be a foolproof look at whether this is a nothingburger, or Spanish Flu. Oh, and if there are really 100,000 cases now, we get there a full month earlier.

Now maybe you can figure out why POTUS said this will last through July or August, at minimum.

And remember, the 85% (or more, or less) of all infected people who have symptoms ranging from none, to moderate flu, aren't the problem. They never were. They'll be just fine.

It's the hordes dying in droves, and crashing the entire U.S. medical system that could put a kink in this country that'll last for decades. And crashing the stock market. And everyone going broke. And crashing the economy even after this passes. And so on. And so on. And so on.

That's 5 1/2 months from now.
How much food do you have?
How much cash on hand do you have?
How much of each of those does Gilligan's family have, and how far are they from you?
So, how much ammo do you have??

That little thought exercise should concentrate your minds wonderfully.

----------

Now, a reminder about some other numbers.
900,000 staffed  hospital beds.
93,000 staffed ICU beds.
60,000 ventilators.
1,000,000 medical doctors.
2,800,000 registered nurses.
106,000 respiratory therapists.
That is the army you're gong to war with, in this pandemic.

And when I say staffed beds, I don't just mean doctors, nurses, and RTs. I also mean D.Os, PAs, EMTs, CNAs, pharmacists, radiology techs, facilities engineers, clean-up crew, supply workers, registration clerks, administration people, IT geeks, and hundreds of other clerks and jerks, without whose constant efforts and hard work, plus medical supplies in small mountains every single day, Dr. Hero and Nurse Awesome are just a couple of people in funny pajamas, and with about as much lifesaving ability on their own as there is actual magical ability in Rupert Grint and Matthew Lewis.

If it was just beds we needed, we could take all the surplus army cots from the 2M guys RIFFed from Uncle Sam in the 1990s, unfold them, and Presto!, have another 2M spots to dump patients. It doesn't work like that.

I bring this up because if "only" 10% of Kung Flu victims require a hospital bed, because they're really that sick, then long about the time we hit 16,000,000 victims, in (44 to 66 days, so let's average it to) 55 days, we have more patients than we have beds for them. At that point, we're Italy. Say about May the 12th or so. (We may also have up to 480,000 dead, which if it happens would have crushed every ICU in the country 5 times over long before that point.)

We've covered this before, but it bears keeping in mind. Keep your thumb in this spot, as we move along.

----------

This weekend, all considered, from purely a Kung Flu cases standpoint, was just ducky.
We had maybe half a dozen to ten "rule-outs" (meaning "maybe it is, maybe it isn't; look for other things that rule out Kung Flu. Like actual influenza flu.) Given the abysmally slow return time, I believe at least one was positive for Kung Flu.
"Ten patients? Is that all?!? Aesop is fulla sh*t! This is a big conjob nothingburger!" - every two-digit IQ soopergenius who ever read a word I wrote on this topic.
And herewith, we digress for a bit.

Scenario One: You're in the military. In a combat zone. The enemy is known to have chemical weapons. One day, a shell whistles over from the enemy side of things, and goes off with a less than enthusiastic bang. Then another, and another. You see a hazy white cloud forming at each impact site, coalescing into a large white cloud, now drifting lazily towards your position.

Do you
a) send the company dumbass Gilligan over there to have a sniff for you, and report back
b) send the whole company of men over, and see what happens
c) put Gilligan in temporary command, and have him lead the whole company over there
d) Yell "GAS! GAS! GAS!", while clanging metal-on-metal, and then rapidly don your MOPP gear and gas mask, before the cloud blows into your position, and prepare to treat anyone nearby who was slower on the uptake.

Scenario Two: You're working in a hospital. An ambulance arrives, and unloads a patient spurting blood everywhere, who tells you he just arrived from the Congo, where he runs an HIV and Ebola Survivors Clinic, and tripped on the jetway and cut his leg open.

Do you
a) run over and apply direct pressure with your bare hands, while fountaining blood cascades into your eyes, nose, and mouth, and lick yourself clean afterwards
b) yell at all your other co-workers to join you in performing "a"
c) Both "a" and "b"
d) put on appropriate gown, gloves, and mask with splatter shield, and apply an emergency tourniquet

In case you were wondering, the correct answer to both scenarios is "d".
You always assume the worst, from common sense, and institutional policy, and over-prepare, so you can deal with it easily if it turns out to be less-than.
You don't grab your .22 to go take on that African Cape Buffalo, and then find out you needed a bit more to get it done. Unless you're a farking moron.
I told you that story so I could tell you this one:

----------

Some days back, I stated that I didn't think we'd bring Kung Flu patients into the hospital, but instead, triage them in tents outside, then send the ones meeting criteria to some FEMA-set-up Kung Flu Treatment Center, staffed as possible, and serviced by dedicated Hazmat 9-1-1 ambulances, whisking members of the community there as appropriate, in full protective gear, 24/7/365.

Because, as I argued with flawless logic, to do otherwise would be to
a) risk our entire healthcare system being overwhelmed and destroyed, a la Italy, and
b) make every other medical emergency impossible to deal with, thus doubling casualties from every other treatable and preventable cause of death, from heart attacks and strokes to appendicitis, because the entirety of any and every hospital would be filled with Kung Flu-infected plague petri dishes, in every nook and cranny.

Turns out, TPTB, top to bottom, make the Italians look like Leonardo da Vinci.

1) We're not putting tents up everywhere.
2) We're not segregating people out of the hospital.
3) We'll do a half-assed triage assessment outside the building somewhere (fill in the blank where___________)
4) Using screening criteria overtaken by reality a month ago, because the CDC, no matter how asinine, is always the CDC
4a) to wit, asking about foreign travel, even though homegrown community-acquired cases outstrip foreign travel candidates, and have for two weeks
4b) ask about exposure to known Kung Flu patients, even though the CDC and local public health  departments refused to test for Kung Flu until four days ago, in most cases, (due to jackassery, fuckwittery, and a dearth of functional kits for two months) thus insuring via Catch-22, that if you never test for King Flu, nobody anyone was in contact with ever officially has Kung Flu
5) then bring the infected into an appropriate sealed negative airflow room
5a) which cleverly has no patient monitoring equipment
5b) will not allow you to get portable chest x-ray equipment into the room with the patient with respiratory problems (which, cleverly, no one thought about prior to then)
5c) which would contaminate said portable x-ray equipment every time you got it into the quarantine room
5d) which would require an extensive, nigh impossible decontamination of said X-ray equipment for each and every subsequent patient
5e) thus leading to shooting x-rays outside the building, or in other places that probably violate 27 hospital safety policies, local health and safety codes, and probably eleventy Nuclear Regulatory Commission regulations regarding radiological safety of patients, staff, and bystanders, in a slow-rolling Chernobyl sort of way
5f) and taking them to CT scanners which are then contaminated, and failing to do a full terminal clean of said rooms and equipment each and every time, which would take them offline for hours each shift, and necessitate closing the hospital to ambulance traffic, so why bother cleaning?
6)unless you're fresh out of negative airflow rooms, in which case you
7) put them into open rooms with no protection or containment
8) thus insuring that all staff members and other patients are exposed over and over again
9) to cases which will not be tested for Kung Flu unless they're first proven negative for the flu
10) Or not
11) All such "policies" being rather more like the Pirates Code ("just guidelines, really"), purely at the whimsy and caprice of whatever doctor(s), charge nurses, or cranky old bat nurse has phone duty that day at the Public Health office, and their personal and capricious interpretation of the current (of four or five or six, so far) CDC guidelines
12) which apparently are changed every hour, if not more frequently
13) while the managers, and senior management, who should be living in the same shoes and underpants 24/7/365 until they sort this shit out, weekend or no, but whom are instead nowhere to be seen, heard from, or in any wise directly involved, until the total colossal clusterfuck falls over from its own weight seven or eight times over, between Friday afternoon and the middle of the following week.
14) while staff and patients having to deal with the results of people with Acute-on-Chronic Head-Up-The-Ass-Syndrome are repeatedly subjected to potential pandemic exposure, leading to sickness, preventative quarantine, lawsuits, and death
15) as the Low IQ staff members, who still think this is no big deal, continue to half-ass every bit of their response, 24/7/365, because half of them were below the upper/lower cut in their graduating classes as well.

THAT'S WHAT YOU'RE GETTING.
The CDC (as per usual, going back years decades) has no f**king idea that it doesn't even know what it doesn't even know, including how to find its own ass with both hands, a map, a compass, and a rearview mirror.
ManageManglement has no idea the CDC can't find its own ass either, and is looking for their own as well.
Supervisory staff puts on its Lemming Suicide Squad Crash Helmet and blinders, and announces that the Light Brigade will smartly charge right over the cliff.
Grunt-level staff, doctors, nurses, ancillary members, etc. will continue to work until
a) they can't take the bullshit
b) they get sick
c) they realize their own family's safety trumps a paycheck.

Instead of learning from Italy's mistakes, and trying to save people and the overall healthcare system, we're going to keep on half-assing this until we're in it over our heads, and then drown. Instead of making the hard call early, and working the kinks out now, when it would have been easy, when it's five patients a week, we'll wait until it's 500 patients an hour, and then crash and burn in a glorious orgy of stupidity.

I expect people to hit the wall.
This is all new to everyone.
There hasn't been a pandemic like this in 100 years.
BUT I ALSO EXPECTED THEM NOT TO BE SO GODDAMN STUPID AFTER THEY HIT THE WALL AS TO NOT RUN HEADFIRST INTO IT TEN OR TWENTY MORE TIMES, IN RAPID SUCCESSION, SIMPLY BECAUSE THEY CAN.

That last expectation was misguided, being most clearly irrational hubris overcoming a solid and well-founded pessimism about people in general, the universality of the Peter Principle, and the inevitability of people, left to their own devices, shooting themselves in the feet until they run out of feet, or ammunition. And then, reloading.



Having said (and witnessed, firsthand) all of the above, and after understating it by at least half (you really have NO idea) there's only one way to deal with this, for me:



I mean that last, most sincerely. We're all going to go through this. Harden the fuck up.
Take care of yourselves.
Take care of your families.
Take care of your friends.
Take care of Your People.

No one is coming to save you.
Not me.
Not the government.
Not. Any. One.


























Everything is Your Responsibility.
Deal With your Shit.
Get It Done.
YOYO = You're On Your Own

Best Wishes. Really.

And if, watching the economy do a SMOD impact into your life, and the entire nation go onto a (mostly voluntary) full lockdown quarantine, you still think this is just a hype and a nothing burger, I can't help you. If you're right, I don't need to; and if I'm right, no one will miss you.

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1430 on: March 17, 2020, 05:17:24 PM »
That one has me looking like a Jewish Don King!  :-o :-o :-o

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ccp

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1433 on: March 19, 2020, 07:25:09 AM »
now with so many people out of the market it is really hard to tell

how many dooms dayers are simply trying to take this down more.

GREAT DEPRESSION
WE may never recover
this will go on for decades etc.

I have to reread 1918 again though the world is far different now..........

DougMacG

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1434 on: March 19, 2020, 07:55:29 AM »
now with so many people out of the market it is really hard to tell

how many dooms dayers are simply trying to take this down more.

GREAT DEPRESSION
WE may never recover
this will go on for decades etc.

I have to reread 1918 again though the world is far different now..........

My complaint with the publicly traded stocks, including the mutual stock funds at T Rowe Price that I refer everyone else to, is the shared ownership aspect.  Like ccp says, some always want to drive it down further so they can profit even more when it comes back.  They have imperfect ways of knowing when but their ways and their powers are better and greater than ours.

I looked to get back into the same funds this week and found out I need to stay out of these funds 30 days when redeeming [so that people do not mess up the mutual funds with instant trading].  Meanwhile I could buy back in elsewhere but setting up accounts takes time.

At the start of this, I figured there is a 100% chance that the market bounces back 100% within a relatively short order after panicking and settling, by end of summer, end of year or within a short period after that, within another 1 or 2 years if it's deeper and slower.  If I buy back in when it is down 25-30% and it comes back, that roughly gives me 25-30% more shares or more value of the same stocks just for opting out of the v-shaped crash/recovery.  If it drops further to 40% off or bounces around in the 30s% down, I have to admit I have no way of calling the real bottom and there will likely or at least possibly be a big rush for people to get back in on the way up too.  This is not headed to zero.  It will come back in one form or another.  A huge percentage of the economy is not affected at all, except by other people's panic. 

We face other risks.  It's hard for the US economy to come back alone if the world economy is still crashed.  Also there is the political risk that if things are bad for too long economically it wouldn't take much for our whole election to turn leftward, and in that double, triple, quadruple bad news scenario I would not want to be in the markets.  My prediction is the opposite.  This country will roar back.  Unfortunately my certainty level is way below 50%.  (

ccp

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1435 on: March 19, 2020, 08:24:36 AM »
".Also there is the political risk that if things are bad for too long economically it wouldn't take much for our whole election to turn leftward, and in that double, triple, quadruple bad news scenario I would not want to be in the markets."

my concern also.

that would for extend the picture of bad new for yrs or forever.


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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1436 on: March 19, 2020, 08:57:43 AM »
Markets also could be down because Tulsi Gabbard dropped out leaving just Joe Biden to challenge Trump.



Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1439 on: March 20, 2020, 03:51:10 PM »
Both he and Wesbury we slow to recognize the Black Swan in 2008.

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U.S. durable goods orders increase solidly before coronavirus
« Reply #1440 on: March 26, 2020, 08:53:55 AM »
https://www.reuters.com/article/us-usa-economy-durablegoods/u-s-durable-goods-orders-increase-solidly-before-coronavirus-idUSKBN21C1YS?il=0

Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, accelerated 1.2% last month (Feb 2020), the Commerce Department reported on Wednesday. Data for January was (also) revised up.
--------------------------------------

GDP Now, a statistical measure published by the Atlanta Fed STILL has current GDP growth at 3.1%, not counting known closures and cutbacks coming due to the Wuhan Coronavirus.

https://www.frbatlanta.org/cqer/research/gdpnow.aspx

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2020 is 3.1 percent on March 25, unchanged from March 18 after rounding. After this week’s and last week’s data releases from the National Association of Realtors and the U.S. Census Bureau, the nowcast of first-quarter real gross private domestic investment growth decreased from 7.5 percent to 7.4 percent.

(...does not capture the impact of COVID-19 beyond its impact on GDP source data and relevant economic reports that have already been released. It does not anticipate the impact of COVID-19 on forthcoming economic reports beyond the standard internal dynamics of the model.)

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Re: Wesbury
« Reply #1441 on: March 29, 2020, 10:09:16 AM »
[quote author=Crafty_Dog
...
payrolls grew by a very strong 273,000 in January and another 273,000 in February. The unemployment rate was 3.5% in February and initial claims for jobless benefits were 216,000 in the last week of February. Retail sales in January were up 4.4% versus a year ago. In February, sales of cars and light trucks were up 1.9% from a year ago and were above the fourth-quarter average. This suggests that total retail sales for February rose as well.
...
hours worked in manufacturing durable goods rose 0.9% in February and colder weather likely lifted utility output.

Housing starts have been particularly strong lately, coming in at an average annual pace of 1.597 million in December and January, the fastest pace for any two-month period since 2006. Yes, part of the surge in home building was due to good weather, so February will likely fall off to around a 1.49 million pace, which excluding December and January, would be the fastest pace of building for any month since 2007.
------------------------------------------

That was the news only a couple of weeks ago.  Kick this virus out of the way and some kind of strong economic recovery is possible.  It's just a matter of time and success on every front, knowledge, testing, supplies, vaccines, treatments.

Crafty_Dog

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Re: Wesbury: V or U?
« Reply #1443 on: March 31, 2020, 05:48:44 PM »
https://www.ftportfolios.com/Commentary/EconomicResearch/2020/3/30/recession-v-shaped-or-u

They economy will reopen gradually so it cannot be a sharp v-shaped recovery.

I see a sharp and vigorous recovery IF / WHEN we fully reopen everything, which is when, never?

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Re: Wesbury: V or U?
« Reply #1444 on: March 31, 2020, 05:51:46 PM »
https://www.ftportfolios.com/Commentary/EconomicResearch/2020/3/30/recession-v-shaped-or-u

They economy will reopen gradually so it cannot be a sharp v-shaped recovery.

I see a sharp and vigorous recovery IF / WHEN we fully reopen everything, which is when, never?

We are in unknown territory.

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1445 on: April 01, 2020, 07:49:12 AM »
Not only is the world economy very contracted now, it is also very fragmented.  Indeed, the very concept of the global economy has taken a deep hit.

This was Jude Wanniski's analysis, with which I agree, of the primary cause of the Great Depression.

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US Economy, why didn't we test our anti-fragility?
« Reply #1446 on: April 01, 2020, 08:36:25 AM »
The former global economy is now a mess.  Trust level with China, for example, is now at zero. 

As we grew our US federal government spending to US$5Trillion!, we managed to spend most of it in ways that weaken the economy and none of it in ways that address the weaknesses in the economy.

Black Swan author Nassim Talib, if I understand him right, does NOT see current times as a black swan event because a virus pandemic was perfectly foreseeable.  Calling it unforeseeable excuses our unpreparedness.

From the article below, over-specialization leads to lost knowledge.  In the case of 3M N95 masks and basic hand sanitizers, maybe that means lost facilities and materials needed to ramp up and build what we need.

https://www.theamericanconservative.com/articles/why-didnt-we-test-our-trades-antifragility-before-covid-19/

Crafty_Dog

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1447 on: April 01, 2020, 09:16:01 AM »
As best as I can tell:

Most analytical focus seems to be on flattening the wave, but not so much on what comes after the peak of the wave.

The Commie Virus is now part of the human biome.  Even assuming that we keep within the now somewhat increased capacity of the health system, a goodly percentage of the human herd remains without immunity and as we lift current measures, not only do the original risks of inundating waves return, but either way those who haven't gotten it remain concerned and their behavior affected.

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Re: US Economy, the stock market , and other investment/savings strategies
« Reply #1448 on: April 01, 2020, 12:22:14 PM »
The ISM Manufacturing Index Declined to 49.1 in March To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 4/1/2020

The ISM Manufacturing Index declined to 49.1 in March, beating the consensus expected 44.5. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

The major measures of activity were mostly lower in March. The production index fell to 47.7 from 50.3 in February, while the new orders index declined to 42.2 from 49.8. The supplier deliveries index rose to 65.0 from 57.3, and the employment index declined to 43.8 from 46.9 in February.

The prices paid index declined to 37.4 in March from 45.9 in February.

Implications: The impact of the Coronavirus on factory sentiment was less than expected for March, with the ISM Manufacturing index coming in at 49.1, beating the forecast from every economics group. Expect the index to get uglier in the months ahead, but for the time being, ten out of the eighteen industries surveyed reported continued growth in March, only six reported contraction, and two reported no change. Comments from survey respondents were peppered with concerns over the Coronavirus, its likely impacts on supply chains, as well as the effects of the oil-price war. The two most forward-looking indices – new orders and production – both moved lower in today's report. New orders fell to 42.2 in March, the lowest since 2009, likely due to uncertainty about the near future. Meanwhile, the production index declined to 47.7 in March from 50.3 in February, as a lack of new orders and delivery restrictions due to public health measures hit activity. That said, recent news surrounding manufacturers converting their production lines to make ventilators, personal protective equipment, and other necessary items for the fight against the Coronavirus suggests some support for production and new orders going forward. Regarding overseas supply chains, one respondent noted that Asian suppliers are getting back up to speed. This was reflected yesterday in China's manufacturing PMI which rebounded sharply back into expansion territory, though it's always important to take Chinese numbers with a grain of salt. That said, supply chain disruptions and delivery restrictions in the US have impacted the supplier deliveries index, which rose to 65.0 in March from 57.3 in February (remember, the supplier delivery index moves higher as delivery delays rise). Finally, the employment index continued to decline in March, falling to 43.8. This echoed the decline of 27,000 jobs in today's ADP employment report, reflecting the ongoing effects of government-mandated shutdowns of businesses. We are forecasting a 145,000 drop in nonfarm payrolls for March but may adjust this estimate tomorrow morning once we see the latest figures on unemployment claims. In other news this morning, construction fell 1.3% in February. A rise in transportation projects was offset by broad-based declines elsewhere, led by commercial construction and manufacturing. Finally, in recent news on the housing market, pending home sales, which are contracts on existing homes, rose 2.4% in February after a 5.3% gain in January. Normally, these gains would signal a surge in closings in March. But closings were unusually strong in February, perhaps a reaction by some buyers to the oncoming Coronavirus. And now, given social distancing, closings in March could be relatively soft. On the price front, the Case-Shiller index, which measures national home prices, rose 0.5% in January and is up 3.9% from a year ago, a slight deceleration from the 4.2% increase in the year ending in January 2019. In the past twelve months, price gains have been the fastest in Phoenix, the slowest in New York and Chicago.

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