Spekulatius

This is nothing. Really. You have to be okay with way, way worse than this. I'm wearing Depends under my big boy pants. No shit.

I picked up a little more of this today I like VNO better. Bought a few shares.

Well, my call was apparently correct, even though possibly for the wrong reasons. Saved me a few buckshot losses for sure. If we indeed follow the European playbook, we will see the banking industry grinding along with low ROE and real estate (especially residential) shooting up, just like what happened in Germany and to some extend France. If I were Millennial, I would really Start taking notice and get on the bandwagon, and take advantage of thr low interest rates and refinance the hell out it as. I bet we are seeing rates in the low 2% later this year, that ought to make owning RE competitive in all but the most pricy areas. If I were the Fed, I would announce a floor for interest rates to save the banking system. I don’t know what the number would be, but it should be positive, They should just state that they never cut the rate below 0.5% or something like that and keep it positive. I don’t really think that cutting further is doing anything and I think the cut below 2% is already not really helping anything other than getting asset inflation in areas where you probably don’t want them. At some point, the banks are becoming bargains. I am not sure we are there yet. Perhaps WFC at or below tangible book value is that point. Smaller banks will hurt a lot and will be forced to merge. lots of jobs will be lost as a consequence of that and most likely, salaries in this sector will be permanently lower too over time, making it much less attractive for employees (the same happened in Europe by the way). Investment banks ironically and credit card companies probably do better and may even benefit from lower interest rates. In my opinion, GS right now is more interested than WFC and trades already at a discount to tangible book.

I hope not. I kind of like these guys, but I sure didn’t want to have my money with them right now.

GOOGL, MOGA, BWEL, TXT, PINS, FOX I have sold out of WMB a while ago, took my tax loss. Will need to obey the wash sale rule a few more weeks before getting back in.

Some leftover Citizen cider and some Finger Lake Riesling wine. Got to finish up some old projects before I start a new one.

The coronavirus situation isn’t going to help the stock - down 50% Between PRKA, NC and NKR.OL, it’s not going to be a great year. I still don’t get what they even saw in PRKA and how they deal with the fact that they acquire a huge (for them) position in a total illiquid stock.

Buying bank stocks during the decline:

Times are so dire that even my teenage son started to wash his hands before dinner ?

I don’t think the dividends will be cut any time soon. The buybacks however are a different bucket and were bound to slow down anyways , because banks have reduced their capital buffer offer the last few years by distributing more than 100% of their earnings in many case to shareholders (WFC, BAC are examples of this). Buybacks are regarded much more discretionary and will cease silently and my cynical guess is that if bank stocks become really cheap (below tangible book) they will trickle to nothing because there is considerable uncertainty or because the management decided that they don’t work. :o

This sounds a bit "get off my lawn". I hate air travel so everyone must hate it :) Sure the details of how planes get from A to B have not changed since 2001, and yes the security, lines, coach seats smaller, discount airlines etc... are worse. However at least in the US IMO, air travel is much more a part of people's lives now than it was in 2001. I think you will see a quick bounce back in because not being able to fly is a big hit to quality of life vs 2001. The frequency with which my friends, family and acquaintances travel is much higher now than it was in 2001. This is seen also in the culture and identity around airline status levels, points, lounges etc... I think the role air travel plays in many people's life has changed considerably over the past 20 years. On a side note regarding the flying experience. I use CLEAR in the US and typically get from car to the gate in 10-15 minutes at SEA. CLEAR is not at every US airport but for me its worth every penny. I didn’t feel like much has changed since 2001 personally, except the experience to air travel has gotten considerably worse. I have used air travel since the mid 1980’s (first flight was to Berlin) and 2001 was definitely a watershed point in terms of making it considerably worse. I do agree thar demand will snap back, but will the Goldilocks economy for airlines also snap back? The 737max grounding was the best thing that happened to airlines (at least for those that are not dependent on this particular model ), but we are seeing a demand shock, followed possibly by a recession now. Key is pricing power, which US airlines have been having abundantly - will it hold? Just in terms of what has changed during the last 20 years - well that’s air travel in Europe. The discount airlines like Ryanair have changed the game, by offering dirt cheap flights from city to city. If you time it right, you can go from Frankfurt to Madrid round trip for $100 and spent a weekend there. Way faster and cheaper than taking a train now. The experience sucks too, but the pricing doesn’t. Will this come to the US like Aldi and Lidl came to Europe? I have some doubts that pricing power for US airlines will hold, but we will see.

This stock follows the storied tradition to selling of substantially when there is any sort of stress (like late 2015 or late 2018). This looks like a repeat and might see the 30’s. It’s a levered bet on aircraft demand and airlines basically. Should be fine, except for the most dire scenarios I think.

We are concerned because the a) mortality rate is 3.4% vs <0.1% for the flu, b) COVID-19 is more infectious than the flue, c) there is no vaccine. So you have the potential to infect more than 35M people that got infected with the flu with a 34x higher mortality rate. I think you can run the numbers yourself Or you can just have a hunch and stick your head into the sand.

JPM is probably a sell now too. I think Jamie is gone unless he want to die at his desk. With such a larger than life figure running the outfit, the bench behind it is often not as deep than assumed. And those that are not picked as a successor, will go elsewhere.

Corona isn't flying airplanes into buildings and we have a younger generation with an insatiable appetite for travel. If all we see is Corona, idk how this would take 4 years to recover. Throw in a recession and the story probably changes. The dynamics of travel and business have changed dramatically since 9/11 so I don't think this (9/11 comparison) is an overly useful lens in terms of airline travel. We will see how Insatiable the demand is, air travel is a crowded affair from airports, airplanes, security etc. international travel is hard hit already and national travel, probably not far behind. I don’t think the change in air travel are so dramatic since 2001. If anything it has become way less convenient because of all this safety overhead and increasingly crowded planes. National travel used to be like taking public transportation and now it’s a big mess when perusing larger airports. I hate air travel now. EBOLA and SARS were big issues too, but they were contained, the current one for sure has jumped the shark and is uncontained. On the other hand being able to securities used aircraft for 54% LTV and pay ~2% interest rates is a pretty good dream, why would Delta even lease aircraft if they can lower their cost of capital that way. sure 54% LTV is less than 100%, but they use a mix of owned vs leased aircraft anyways and have unsecured debt - they can just swap to secured debt and pay almost nothing after inflation. Simply amazing.

The Coronavirus will go away, but the low interest rates are going here to stay, they are like crack, once you are on the drug, it’s hard to wean off.

Same thought here. I sold most of mine above $36 and now started to buy back into my position again. It seems like a good bet when people stay at home more and watch the epidemic unfold. We also have an election year which is good for poltical advertisement. I also think they have the best durability of all the networks, imo.

People stating that we were fine in 1918 are missing that the world and Financial markets are very different now ( much more connected stronger feedback loops ) and back then WW1 was actually a much larger problem ( and the reason why information about the flu was censored ). I am sure we as a species survive this, we survived 9/11 which imo is the closest comparable, but it wasn’t pretty. I also think that we will see more political changes based on how the people in power handle this ,or how it is perceived.

For those hunting for Japanese bargains - Kenkyoinvesting apparently has lowered his subscription fees and also added a free Tier. I signed up for the latter, a great resource. If I do more with Japanese stocks, I would probably pay for the kenkyo plus. https://www.kenkyoinvesting.com/services/

Coronavirus predicted in “Asterix and Obelix” in 1981:

I have a much better idea - force some skin in the game, as Taleb would say. Force some of the head honchos to have the same exposure with the same protection that the people working in the trenches do. I‘d like the head of the CDC or Mr Pence stand in front of a bunch of wheezing untested patients without mask. No worries, the strong will survive! The Romans would have the engineer sleep under the newly build bridge and if it didn’t hold, I guess the next bridge would be build by another engineer. Well, some of the Roman bridges are still standing now, so that system seems to be working quite well.

Delta has a presentation out today fwiw - https://www.sec.gov/Archives/edgar/data/27904/000119312520061029/d887033dfwp.htm Interesting, secured credit AA- rated collateralized by a couple year old aircrafts in front of a major disruption in air travel potentially. Who the hell would buy this and what is the interest rate?

II mentioned this before - my wife is working as an RN (contractor) on specialty care in several hospitals. I have talked to her and so far zip safety precautions, no COVID-19 testing (apparently no test kits) and not even N95 masks for personal. Can‘t believe it. Now a neighboring hospital has a confirmed case and they have a suspected case, but no way of knowing yet. They will start safety training this week and get N95 mask this week supposedly, probably test kids too. The patients my wife deals with have high mortality to begin with, so if they get infected, they are most likely gone. I don’t know who is to blame here, the hospital admin, the state bureaucracy , CDC or federal government institutions, my guess it’s all the above. There will be lots of blaming and law suits when this is over.

Every country with negative rates has seen a contraction in real GDP over a multi-year period. I think Denmark is the only country that is near surpassing it's former peak. The EU is at 0% and obviously there are many countries with varying degrees of economic problems. Prior to the GFC, many of the EU banks had 10%+ ROE and ~20% ROTCE. I'm not sure declining returns for Euro banks can be primarily attributed to competition. Even before the financial crisis, the ROA was crap. NIM was generally below 2% already. They only reason they made decent ROE because they used lots of leverage. I do agree that the EU markets are different, but Ireland, the UK and some Nordic countries have structurally less competition than the US. So part of the difference is interest rates, the other part is competition. I think I am most bullish on British banks. They keep their own currency so they may avoid some Euro foibles. For sure the UK banks are cheap. I think the that the US and the EU interest rates converge means that Bank NIM are going to converge too, this is a directional assessment and dozens mean we get to the same end result. Stock markets are mostly about getting direction right. I would stay away from US Bank stocks now, unless they start to trade at considerable discounts to tangible book.

The way DAL is trading ( static share price around $46) while other airline stocks are falling, Warren‘s bid put a floor under its price for the tone being. I bet he buys a ton of DAL as I type this.