Economic implications of a SARS/Coronavirus outbreak

[over9k]

CRITICAL INFORMATION FOR ALL INVESTMENT DECISIONS:

 

[Dona Ferentes]

 

[over9k]

Yeah gdp growth is unfortunately of little concern.

National debt, now there's something to worry about.

 

[over9k]

Total nothing day today guys. Oil & energy soared on results of the opec meeting - nothing to do with the virus. Markets were almost flat otherwise.

I nuked my ERY position yesterday and sold it almost perfectly breakeven so I've gotten away with it by the skin of my teeth.

The next bet will be on energy but timing that's going to be a pain. Markets are just flat as virus data counteracts stimulus probability and emergency vaccine rollout news.

I wouldn't be surprised if markets are quite flat and search for direction for a while now actually. Only once the moderna vaccine starts getting rolled out do I suspect we'll see any kind of significant uptick.

Everything that was massacred yesterday (zoom, nio, moderna etc) rebounded, so that's a good sign longer term. It's now just a waiting game to see when the rebound (and rotation) actually starts. At that point, all you need to do is grab a couple of index etf's & ride the market.

 

[over9k]

Alright so choppy day, as you can see the r2k+nasdaq combo was a winner again, stimulus news plus opec news was good, virus data was bad, but the key is to ask which virus data and why it matters.

I made this post a few days ago:

But the fact is that the real key metric here is this one:

Fact is that the real number which will bring the country to its knees is hospitalisations. Not only that, but medical staff numbers off work sick is increasing at the same time as hospitalisations are, so the healthcare system is very seriously looking like buckling under the strain.

At least the authorities, incompetent as they are, are starting to recognise this though.

View attachment 115676

And today's data looks like this:





Yet the market was, well, choppy, because a few both good and bad announcements (opec, stimulus, lockdowns) all happened at once. Stimulus and opec good, cases and deaths made no difference, hospitalisations also didn't matter until the powers that be told us that they do and why:




I mentioned how it's the hospitalisations which are going to determine the lockdowns, deaths and cases be damned, and wouldn't you know it, here we are.

Ergo, despite the stimulus & opec news, the number we really need to watch is this:



And as you can see, it hasn't even so much as levelled out yet.

With the very first vaccines for medical staff & nursing homes scheduled for the 15th, it's pretty fair to say we're going to get plenty more cases and therefore some pretty decent shutdowns in order to prevent the healthcare system from collapsing, and those lockdowns are what drives the market because case number increases, natural human isolation behaviour like this etc etc:



is well & truly already priced in at this point.

 

[over9k]

As an aside, here's how much oil is still floating around the world's oceans in those tankers I showed a few posts back:



And I found a decent shot of one of the tankers being pushed around by a tugboat to put their size in perspective. You obviously couldn't really tell how big they were from the air in the pictures I posted previously, but once you get closer and put a tug next to one you can see that they're freaking huge:




If you want to get more granular with this and find out what ships are sitting where and what capacity they are and what's being paid for them and so on and so forth then the service you want is vortexa: https://www.vortexa.com/

But as you can imagine, info like that isn't free. If you have a bloomberg or cnbc or any other decent intel subscription(s) it'll obviously be included though.

 

[over9k]

Theaters news:

Warner brothers are now putting their films on HBO max (their streaming service) the same day they're releasing them in cinemas.

Warner Bros. Says All 2021 Films Will Be Streamed Right Away (Published 2020)

Seventeen movies will each arrive in theaters and on HBO Max simultaneously, the biggest challenge yet to Hollywood’s traditional way of doing business.

www.nytimes.com

Streaming services are now allowing the cinemas to own the distribution of the films as well as the production. Classic vertical integration. Cinema owners/companies are, as you can imagine, seething, but there's nothing they can do about it.

 

[over9k]

Alright so it's pretty fair to say that markets are well & truly pricing the recovery in now.

Despite the hospital data cracking the 100k mark and still climbing:



And jobs numbers released today being way worse than expected:




Virus numbers still playing merry hell with everything:





Markets couldn't have cared less. Stimulus looks like it's finally going to actually happen:



See the irony is that with the vaccines now on the way (so to speak) worse virus numbers actually strengthen the case for stimulus (which is better described as support and the politicians etc are now calling it "targeted assistance" but that's a different discussion) as the whole "we can't keep doing this forever" argument doesn't hold, all we need to do now is last until XYZ point (pfizer vaccine looking like really ramping up Q3 next year but moderna will be more like end of Q1/maybe april) so the package is just a stop-gap measure, which is a much easier thing to actually get done/supported/passed.


As a result, markets behaved as if another vaccine was announced:



The fangs barely ended green, stay-at-home ended in the red, and microcaps took off like a gunshot, moving nearly 3x the next index. Whether you were holding any of the other indexes didn't matter today so long as you held a microcap etf. In short, barbell spread is still the way to go but the critical part is the microcap end - the other end is far choppier, but microcaps have been a consistent best play since the first vaccine.

So, too, have semiconductors, the sector you have absolutely wanted to be in the whole time both pre & post vaccine, and, well, they hit nosebleed territory today:



Making near a three-bagger since june:



With the pfizer vaccine being deployed on the 15th and then the much easier to deploy moderna one coming shortly after I can't see markets dropping from here on out, probably just a flatline at worst, so unless you have a hot stock pick it's just a matter of dumping your money in some index funds and sector etf's and riding the wave.

I converted my small bet against energy into a small bet on energy yesterday and put my money where my mouth is and bought the big oil etf rather than the energy etf and check out the result:



Remember when my other post showed how big oil moved twice as much as regular energy on vaccine news? Same thing today. So it looks like (based on this admittedly small amount of data) big oil's going to move about twice as much as regular energy going forward (assuming that the market continues pricing a recovery in).

The same thing happened with big tech vs regular tech throughout the year too so it looks like the previous play of buying up the biggest players in a sector when betting on it is still the way to go.

So that's good! That means we have half of our next play already figured out.



But to be honest, that's actually the easy part - the hard part now becomes deciding which sector(s) to buy up going forward. We already knew that energy & aviation were hit the hardest by the pandemic so they (unless something has fundamentally changed the market permanently like working from home has with commercial real estate or streaming services have with cinemas or e-tail vs bricks & mortar or anything else like that) are likely to rebound the most going forward.

It'd be great to get some other members' input here as I've got a few in mind to write off long term like bricks & mortar retail as there was quite a bit that was already in structural decline before the virus hit and they've basically been KO'd permanently by the virus/will only return to a shadow of their former selves. Same goes with cinemas, office space, and business travel. Conversely, e-tail will remain strong. Energy obviously has a long way to go but I can't see it returning to previous levels as the remote work revolution plus electric car push has changed a lot:


And per-capita energy consumption actually declines with age too.



The big one I can think of off the top of my head is healthcare. People have avoided hospitals, doctors' surgeries etc like the plague (quite literally) through this pandemic and so with the huge demographic bulge that is the baby boomers only getting older this whole time I can see both a ridiculous pent up demand for healthcare as well as a structural increase in demand for healthcare longer term from demographic demand for healthcare on account of the very simple fact that 60-80 years after a baby boom you're necessarily going to have a healthcare boom (followed by a death boom).

The same goes for leisure travel/tourism as people want to just get out of the house and the boomers also want to go & enjoy their retirement, which means spend their retirement savings.

Same goes for restaurants/hospitality.


Anyone else think of anything else off the top of their head?

 

[over9k]

How about the banks?

They're the same story. Big banks have recovered way more despite not being hit as hard as the smaller regional ones. Ergo, it's not simply a question of one class being more volatile than the other like with some other sectors - you're better off with your cash in big banks rather than smaller ones either way:

 

[wayneL]

Effects on the street level, small businesses getting the Roger, where the sun don't shine, without even the dignity of a little bit of lube:

Restaurant Owner Exposes LA Mayor in Video All of America Needs to See NOW

This is what bureaucrats are doing to America's business owners. It's pathetic.

rumble.com

 

[over9k]

Oh yeah wayne. The big players are cleaning house left, right, and centre. This year has had the largest number of buyouts, takeovers, and mergers in history.

Every single business that goes to the wall is a business that can be absorbed by whatever players remain. Corporate lawyers etc have never been so busy.

Worst case the existing players pick up the market share directly rather than absorb the company/business that's gone to the wall, so either way, the bigger you are, the more you win.

Unless you're one of those small & unique/new disruptive growth companies that's increased/benefited tenfold from the pandemic (like zoom), you are f***ed.



But don't worry, it's going to get worse:

Bloomberg - Are you a robot?

www.bloomberg.com

Covid-19 cases in Los Angeles will reach 500,000 by the end of the year based on the current pace of infection, and deaths could surpass 11,000, Mayor Eric Garcetti said... “We’re perilously close to running out of ICU beds,” Garcetti said in a briefing, calling the outbreak “the greatest threat to lives in Los Angeles... At this rate of infection, Los Angeles will be out of hospital beds in two to four weeks", he said.

Meanwhile, the stock market continues to scream, with futures already at this point and it's not even sunday:



I keep saying that you can't beat this, fighting it is an exercise in futility. As frog said previously, your only hope is to get on board with it before you get left behind.

 

[wayneL]

Oh yeah wayne. The big players are cleaning house left, right, and centre. This year has had the largest number of buyouts, takeovers, and mergers in history.

Every single business that goes to the wall is a business that can be absorbed by whatever players remain. Corporate lawyers etc have never been so busy.

Worst case the existing players pick up the market share directly rather than absorb the company/business that's gone to the wall, so either way, the bigger you are, the more you win.

Unless you're one of those small & unique/new disruptive growth companies that's increased/benefited tenfold from the pandemic (like zoom), you are f***ed.

View attachment 115896View attachment 115897

But don't worry, it's going to get worse:

View attachment 115895View attachment 115898

View attachment 115899

Bloomberg - Are you a robot?

www.bloomberg.com

Covid-19 cases in Los Angeles will reach 500,000 by the end of the year based on the current pace of infection, and deaths could surpass 11,000, Mayor Eric Garcetti said... “We’re perilously close to running out of ICU beds,” Garcetti said in a briefing, calling the outbreak “the greatest threat to lives in Los Angeles... At this rate of infection, Los Angeles will be out of hospital beds in two to four weeks", he said.

Meanwhile, the stock market continues to scream, with futures already at this point and it's not even sunday:

View attachment 115900

I keep saying that you can't beat this, fighting it is an exercise in futility. As frog said previously, your only hope is to get on board with it before you get left behind.

Agree.

It's been my thesis for probably 30 years or more in one form or another. 99% of those years I have been called a nutter, conspiracy theorist and whatnot.

And here we are, it is actually happening, and actually enabled and facilitated by we narcoleptic plebeians.

Yes. We are farked.

 

[Country Lad]

Big banks have recovered way more despite not being hit as hard as the smaller regional ones. Ergo, it's not simply a question of one class being more volatile than the other like with some other sectors - you're better off with your cash in big banks rather than smaller ones either way:

@over9k although percentage wise all banks have recovered about the same amount, I would agree big banks are likely a better option than the smaller ones but we still need to be careful of which big banks we go with. NAB and WBC are not real standouts over the years.

 

[sptrawler]

@over9k although percentage wise all banks have recovered about the same amount, I would agree big banks are likely a better option than the smaller ones but we still need to be careful of which big banks we go with. NAB and WBC are not real standouts over the years.


View attachment 115909

Yes the problem with the banks is, if t hey are making money people are lpsing money.
So it is seen as as the banks robbing their clients, which is the general public.
On the other hand, if they dont make money, they cant lend money.
It is a real conundrum.

 

[qldfrog]

Yes the problem with the banks is, if t hey are making money people are lpsing money.
So it is seen as as the banks robbing their clients, which is the general public.
On the other hand, if they dont make money, they cant lend money.
It is a real conundrum.

Banks here in Oz are a bit different as the banks here are most and nearly only real estate, so different from the US and europe

 

[Country Lad]

................ but we still need to be careful of which big banks we go with. NAB and WBC are not real standouts over the years.

I was curious to see how the banks went since Covid started to affect the market. The main change is BOQ from worst to best and WBC from mid performance to worst.

 

[No Trust]

Given the health catastrophe about to envelop the United States, expect a financial meltdown in the first quarter of 2021...
The US has never had a modern day Health Crisis of this magnitude...


The Coming Financial Crisis of 2021 | Peak Prosperity

Oh yeah wayne. The big players are cleaning house left, right, and centre. This year has had the largest number of buyouts, takeovers, and mergers in history.

Every single business that goes to the wall is a business that can be absorbed by whatever players remain. Corporate lawyers etc have never been so busy.

Worst case the existing players pick up the market share directly rather than absorb the company/business that's gone to the wall, so either way, the bigger you are, the more you win.

Unless you're one of those small & unique/new disruptive growth companies that's increased/benefited tenfold from the pandemic (like zoom), you are f***ed.

View attachment 115896View attachment 115897

But don't worry, it's going to get worse:

View attachment 115895View attachment 115898

View attachment 115899

Bloomberg - Are you a robot?

www.bloomberg.com

Covid-19 cases in Los Angeles will reach 500,000 by the end of the year based on the current pace of infection, and deaths could surpass 11,000, Mayor Eric Garcetti said... “We’re perilously close to running out of ICU beds,” Garcetti said in a briefing, calling the outbreak “the greatest threat to lives in Los Angeles... At this rate of infection, Los Angeles will be out of hospital beds in two to four weeks", he said.

Meanwhile, the stock market continues to scream, with futures already at this point and it's not even sunday:

















View attachment 115900

I keep saying that you can't beat this, fighting it is an exercise in futility. As frog said previously, your only hope is to get on board with it before you get left behind.

 

[over9k]

Hmm dunno trust. The first vaccines are due on the 15th. 50 million by year end apparently. The moderna one is the one they're really going to produce by the zillion.

 

[over9k]

Yelp: Local Economic Impact Report

Restaurants remain hardest hit, permanent and temporary closures increase

www.yelpeconomicaverage.com

 

[over9k]

And it just keeps getting worse.



I've held on to zoom, and am about 20% cash at this point. Almost everything else is in the industry/sector etf's I've mentioned already.