Spekulatius

BAM's fee from BPY is based on market capitalization. BPY can dilute itself to finance the short-term and maybe even fund the redevelopment... I think the legal structure is brilliant. Yes BAM owns a meaningful portion of BPY... but it won't be that impactful. Am I missing something? Given what I said - why are you so worried for BAM? I am not worried because I don’t own it. They deserve all the praise the get, if they navigate this. Structures like this have imploded before. They require very astute management. One example: https://en.wikipedia.org/wiki/Babcock_%26_Brown

I doubt there is much of a private market right now.

In tiny dribs : BRKB, MA and CMCSA.

That’s not the health insurers problem though. Health insurance is a good business and short tail too. Rates gets negotiated every year and costs just passed through. There is some risk of a catastrophic surge in claims I guess, but I think if such a thing happens, they get bailed out too.

Anyone concerned they the health insurers may run into financial issues as well? People getting laid of in drives reduces their membership and those that stay may get their money’s worth if this epidemic goes out of control. Of course right now with everything elective being on hold and many practices only taking emergencies, the cost trends may be really great. The chart looks like they caught the flu already.

TIKR.COM is the best, imo. They handle foreign stocks. Transcripts are included as well. None of the or the platforms does, at least not in the freemium version.

USB is less dependent on interest income than WFC (fee income, payments etc.). It should hold up better. I avoid banks right now but that’s one I keep an eye on.

All the initial economic estimates for China were way too optimistic; virus caused much larger economic contraction than expected. And the re-start has also been slower to materialize. The challenge in the West is we are taking a very different approach to managing the virus than China, South Korea, Taiwan and Singapore. Our approach is the blunt ‘flatten the curve’ (social distancing followed by lock down) but without all the other measures implemented in the asian countries. I am starting to think that our blunt strategy is going to need to be in place for longer (2-3 months). Recession is coming. If this lasts months then likely a severe recession. If it stretches into 12-18 months then what is worse than a severe recession? Recession is already there. In Trumps words, the unemployment numbers will probably increase by the greatest rate ever. I live in the US for more than 20 years and it constantly surprised me how quickly everything can unravel. The renters that our friend from town rents to are hardworking folks (he selects them carefully and has done this for decades), but they have nothing to fall back so he literally collect the rents weekly. That’s why they are already out of means because this crisis started 3 weeks ago. I don’t think any of them has health insurance either. Even if their employer would offer cobra, they can’t afford it anyways. In Germany, workers get out on “Kurzarbeit” for many month for partial pay and they keep the health insurance which then is free without much income, so they can last a long time. That’s why the Great Recession in Germany wasn’t that big of deal for the most folks there. Perhaps the $1000 checks for everyone are a partial solution in this situation.

It's worth noting that Japan has one of if not the oldest population yet have seen pretty good numbers without extreme measures. I'd say the odds are high it's somewhat correlated to smoking. Doesn't the Middle East have really high smoking rates as well? I think the odds are related to testing frequency. There is suspicion that virus was undetected in Italy for weeks , so the number of undetected cases is high increasing the mortality rate because mortality rate is number of death/detected cases. Germany’s morbidity rate is low right now 0.3%, but is sure to rise. Germany did way more testing than Italy at the same stage of progression, but is also behind the curve so the time lag between infection and the morbidity is almost guaranteeing that the mortality rates will go up.

Economic impacts - This moves with breakneck speed: Brother in law got laid of in CA. He worked (in accounting) in a hotel in SF, which went from full occupancy to almost zero. A friend from my town rents apartments to lower income people in our area. He is already seeing defaults on rent payments. Many work in restaurants etc. He will work with renters and probably needs to forgive a few month of rent (he thinks).

I think the timeframe should be the starting point to think about how this is playing out. There is still a lot of thinking going around (besides those that still believe in the flu variant) on that this is over in a few weeks. The longer it lasts, the greater the economic damage is going to be. The 3 month timeframe until things clear up and the normal live more or less can restart sounds about right to me. When we look back at China, this thread got started early in January and now the normalcy returns mid March, so for us starting in March, it seems that June is our best case scenario, assuming a similar timeline. Most likely, it is going to be a longer drawn out affair though. We do not know if this epidemic is seasonal, but if it is, it might reoccur in Winter. Then we are most likely talking Spring next year. Even if not seasonal, I expect new infection hotspots popping up, but hopefully they will be easier to contain when part of the population is already immune and the government and states know what to do. In any case, it’s going to be a 3 month best case, but more likely one year affair.

It is still calm where ai live (MA/ NH) border. No known cases in my town yet. Hospitals are empty (my wife works in a couple) as they cleared out patients that don’t have to there and procedures elective or can wait are delayed. In one hospital, they have crated an extra ICU an “droplet Control” zones. It will come, but it’s not there yet. Based in my Nextdoor local feed, I still estimate that at least a third of the local population thinks it’s media induced hysteria.

1) What is the Economy going to look like when the epidemic is over? 2) How long is it going to take until the economy turns 3) Which industries may take irreversible damage, which may benefit? 4) Economic changes? Are tax rates going up or down? For whom? 5) Political changes? 6) Bailouts, what is likely to happen, who is going to pay for it? 7) Will there be lasting changes to the health care system in the US? I hope we can do some crowdsourcing here and get some new ideas and variant opinions.

The MXN.USD currency pair trades like an equity nowadays. +/- 4% Swings some days. https://www.xe.com/currencycharts/?from=USD&to=MXN&view=1M

China is defiantly restarting their economic engine, but who going to buy there stuff when the rest of the world is in lockdown. It would be kind of ironic if this calamity starting out in China and hitting it hard would actually show their resiliency while the rest of the world (ex Japan, Korea, Singapore) tumbled into lockdown that it can’t get out of. may not exactly play out like this, but who knows? Most of the off patent medication consumed in the US is made China and India nowadays.

BPY is levered to the hilt. Their properties are of higher quality, but value you Market to market, them, they would be deep underwater. The stuff from GGP and Forest looked rich before the COVID-19 Crash, but now it’s got to be a real deep whole. Not only are malls empty, which also impact the landlord cash flows a bit, but there are going to be massive bankruptcies in retail which are going to be very hard to fill. I think BPY has doubly twice the leverage of SPG which is scary enough. Then there is the secular trend online shopping which receives a tremendous boost from the current situation. I bet a lotmof e-commerce holdouts will sign up at Walmart and Amazon and the habit formed will cause a permanent shift. This COVID thing is one of the best things that ever happened to Amazon in terms of creating an external tailwind. Circling back to BPY, it is possible that BAM can amputate BOY and survive, but it would be a massive hit both in terms of BAV, fees and reputation. I think BAM looks really really rich here. OAK was certainly a great purchase for them, but is it enough, Howard Mark Must be regretting selling out, what happens here is a great environment for them.

If real estate overall is going to 10% cap rate, every single bank and insurance company is going to be broke, FNME and FRE will have trillion Trillion $ holes and everyone with a mortgage currently will be deep underwater.

Smoking kills even faster. The upside for PM and MO is that people may care less.

LOL: https://twitter.com/loudobbs/status/1240421216692961284?s=21

Hilton is a capital light business that provides branding and marketing support to the real owners Hotels. I am not sure about Hilton, but I think MAR gives performance guarantees to franchisees for newbuild Hotels, which allows them to get cheap loans. That would be something to look at in Hilton’s 10-k‘s. Bailing out Hilton will do very little to help the Hotel owner who has mortgage loans and employees to pay. They will bear the brunt of the downturn and may net helps to prevent them going under. Hilton itself („ as well as MAR and IHG) are just the somewhat symbiotic leech on top of the Hotel ecosystem and capital structure, similar to GP‘s in MLP‘s. The whole system is also similarly levered.

Why? What exactly did they do wrong? Let’s jack up the Capex on all of these companies so the already razor thin margins in the airline industry tighten even more and increase prices putting air travel back out of reach for the average American. The issue is 2008-09 is still fresh in many people's minds. Lots of ordinary people lost everything in the housing crash. Lots of big corporations got bailed out. Same thing looks to be happening again. Warren feels the scale is tipped too much one way. Lots of voters agree with her. I don’t disagree that lending should be sparingly and stringent. But you cross a line when you start mandating wages etc. There are simply better ways to structure this. They would be mandating wages if they take the offer. They don't have to take the offer. That's fair. The executives have "compensation consultants" to help them make more. Employees don't have that. You have to level the playing field. That’s not leveling the playing field. That’s straight up intervention and beyond. The business was fine before the pandemic. If you want to say “keep more cash on hand because next time you’re not getting a bailout” fine. Are you going to make that same mandate for every small business across the country? Ridiculous. A bailout is Intervention to begin with. I actually think the management should be booted in many cases. Heads on sticks do serve a purpose for a better future. #skininthegame. I don’t think buybacks are problem, the problem is that they are overused. The classical examples are ASL and BA which both de-equitized their company with massive buybacks, leveraging their balance sheet and in BA case both their balance sheet and their supply chain.

It seems likes Great Depression, but we had sub $10/brl (might have been as low as $8 ) for a brief time in 1998 and it wasn’t a Depression. https://www.macrotrends.net/1369/crude-oil-price-history-chart

It looks to me like airlines, hotels, restaurants, cruise industry, travel industry, Boeing are all essentially bankrupt as of today. Most will not survive with no revenue if we do a soft lockdown that next 2-3 months. We know the government is going to try and bail some out. That is a tough thing for an investor to figure out (who the winners and losers are going to be). Didn’t work great for bank investors in 2008 (BAC and C); the companies survived but shareholders had their head handed to themselves. Shadow banking system might be the next shoe to fall... overleveraged companies. Oil and gas industry... Looks to me like their might be a real bifurcation in the market. A stock pickers market. 30% of companies weather the storm and 70% get shit kicked. Not great for ETF holders. Private equity would be my guess as a casualty. Another thing I noticed - treasuries were very weak today and interest rates have shot up. That rarely happens in such a down market. Is the financial system getting squeaky? If treasuries yields would explode upwards it would be game over, imo.

Also bought back some beloved TRV @$77 and change. Second bid did not hit unfortunately. Sold this yesterday into the surge at close for more than $96. I call this type of market “Nantucket Sleighrides”. Nothing makes sense any more until it does. Also got a bit more FOX. People still watch TV, I think.

Yes, I have looked at an owned too many stocks. I remember this when it was spun off from BMY, but never owned it unfortunately. This is a pretty good business though. Cigarbutt is correct, that things like hip implants gets performed at a much higher in the US than elsewhere (Germany example). Still, if things don’t change too much, I feel this business should continue to do well although I think people were surprised in a past that some of thr must do procedures that ZMH is involved with in terms of devices have been considered somewhat elective in times of a recession. The valuation looks quite enticing and reflects some economic risk.