Sorry for the hiatus, stuff got real. Having kids at home and trying to work has been tough. I did think the economy would tank, but I expected more from supply chain contagion, not just travel and restaurant limitation. So I underestimated the drop. I predicted a drop to 2350 originally based on supply chain disruption. We hit that, but I then revised to 2000 after I realized the expanse of the contagion, and we didn't hit that.
1. The Chart doesn't lie. I said when this started and continue to this date to do the same thing (which hurt this past week). I am short the market as long as we stay on the trend line for new cases. I started tracking data early on with case numbers outside of China (I don't trust numbers out of China). Then I set a trend line and recorded the equation. y = 0.0013x5 - 0.1121x4 + 3.5943x3 - 48.725x2 + 270.03x - 380.87. X equals days. So first day of first case was Day 1, X=1. Then I used the equation to forecast case number projections. Then I slid the line over 2 days because of the number of new cases, not the total number. (X=Day+2) and the equation has been really accurate. Today, it predicts we will have a total of 670,000 cases worldwide outside of China. Based on current growth, we should finish today around 695,000. But the growth shows on the chart around 60K, which is what we should be around today. Yesterday was 56K, but the days before were 65K+. So we are still on or above the trendline. I don't see this ending this week, so I think the market still goes lower. What really worries me is that transmission in warmer cities is bad too. New Orleans is in a world of trouble right now and people there still went to church this past sunday. Here in Dallas, we have been doing virtual church for 3 weeks now.
2. Gross versus Per Capita. This drives me insane. People say "Stats don't Lie" and I agree with that. Then there is the policy of using the stats to drive the narrative. There is no better example of that then the Liberal side this past week. So based on Gross Numbers, the US has the most positive cases of Covid in the world. Also true is the US has done more tests than any other country in the world. That statement is 100% accurate. Those who say, that's not tru per capita are changing the statement, not that my statement was inaccurate. Now if you want to do stats by per capita, that's fine, then don't say the US has the most cases in the world. We have many (CNN especially) saying US sucks, has most cases and doesn't do most tests* (*=per capita). This is a perfect example of changing the stats to drive your narrative, not report it. Just be effing consistent. You have STUPID effing people who don't make it past the headline. Another example is, "I think they should be appreciative" from Donald. The entire comment was Trump saying you should appreciative, I am not talking about me, but the task force, Pence, the army corp of engineers, etc. BUT, a reporter ran with "Donald demands appreciation before sending supplies from governors." It went all over twitter, then other reporters ran with their version just using the same line from originator. It is despicable. You want to rip on Trump, rip on him for caring about his ratings or acting like a child, or lying, etc., etc., You don't have to make sh!t up to find content to rip on Donald. People don't trust the media and it's stuff like the playing both sides of the stats (like CNN) or the misleading quote (NY Times). These are supposed to be two of the better sources for journalistic integrity and they are dogshi!t in a time when we need them to be their best.
3. How are we handling this new reality? So far, my work is fine, but I think there will be a tail where we are impacting. In my dealings with Japan (which are already notoriously slow), things are even WAY slower. Work with China has started to come back. Taiwan is an interesting story. Taiwan never seemed to be concerned about Corona until last week. Something changed there. I heard from colleague there that a lot of students who came home from USA tested positive, so Taiwan is simply blocking international incoming travel going forward. As for day to day, with a new baby, home schooling is a bit of a challenge, but the 8 year old is doing fine. Some teachers are adapting better than others. I see one of my high school classmates is handling it very well for her elementary math class. The 3yr old and 5yr old are having trouble adapting to being stuck in the house all day except for a couple times per day. Additionally, it has been raining a lot here in Dallas, so some days, we cannot even get outside. Last week was much better thank goodness, but here we are on Monday, raining again. I feel bad for those who lost there jobs and I expect them to get a lot of company in unemployment as we as society stop going to movies, restaurants, events, etc.
4. The Stimulus Bill. I hate this effing thing. There is so much BAD debt in the system right now. It needs to be flushed and those who gave out risky loans punished. Think about how good things would have been if interest rates had been so much higher. For example, what if you could have had savings accounts that had 4% interest (like before the FED). Those up in age would have just had their money in savings accounts and not in the market. We wouldn't have had speculative PE ratios and this economic shutdown wouldn't have hurt those with savings. That kind of situation would not just enable, but would promote a V Shape recovery and the bottom wouldn't have been very severe at all. Constantly lowering the interest rates was a big effing problem and it inflated asset prices significantly making new buyers take on more debt. But instead of interest (which is tax deductible), we made them pay a higher principle which was not tax deductible and the capital gains (the seller) wasn't taxed either. Of course it would have lowered our property taxes as well. But we don't operate that way, we want to punish savers. So we pass the $2.2 Tril stimulus bill. We try to protect those who bought back stock and didn't save (which they couldn't do because they got no interest on savings). What is worse and scares the sh!t out of me is that the Fed Reserve is buying Bonds, Corporate Bonds, now stock and ETFs. We are becomming nationalized economy before your eyes. Don't kid yourself, there will be a major cost for all of this. We will pay one way or another. We did a smaller version of this in 2008 and look what happened to income inequality as a result. It looks like we didn't learn our lesson. I liked Andrew Ross Sorkin's bridge loan idea. I don't like printing money and giving it away. I don't like debt. I don't like the US govt increasing spending exponentially. I don't like increasing taxes. I still can't stand the stupidity of so many who are screaming from the mountain tops about poor performing government in this time of crisis and yet they are the same people who want to increase the power and size of government significantly. Govt is giving money to private jet companies btw. Shocking that govt does things in a stupid, selfish way.
5. Prediction time. Without a cure (either a treatment or vaccine) in the next 2 months, I think we are in for a depression. I think that depression will happen in 2 parts. 1. Think large asset prices will plummet, used cars, houses, etc. 2. I think basic goods will skyrocket, notably FOOD. In the US, we live in a luxury of paying a very small amount of our monthly budget for food. I think that changes. No one is buying a car right now and they won't all jump to buy cars when this is over. Same thing on iPhones, TVs, etc. I still think the S&P goes lower than 2000, but I am concerned about the Federal Reserve buying stocks to keep it pumped up. So who does this hyperinflation hurt? Social Security recipients. Pension recipients. That's right, the young generation is going to finally stick it to the Boomers. And if you think they will sacrifice more to help out the boomers, you haven't been really watching this generation. I honestly don't know where you hide your money. If you save it, you may be punished via inflation.
6. 2020 POTUS Update. Donald is going to lose New York, Washington, and Massachusetts. He was going to lose those anyways. Right now, the Media's dishonestly is giving Donald a fighting chance. Just let him sound like an idiot, play his news conferences, etc. He will drown himself in stupidity. Cutting off his press conferences, using misleading quotes, double playing the stats, it's not going to end well. Polls are interesting and bad for Biden. Polls show Biden leading by 3 in Michigan. I think HRC was leading by 3 or 4 in Mich heading into the actual election in 2016. Biden needs a bigger cushion than that. Ofcourse things are changing by the day now, so who knows right now.
1. The Chart doesn't lie. I said when this started and continue to this date to do the same thing (which hurt this past week). I am short the market as long as we stay on the trend line for new cases. I started tracking data early on with case numbers outside of China (I don't trust numbers out of China). Then I set a trend line and recorded the equation. y = 0.0013x5 - 0.1121x4 + 3.5943x3 - 48.725x2 + 270.03x - 380.87. X equals days. So first day of first case was Day 1, X=1. Then I used the equation to forecast case number projections. Then I slid the line over 2 days because of the number of new cases, not the total number. (X=Day+2) and the equation has been really accurate. Today, it predicts we will have a total of 670,000 cases worldwide outside of China. Based on current growth, we should finish today around 695,000. But the growth shows on the chart around 60K, which is what we should be around today. Yesterday was 56K, but the days before were 65K+. So we are still on or above the trendline. I don't see this ending this week, so I think the market still goes lower. What really worries me is that transmission in warmer cities is bad too. New Orleans is in a world of trouble right now and people there still went to church this past sunday. Here in Dallas, we have been doing virtual church for 3 weeks now.
2. Gross versus Per Capita. This drives me insane. People say "Stats don't Lie" and I agree with that. Then there is the policy of using the stats to drive the narrative. There is no better example of that then the Liberal side this past week. So based on Gross Numbers, the US has the most positive cases of Covid in the world. Also true is the US has done more tests than any other country in the world. That statement is 100% accurate. Those who say, that's not tru per capita are changing the statement, not that my statement was inaccurate. Now if you want to do stats by per capita, that's fine, then don't say the US has the most cases in the world. We have many (CNN especially) saying US sucks, has most cases and doesn't do most tests* (*=per capita). This is a perfect example of changing the stats to drive your narrative, not report it. Just be effing consistent. You have STUPID effing people who don't make it past the headline. Another example is, "I think they should be appreciative" from Donald. The entire comment was Trump saying you should appreciative, I am not talking about me, but the task force, Pence, the army corp of engineers, etc. BUT, a reporter ran with "Donald demands appreciation before sending supplies from governors." It went all over twitter, then other reporters ran with their version just using the same line from originator. It is despicable. You want to rip on Trump, rip on him for caring about his ratings or acting like a child, or lying, etc., etc., You don't have to make sh!t up to find content to rip on Donald. People don't trust the media and it's stuff like the playing both sides of the stats (like CNN) or the misleading quote (NY Times). These are supposed to be two of the better sources for journalistic integrity and they are dogshi!t in a time when we need them to be their best.
3. How are we handling this new reality? So far, my work is fine, but I think there will be a tail where we are impacting. In my dealings with Japan (which are already notoriously slow), things are even WAY slower. Work with China has started to come back. Taiwan is an interesting story. Taiwan never seemed to be concerned about Corona until last week. Something changed there. I heard from colleague there that a lot of students who came home from USA tested positive, so Taiwan is simply blocking international incoming travel going forward. As for day to day, with a new baby, home schooling is a bit of a challenge, but the 8 year old is doing fine. Some teachers are adapting better than others. I see one of my high school classmates is handling it very well for her elementary math class. The 3yr old and 5yr old are having trouble adapting to being stuck in the house all day except for a couple times per day. Additionally, it has been raining a lot here in Dallas, so some days, we cannot even get outside. Last week was much better thank goodness, but here we are on Monday, raining again. I feel bad for those who lost there jobs and I expect them to get a lot of company in unemployment as we as society stop going to movies, restaurants, events, etc.
4. The Stimulus Bill. I hate this effing thing. There is so much BAD debt in the system right now. It needs to be flushed and those who gave out risky loans punished. Think about how good things would have been if interest rates had been so much higher. For example, what if you could have had savings accounts that had 4% interest (like before the FED). Those up in age would have just had their money in savings accounts and not in the market. We wouldn't have had speculative PE ratios and this economic shutdown wouldn't have hurt those with savings. That kind of situation would not just enable, but would promote a V Shape recovery and the bottom wouldn't have been very severe at all. Constantly lowering the interest rates was a big effing problem and it inflated asset prices significantly making new buyers take on more debt. But instead of interest (which is tax deductible), we made them pay a higher principle which was not tax deductible and the capital gains (the seller) wasn't taxed either. Of course it would have lowered our property taxes as well. But we don't operate that way, we want to punish savers. So we pass the $2.2 Tril stimulus bill. We try to protect those who bought back stock and didn't save (which they couldn't do because they got no interest on savings). What is worse and scares the sh!t out of me is that the Fed Reserve is buying Bonds, Corporate Bonds, now stock and ETFs. We are becomming nationalized economy before your eyes. Don't kid yourself, there will be a major cost for all of this. We will pay one way or another. We did a smaller version of this in 2008 and look what happened to income inequality as a result. It looks like we didn't learn our lesson. I liked Andrew Ross Sorkin's bridge loan idea. I don't like printing money and giving it away. I don't like debt. I don't like the US govt increasing spending exponentially. I don't like increasing taxes. I still can't stand the stupidity of so many who are screaming from the mountain tops about poor performing government in this time of crisis and yet they are the same people who want to increase the power and size of government significantly. Govt is giving money to private jet companies btw. Shocking that govt does things in a stupid, selfish way.
5. Prediction time. Without a cure (either a treatment or vaccine) in the next 2 months, I think we are in for a depression. I think that depression will happen in 2 parts. 1. Think large asset prices will plummet, used cars, houses, etc. 2. I think basic goods will skyrocket, notably FOOD. In the US, we live in a luxury of paying a very small amount of our monthly budget for food. I think that changes. No one is buying a car right now and they won't all jump to buy cars when this is over. Same thing on iPhones, TVs, etc. I still think the S&P goes lower than 2000, but I am concerned about the Federal Reserve buying stocks to keep it pumped up. So who does this hyperinflation hurt? Social Security recipients. Pension recipients. That's right, the young generation is going to finally stick it to the Boomers. And if you think they will sacrifice more to help out the boomers, you haven't been really watching this generation. I honestly don't know where you hide your money. If you save it, you may be punished via inflation.
6. 2020 POTUS Update. Donald is going to lose New York, Washington, and Massachusetts. He was going to lose those anyways. Right now, the Media's dishonestly is giving Donald a fighting chance. Just let him sound like an idiot, play his news conferences, etc. He will drown himself in stupidity. Cutting off his press conferences, using misleading quotes, double playing the stats, it's not going to end well. Polls are interesting and bad for Biden. Polls show Biden leading by 3 in Michigan. I think HRC was leading by 3 or 4 in Mich heading into the actual election in 2016. Biden needs a bigger cushion than that. Ofcourse things are changing by the day now, so who knows right now.
