Dow Futures down 4%

[Spekulatius]

The last 30 or so minutes of each day have been bonkers

 

Yeah, I opened a small limit order for GOOGL before the press conference which filled almost at yesterday closing prices and then it ran up 7% during market hours. Mr Efficient market at work obviously.

 

I think I want to own stocks just from 15:30-16:00 in the future. Why bother holding it the rest of time with all the risk that comes with it?

[Jurgis]

I think I want to own stocks just from 15:30-16:00 in the future. Why bother holding it the rest of time with all the risk that comes with it?

 

On Fridays the 13th only too.

 

Why bother with other days.

[LC]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

[stahleyp]

There are several stocks that aren't showing a bid/ask.  :o

 

I'm cherry picking but IJS hit 2013 levels earlier today.

[hillfronter83]

so during the weekend, I looked at some of historical flu pandemics, especially the ones from 1957-58 and 1968-69. Both infected between 0.25 to 1 billion people and caused millions of death. Then I went back and checked Buffett's partnership letters and found exact 0 mentioning of those events. I guess this time is different. Crazy time.

[rkbabang]

so during the weekend, I looked at some of historical flu pandemics, especially the ones from 1957-58 and 1968-69. Both infected between 0.25 to 1 billion people and caused millions of death. Then I went back and checked Buffett's partnership letters and found exact 0 mentioning of those events. I guess this time is different. Crazy time.

 

It is very, very different now.  We have social media now where people endlessly spread news articles with each other.  We also have a mainstream press who absolutely loathes the person occupying the Oval Office and is willing to cause mass panic and take down the world's economy in order to remove him and replace him with a senile kiddy grabber.  Imagine if this virus was actually more deadly than influenza?  We'd be in a new dark age within a month.

 

 

[opihiman2]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

 

Everyone saw this coming?  Like who on this MB bought puts or shorted the market on Friday???  You guys have all been buying the dip when you should have been selling into any strength. 

[rkbabang]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

 

Everyone saw this coming?  Like who on this MB bought puts or shorted the market on Friday???  You guys have all been buying the dip when you should have been selling into any strength. 

 

Bingo.  I fully admit my lack of psychic abilities. It is so easy to see everything so clearly in retrospect.

[chrispy]

What will happen between 330-4est today? Exacerbated sell off?

[stahleyp]

What will happen between 330-4est today? Exacerbated sell off?

 

 

Market will end in the green by 57 points. Kidding, of course. :P

[TwoCitiesCapital]

I had, and still have, puts. But in retrospect I let too many of them go to early.

 

Also failed to see that mortgage REITS would get slaughtered in all of this despite having portfolios of govt guaranteed bonds that are doing just fine so that 10% of my portfolio hasn't been as defensive as I would've liked.

 

Ultimately, the best and smartest move for me remains having moved to 50/50 mid-2019 and not any tactical trades I made in 2020.

 

Even those of us who prepared for a popping of the equity bubble were ill-prepared for the economic damage of the pandemic.

[alwaysdrawing]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

 

Everyone saw this coming?  Like who on this MB bought puts or shorted the market on Friday???  You guys have all been buying the dip when you should have been selling into any strength.

 

I have been short (via puts), and added on Friday, and throughout the week last week, and continue to do so.

[opihiman2]

Nice, congrats to all the shorts! 

[ERICOPOLY]

I think most definitely a recession has already begun and the market knows it.

[BG2008]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

 

I worked for Citigroup's mid market real estate investment bank in 2008 and saw Citi go from $50 to under $1 during my time there...I'm now one of the old guys

[chrispy]

I am young and nieve - what is a recession level PE for a company life MSFT which has a 1.4% yield and the 10yr is at 0.7%? Of course we will get a decrease in earnings for the next few quarters (impossible to predict further out)

[Spekulatius]

I am young and nieve - what is a recession level PE for a company life MSFT which has a 1.4% yield and the 10yr is at 0.7%? Of course we will get a decrease in earnings for the next few quarters (impossible to predict further out)

 

@chrispy I would say 15x earnings is what you paid in similar circumstances in the past. Perhaps adjust for cash.

 

For an “extinction level event”, I don’t think the market is doing too badly actually. It’s just back to where it was before Trump goosed it up on Friday 15:30PM, give or take.

[LC]

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

 

Everyone saw this coming?  Like who on this MB bought puts or shorted the market on Friday???  You guys have all been buying the dip when you should have been selling into any strength.

I meant based on yesterday's policy announcement  ;)

[james22]

Even those of us who prepared for a popping of the equity bubble were ill-prepared for the economic damage of the pandemic.

 

If Hussman though the market might lose two-thirds before reaching fair valuation (without overshooting), I'll be curious what he thinks it might lose with the pandemic.

 

After buying today, I've now burned through half my dry powder. Probably prematurely, but the popping has been a long, long time coming. I'm afraid it's frayed my discipline (I fear Trump/Fed intervention too).

[jgyetzer]

Even those of us who prepared for a popping of the equity bubble were ill-prepared for the economic damage of the pandemic.

 

If Hussman though the market might lose two-thirds before reaching fair valuation (without overshooting), I'll be curious what he thinks it might lose with the pandemic.

 

After buying today, I've now burned through half my dry powder. Probably prematurely, but the popping has been a long, long time coming. I'm afraid it's frayed my discipline (I fear Trump/Fed intervention too).

 

When you (and others willing to chime in) make comments about being premature in buying, what timeframe do you have in mind?  It seems like there’s no way to know the bottom.  Personally, I’m just continuing to buy most of the same stuff I had been before the virus because I think in 5 years those businesses will be doing well.  Am I being naive and underestimating this virus and its impact on the economy?

[TwoCitiesCapital]

Even those of us who prepared for a popping of the equity bubble were ill-prepared for the economic damage of the pandemic.

 

If Hussman though the market might lose two-thirds before reaching fair valuation (without overshooting), I'll be curious what he thinks it might lose with the pandemic.

 

After buying today, I've now burned through half my dry powder. Probably prematurely, but the popping has been a long, long time coming. I'm afraid it's frayed my discipline (I fear Trump/Fed intervention too).

 

When you (and others willing to chime in) make comments about being premature in buying, what timeframe do you have in mind?  It seems like there’s no way to know the bottom.  Personally, I’m just continuing to buy most of the same stuff I had been before the virus because I think in 5 years those businesses will be doing well.  Am I being naive and underestimating this virus and its impact on the economy?

 

I think he means because he expects the markets to continue dropping.

 

And while I have generally been optimistic about the impacts on the economy long-term, I did have a conversation today with a local banker friend of mine who thinks SBA loans are going to get soaked and he doesn't see any banks willing to lend in this environment.

 

A credit crunch on top of the dramatic drop in economic environment on top of the dramatic drop in oil seems like a confluence of a lot of events that are very impactful in and of themselves. This may be way worse than anything I anticipated if policy makers don't prevent a total lock up of the economic gears.

[Viking]

The virus hasn’t actually hit the US yet. Right now its a mental exercise for businesses and people. The medical and economic pain actually hasn’t happened yet. When the shit storm hits my guess is we will see lower stock prices.

 

Right now the meteor is about a week away... each day we can expect the news flow to worsten.

 

I am not optimistic. Everyone should watch the entire Trump news conferences from yesterday and today. Nothing like going straight to the source to learn what the situation really is. It is clear that the administration started taking the virus seriously about the middle of last week. They basically told the States today that they are on their own to solve this thing. Any support from the Federal government will be slow in coming because of the red tape involved and because they are only now getting their act together. But they will have some really great things in a week or two. (Now where have we heard that before?)

 

Trump also had what may well be quote of the decade: something like “no one in my administration was thinking about Coronavirus a month ago” as his reason why planning is only now getting off the ground. OMG

 

He was also asked to rate on a scale from 1 to 10 his administrations response to the virus to date. He said ‘10’ with absolutely no hesitation. (Now maybe Trump was thinking 1 was great and 10 was terrible?). You can’t make this stuff up.

[james22]

Even those of us who prepared for a popping of the equity bubble were ill-prepared for the economic damage of the pandemic.

 

If Hussman though the market might lose two-thirds before reaching fair valuation (without overshooting), I'll be curious what he thinks it might lose with the pandemic.

 

After buying today, I've now burned through half my dry powder. Probably prematurely, but the popping has been a long, long time coming. I'm afraid it's frayed my discipline (I fear Trump/Fed intervention too).

 

When you (and others willing to chime in) make comments about being premature in buying, what timeframe do you have in mind?  It seems like there’s no way to know the bottom.  Personally, I’m just continuing to buy most of the same stuff I had been before the virus because I think in 5 years those businesses will be doing well.  Am I being naive and underestimating this virus and its impact on the economy?

 

I think he means because he expects the markets to continue dropping.

 

And while I have generally been optimistic about the impacts on the economy long-term, I did have a conversation today with a local banker friend of mine who thinks SBA loans are going to get soaked and he doesn't see any banks willing to lend in this environment.

 

A credit crunch on top of the dramatic drop in economic environment on top of the dramatic drop in oil seems like a confluence of a lot of events that are very impactful in and of themselves. This may be way worse than anything I anticipated if policy makers don't prevent a total lock up of the economic gears.

 

Yeah, I'm just guessing as we see big numbers of cases over the next couple weeks/months the market will continue to fall. But I cannot know, so I'll continue to buy as it falls. I can't time the bottom, but I'll capture what discount from the highs I can.

 

The only thing worse than having expected a 50% crash and buying in before then would be having the market rescued by Trump/the Fed before I get a chance to buy and be forced to wait for another popping of the bubble..

[james22]

Goldman Sachs:

 

50% of Americans will contract the virus (150m people) as it's very communicable. This is on a par with the common cold (Rhinovirus) of which there are about 200 strains and which the majority of Americans will get 2-4 per year.

 

70% of Germany will contract it (58M people). This is the next most relevant industrial economy to be effected.

 

Peak-virus is expected over the next eight weeks, declining thereafter.

 

The virus appears to be concentrated in a band between 30-50 degrees north latitude, meaning that like the common cold and flu, it prefers cold weather. The coming summer in the northern hemisphere should help. This is to say that the virus is likely seasonal.

 

Of those impacted 80% will be early-stage, 15% mid-stage and 5% critical-stage. Early-stage symptoms are like the common cold and mid-stage symptoms are like the flu; these are stay at home for two weeks and rest. 5% will be critical and highly weighted towards the elderly.

 

Mortality rate on average of up to 2%, heavily weight towards the elderly and immunocompromised; meaning up to 3m people (150m*.02). In the US about 3m/yr die mostly due to old age and disease, those two being highly correlated (as a percent very few from accidents). There will be significant overlap, so this does not mean 3m new deaths from the virus, it means elderly people dying sooner due to respiratory issues. This may however stress the healthcare system.

 

There is a debate as to how to address the virus pre-vaccine. The US is tending towards quarantine. The UK is tending towards allowing it to spread so that the population can develop a natural immunity. Quarantine is likely to be ineffective and result in significant economic damage but will slow the rate of transmission giving the healthcare system more time to deal with the case load.

 

China’s economy has been largely impacted which has affected raw materials and the global supply chain. It may take up to six months for it to recover.

 

Global GDP growth rate will be the lowest in 30 years at around 2%.

 

S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall.

 

There will be economic damage from the virus itself, but the real damage is driven mostly by market psychology. Viruses have been with us forever. Stock markets should fully recover in the 2nd half of the year.

 

In the past week there has been a conflating of the impact of the virus with the developing oil price war between KSA and Russia. While reduced energy prices are generally good for industrial economies, the US is now a large energy exporter, so there has been a negative impact on the valuation of the domestic energy sector. This will continue for some time as the Russians are attempting to economically squeeze the American shale producers and the Saudi’s are caught in the middle and do not want to further cede market share to Russia or the US.

 

Technically the market generally has been looking for a reason to reset after the longest bull market in history.

 

There is NO systemic risk. No one is even talking about that. Governments are intervening in the markets to stabilize them, and the private banking sector is very well capitalized. It feels more like 9/11 than it does like 2008.

 

https://www.zerohedge.com/markets/half-america-will-get-sick-here-what-goldman-told-1500-clients-its-sunday-conference-call

 

Interesting.

[Spekulatius]

I listened to first 3 minutes of today’s news conference from the WH. I couldn’t stop laughing. He talks about incredible things happening with the virus spreading and we all come together for a big celebration. WTF?  Who wrote his speeches thr Monty Python troupe?  It’s basically Saturday night life....