ERICOPOLY

Does anyone follow the major Australian equities? 58 cent AUD/USD exchange rate now and it was 66 cents last week. AUD was stronger than USD in 2011. A little tailwind from current exchange couldn't hurt when things settle down again.

Roche's tests can give a result 3.5 hrs after the sample gets to the lab. These tests have been FDA approved. I'm very optimistic that we'll follow the S. Korea model. If you were writing a fictional novel, could you have the US Govt buy Roche and order manufacturers to put these things together? What timeline would it take (realistically)? And have the military set up labs? The ONLY reason why we all have to stay home right now is because we don't know who is positive.

And now WWII style manufacturing: https://www.cnn.com/2020/03/18/politics/trump-defense-production-act-coronavirus/index.html

Once we can test a sufficiently large number of people reasonably often, we can all go about our business again. This is a logistical and manufacturing problem, because 6 hr tests are available.

Certainly it is getting right down to business. There is something to be said about ordering all consumers to literally stay home at the same time.

GM shareholders are having a worse year.

I noticed this bank was down yesterday while JPM, WFC, BAC all had a big day. It's also dropping more than the rest today. I wonder if the market is beginning to single this one out from the herd.

No. It irritated me to spend time thinking about it and I closed it (unfortunately).

Ouch! Sheriff: Tesla not an ‘essential business,’ factory must obey coronavirus shutdown order https://electrek.co/2020/03/17/sheriff-tesla-not-an-essential-business-factory-must-obey-coronavirus-shutdown-order/

I haven't heard of that. Any sources? There are no sources, Eric. It's a back-handed accusation. Another post begins with "I know some people enjoy learning about finance through popular films"... It's just very condescending.

I have found bull spreads very annoying in the past when I've used them because when the stock climbs the volatility disappears on the call you bought and it rises rather painfully on the one you sold. As the stock goes from $27 to $37, you might lose $3 of volatility on the $27 and find that the $37 concurrently gains $3 in volatility. So for a stock rise of $10 you only immediately benefit by $4 (and you get more after a long and boring decay).

Why not wait to write the covered call until AFTER it has run to 37 if a run to 37 is what you are expecting? This way you take all of the invested money off the table and have it on hand to repeat the trick if WFC drops back to 27. Then if it goes back to 37 you have twice the gain. And if things will be volatile for a while, you might get yet a third repeat.

I wonder what the outcome would be like if the "shelter in place" orders only applied to households containing a person who is 65+ yrs of age, or has chronic health conditions. And focus the bail-out dollars on sustaining them and delivering food/care to them until a vaccine arrives. The rest of the population, after three months, would have developed "herd immunity" and normal life could largely resume.

I haven't heard of that. Any sources?

It isn't a theory. It is compounding. It would be fast.

This is what you happens when you try to combat a viral outbreak by listening to "nudge boy" behavioral economists and pseudoscientists. Rapidly achieving "herd immunity" sounds good on paper, but then you have to actually think about what will happen on the way to getting there... Some people still clearly have not learned the basic "flatten the curve" concept. Thank you for the inputs. Here's another perspective related to the UK situation and the "report": https://www.bloomberg.com/news/articles/2020-03-17/prolonged-social-distancing-would-curb-virus-but-at-a-high-cost FWIW, despite some reserves, I heavily support (indirectly and directly) the pro-active efforts deployed in my provincial jurisdiction which, for various reasons unrelated to the virus or the policies, has been relatively lucky, in terms of spread and impact, at least so far. I guess it is still relevant to ask questions, to adapt and to go for cost effective measures (definitions of "cost" and "effective" remaining open for debate). I just read that government officials announced that economic measures to be taken will prevent unemployment from rising to 20%. They are basically looking to flatten the curve. So a flurry of bailouts are coming and the emphasis has to be on the short term and I'm OK with that, at this point, although Bagehot, long ago, suggested that bailouts should balance the short term against the long term and moral hazard. As an avid follower of the GFC, I remember government officials suggesting then that another great depression could be avoided (although impossible to verify) with various monetary and fiscal bailouts. I would suggest that they tried to flatten the curve in a way but people ran out of will and perseverance and we've had the weakest recovery on record, a glaring absence of deleveraging and, in fact, developed economies have become very weak and compromised economic hosts and now a virus hits. It appears difficult to explain, at least from my humble perspective, why we should be surprised by the eventual course of economic events. I just worry about unintended consequences and wonder if, at least, we can base our decisions on solid data, analysis and rational reasoning that truly balances the short term with the long term? Can we think of (and implement) necessary reforms or do we just need that they become imposed on us the way natural selection can and simply hunker down? The downturn itself is essentially being ordered by the government. This thing would blow through quickly if there were no "social distancing". So given that they are effectively contributing to the severity of the downturn, we already have interference with free market principles before the first check is written. Under that environment, bailouts are fair game and they do not introduce moral hazard. It's very different situation from a financial crisis precipitated by extreme excess and rewarded with a bailout.

Thank you. It offers an answer to the challenge posed earlier with regards to possible Diamond Princess deaths that went uncounted. It basically suggests that the mortality rate of COVID-19 amongst the general population would still be lower than 1% because the population on that cruise ship was much older on average.

“Last week, SPY recorded a $9Bn increase in shares outstanding, as new ETF shares were created for the purpose of lending it out to investors looking to short,” wrote JPMorgan strategists including Marko Kolanovic. “Thus, what looks like an inflow to the fund actually represents new shorts, rather than buying by fundamental investors.” https://finance.yahoo.com/news/jpmorgan-sees-short-sellers-behind-134949596.html Huh? How could this not represent buying? How did the shorts manage to sell these new shares without finding buyers?

There is some funny business going on with WFC this morning. +15% when the S&P500 and the other big banks are at around +4%.

The word you are looking for is probably Martingale. https://en.m.wikipedia.org/wiki/Martingale_(betting_system) It differs a bit... I think... Let me simplify the example and just say you buy the same number of calls each time the stock declines by $10. So you have put a total of $27.50 at risk by the time you've gone through 5 iterations of call purchases. That's 'all' you've lost if the stock goes completely kaput to $0, for example. You still have $22.50 in cash per share that you never allocated. Maximum loss is 55%, despite the common losing 100%. The S&P500 will also likely be down 55% in that kind of outcome and you can put your remaining 45% in the S&P500 like it never happened and get the capital back upon eventual market recovery.

“I’d rate it a 10,” Trump said at a White House press briefing Monday when asked by a reporter how he would rate his response to the pandemic. https://thehill.com/homenews/administration/487883-trump-gives-himself-10-out-of-10-on-coronavirus-response

50%? Not if we're all staying home like right now. We may not even reach 1% if we're all isolated at home, and thereby flattening the curve. The price of such success is that, at that point, who's going to have the confidence to go outside again without having a vaccine in hand? And if we've got to wait 12-18 months for a vaccine? Therefore, a bounce-back in the 2nd half of the year appears unlikely to occur.

He did hold one today. When he got to the part about staying this way until August, market took a dive. This late day volatility happens when Trump opens his mouth.

That may be the point But as kdk77 says, asset cap.. The thought of ramping up lending right now is bewildering to me.

Obama should do that, except he has too much class/maturity.