The Economy and The Markets (where are we, where are we heading, and what does it mean for the QC...)

[A2.]

1 hour ago, cltheel.sdl said:

@A2., I put in trade orders tonight...will they trade at open tomorrow morning?  Just curious as to the timing mechanics of how it works.  Hoping I wasn't too late to catch today's up.

Depends. If they are your run of the mill funds found inside of most 401k plans then your sell will be executed upon the close of the trading day tomorrow. 
If they are individual securities, then they would execute upon the open of the markets. If you do decide to lighten the load and have individual securities, sometimes setting a limit order is a smart path. Market orders when markets are going haywire, can result in a bad price for the sell.

one thing I want to point out is that I am Not giving financial advice, merely letting you guys know the dire situation we are all in as a country. Our markets are screaming trouble ahead. If you have more than twenty years to stay invested , then your situation is entirely different from say someone who is looking to retire in the next three to five years. 
 
right now the situation is VERY FLUID. The fact of the matter is that if we hold a couple of lower levels, we could rally hard. But it’s my belief that things will get worse before they get better.

the last thing that I will say is that something stinks to high heaven about this CV hysteria. I smell a rat and I don’t like it. Regardless of the CV pandemic, the markets alerted well ahead of time they were way overdue for a large correction. Generally speaking when people and institutions are liquidating the markets can go to further extremes than even what the charts are telegraphing. 

I am not a financial prophet, but can tell you what I see. I will certainly inform the board and UPers if I see a material change that would cause me to see this different. As of now, the return of your capital is much more important than return on your capital. 
capital preservation is the key to wealth. When you lose 50% in the market, you don’t need a 50% rally to get you back to whole, you need 100%.

for example:

I invest in XYZ stock at $10 with $1000

after a 50% correction the value of my stock is $5. My account balance =$500

i need my money to DOUBLE just to get back to the starting point. The person who doesn’t take that hit, has a MUCH better chance of actually making money once the selling has exhausted itself. 
 

be safe out there, and more importantly just employee some proper risk management for what works for you and allows you to sleep at night. In the end, this too shall pass, but until then, I’d rather watch from the sidelines.

A2

 

[A2.]

1 hour ago, cltheel.sdl said:

My cousin works for BofA and forwarded the below message from an analyst who attended a Goldman Sachs update call.  The main takeaway is that this is a temporary issue and not systemic.  @A2., I assume you think this is BS - where's the disconnect?  

 

Conclusions of Goldman Sachs Investee call where 1,500 companies dialed in.
The key economic takeaways were:

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.

I was actually on this call. The truth is the that GS is and has always been a mouthpiece for the very institution that got us into this mess in the first place. 

GS has done and will always do what’s in their interest. 
 

here is what THEY SAID, when I was telling everyone on here to get out late last year:

https://www.google.com/amp/s/www.cnbc.com/amp/2019/12/31/goldman-sachs-is-saying-the-economy-is-nearly-recession-proof.html

GS is in it for themselves, not us:

https://www.google.com/amp/s/fortune.com/2016/04/11/goldman-sachs-doj-settlement/amp/

https://www.nytimes.com/2010/04/25/business/25goldman.htm

https://www.google.com/amp/s/amp.mcclatchydc.com/news/politics-government/article24561376.html

 

I could go on and on. But the BOTTOM LINE is that the BANKS DO HAVE SYSTEMIC RISKS WHEN THEY HAVE TRILLIONS IN DERIVATIVES ON THEIR BOOKS. Period.

Lastly, remember that these same banks have massive loans out with companies and individuals who are getting ready to go under. Those loans are wrote down and the banks lose.

ps—-I didn’t mean to go all caps, but I’m not the biggest fan of GS. They are the antithesis of integrity, and good faith. Sorry for anyone I offended, but these guys make obscene amounts of money and are the very definition of income inequality and this is coming from a die hard capitalists. 
 

I am a huge capitalist, but I detest crony capitalism. 
 

 

 

Edited March 18, 2020 by A2.

[A2.]

1 hour ago, gman430 said:

Don’t forget about the current under construction highrises stalling too.  

Hopefully they counted the cost before they started. But if not, then yes, I could see another epicenter fiasco on our hands with some of these under capitalized projects. Fingers crossed that doesn’t happen. 
 

A2

[southslider]

6 hours ago, cltheel.sdl said:

It feels more like ‪9/11 than it does like 2008.

Maybe on Wall Street, but on Main Street, it feels more like 1929.

[A2.]

3 hours ago, southslider said:

Maybe on Wall Street, but on Main Street, it feels more like 1929.

Agreed and it won’t be long and Wall Street will feel the end of the roaring 20’s as well. Boeing is now asking for $60B from the government just to avoid insolvency. They employee more than 100k people. This is just one firm of many soon to be asking for a bail out.

 

[A2.]

Bye bye DOW 20000. Sad to see you go. Next level is substantially lower 

[cltheel.sdl]

Crap, I definitely placed my order too late yesterday.  Oh well, I guess it's just money... @A2., you have knack for these things.  I remember that you pre-called 08 quite accurately, hence the reason why I'm taking your comments so seriously.  I'm maintaining my 401K and Roth IRA positions for now since I'm 30+ years from retirement, but liquidated everything else.  

[urbanlover568]

25 minutes ago, A2. said:

Bye bye DOW 20000. Sad to see you go. Next level is substantially lower 

We were so close to 30,000 

[A2.]

1 hour ago, cltheel.sdl said:

Crap, I definitely placed my order too late yesterday.  Oh well, I guess it's just money... @A2., you have knack for these things.  I remember that you pre-called 08 quite accurately, hence the reason why I'm taking your comments so seriously.  I'm maintaining my 401K and Roth IRA positions for now since I'm 30+ years from retirement, but liquidated everything else.  

Wise grasshopper! If your that far away from retirement, then this bloodbath will be an opportunity. 
 

one last thing for the board. Here is the line in the sand: 

S&P 2335

write it down, put it on a sticky, but just know if we hold that level=good

if not=bad, very bad

and that is on a CLOSING basis, not intraday. 
 

we are still over that level, so there still hope, albeit slight

be safe out there guys!

A2

 

[urbanlover568]

Breaking!!!!

BREAKING: Ford, GM, Fiat Chrysler to announce production shutdown today 

[A2.]

4 minutes ago, urbanlover568 said:

Breaking!!!!

BREAKING: Ford, GM, Fiat Chrysler to announce production shutdown today 

Add to that another circuit breaker triggered. Market halted. Never before have we witnessed anything like this. Even 08 didn’t have as many halts

[gman430]

Forget recession. It’s about to be a depression. And now every industry from the malls to the airlines are asking for a bailout. How long is this going to last for? How long until they ask for another one that makes the deficit in this country go even higher? They are not going to be able to beat this virus without a vaccine. Fighting it now until that is ready is pointless. And now the automakers are shutting down: https://www.wyff4.com/article/ap-sources-detroit-automakers-plan-shutdown-of-factories-amid-coronavirus-fears/31744490#

Edited March 18, 2020 by gman430

[A2.]

7 minutes ago, gman430 said:

Forget recession. It’s about to be a depression. And now every industry from the malls to the airlines are asking for a bailout. How long is this going to last for? How long until they ask for another one that makes the deficit in this country go even higher? They are not going to be able to beat this virus without a vaccine. Fighting it now until that is ready is pointless. Oh and look at the stock market today. Weee.

Winner winner chicken dinner. Depression is where we are heading.

oil is having its worst month EVER. It’s at $21 a barrel. Energy sector is being crushed. How many millions of people are tied to that industry alone!? This is an epic time. Even in my belief we would fall, I have to admit that the speed of this fall has been nothing short of breathtaking. It’s speed has even taken me by surprise. 

unbelievable 

A2

Edited March 18, 2020 by A2.

[urbanlover568]

19 minutes ago, A2. said:

Add to that another circuit breaker triggered. Market halted. Never before have we witnessed anything like this. Even 08 didn’t have as many halts

Might hit 10% down today.

[cltheel.sdl]

Just now, A2. said:

Winner winner chicken dinner. Depression is where we are heading.

oil is having its worst month EVER. It’s at $21 a barrel. Energy sector is being crushed. How many millions of people are tied to that industry alone!? This is an epic time. Even in my belief we would fall, I have to admit that the speed of this fall has been nothing short of breathtaking. 
 

A2

What does a depression even mean vs. a recession?  Longer duration?  Farther fall?

[A2.]

Just now, urbanlover568 said:

Might hit 10% down today.

Quite possibly. It we go to -13% we will have another halt. God forbid, but if it drops -20% they will simply close it down. 
 

Just now, cltheel.sdl said:

What does a depression even mean vs. a recession?  Longer duration?  Farther fall?

A recession is when your neighbor loses their job, a depression is when you lose yours.

But in all seriousness, a depression is marked by several factors including longer durations of negative GDP and catastrophic unemployment. Think 20%+

[urbanlover568]

BREAKING: Delta Air Lines sees revenue plunging $2B in March & has cut its system-wide capacity by 70%.

$DAL shares now down 30% today. 

[gman430]

3 minutes ago, urbanlover568 said:

Might hit 10% down today.

It’s pretty much there right now. Crazy.

[A2.]

If we halt again, I’ve seen it all. This is unprecedented. Seriously, even your truly, is dumbfounded. The charts are looking horrible and the truth is, this selling looks to just be warming up. I the charts I’m looking at, play out, many here, and those who don’t even follow markets will be shell shocked. 

2 minutes ago, gman430 said:

It’s pretty much there right now. Crazy.

Yup. A few more percent and they will halt again

Edited March 18, 2020 by A2.

[urbanlover568]

All my friends are talking about layoffs now. Nothing is stable anymore. This looks like 2008 but double if not tripple worse. This crash has going lightening speed.

[A2.]

Technical level snapped. If they don’t throw everything, including the kitchen sink at this thing, it’s Katie bar the door. This market will be cut in half from here. Period 

[urbanlover568]

NEW from @jamieson — The union Unite Here estimates that about 80-90% of its members are going to lose their jobs due to coronavirus crisis 
Union has 300,000 employees.

[cltheel.sdl]

@A2., where do you think VXX is heading?

[A2.]

3 minutes ago, cltheel.sdl said:

@A2., where do you think VXX is heading?

No telling. It’s hard to call such a parabolic move. One things for sure, we lost 19,000 faster than a hot knife through butter.

im actually expecting some kind of bounce between here and 18790 and if that doesn’t hold then 17500 area. 
 

this is some serious selling and the margin calls that are cutting through the investment firms now is unprecedented. 
 

My short positions are flying and I’m actually tempted to cover them. Too far too fast. Perhaps a snap back. If not, then guys this is scary (as if it wasn’t already)

 

A2

[gman430]

Oil has completely collapsed: https://www.cnbc.com/2020/03/18/oil-plummets-to-near-18-year-low-on-pace-for-worst-month-ever.html