It's May 29 and the Coronavirus event seems to have started to blend in with world events of the regular sort, and it's now more our environment than new things coming up, and some world events are coming to the fore in importance. I'm going to leave off the log about talk of a recession and Coronavirus (Part 1, 2, 3, 4) which I started February 25 until now, and write under the broad subject of things emerging in global events, and how those might impact economies and also anywhere they seriously affect human rights.
The biggest story of the days this week are with China. Most of my news is US Economics and Markets news, so naturally everything there is from a US business standpoint. Partly this continues from what I wrote in 2019 about what I thought was the biggest story of the year then, the Hong Kong protests.
China is facing opposition from the US and other countries because it has been a shitty country for so long, and has been growing and becoming an internationally important country that is active in other countries for the past decade or two. It hasn't let up with it's shitty actions like what it's been doing in Tibet, which is currently not among the issues people are talking about, with the Uighurs in Northwestern Muslim China, Hong Kong, Taiwan, it's tech spying and stealing, ongoing attempts to steal islands and sea property by building new islands with military muscle, huge numbers of death sentences, laws against protests and other laws against human rights, treatment of religious groups like Falun Gong. Also, while tons of Chinese have for the past 10 or 20 years of economic success been traveling, this has hurt people's perception of Chinese because they are rude and inconsiderate, famous for doing messy personal care in public, cutting lines, cramming, yelling or talking very loudly, rushing buffets and taking all the food, trying on clothes and messing up stores. They're one of the only types of travelers that I would guess has globally people have a strong negative impression of.
On the other hand China has shown the world that it's population, it's culture, is hardworking and serious. It has become the factory of the world not just because it's people wanted the money. It's hard to find people who are capable of being serious and working, but Chinese are just that. For this reason, they've made good business partners and good, successful companies. On top of that they're very obedient and unobtrusive, so it's easier to deal with them than more individualistic peoples, which is also probably why Canada seems to have like them for selling their cities to. Like the West, China has become rich because it has a population serious about being workers. China is more industrious than the West though, it seems, because more Chinese people think about starting and running businesses, it seems, and becoming wealthy, while in the West most people seem to be workers or employees in their minds. Perhaps this has something to do with the strict and idiotic laws in the West that make starting or running businesses extremely difficult. Canada, for example, is widely considered a bad place to try to do a business because the laws make it very difficult to enter, navigate, and succeed. The US reduced it's corporate tax rate from about 30% to about 20% to be more globally competitive, since many countries have rates in the teens, although right now there is talk of restoring the higher rate for companies that make over $400,000k per year. There's also talk, and has been for years, about somehow making pay taxes the giant companies that are displacing smaller companies, notably Amazon but we might also mention Google, Walmart, Target. Amazon, which is being talked about now, has been portrayed as a sort of hero, delivering goods while stores have not been open, employing large numbers of people with good wages, but as everyone knows it does this by economies of scale and it's scale is one where it eclipses smaller companies which would otherwise be part of the community and economy, and also perhaps the tax situation with 100 small stores would be different from one large one per town.
That was sort of a preamble but it seemed more of a ramble since most of that stuff is well-discussed and understood. I'll draw a line and start with news and developments.
Trump faces a reelection challenge in so-far Joe Biden, who it seems impresses no one in any way. The economy is down but might recover. I'm not sure how much credit Trump can take for the US government's moves to prop up the economy, or how it will appear in retrospect when people are measuring how the emergent US compares with other countries, although right now basically everyone says what they did was the correct thing and the only thing they could have done. I don't know how much of it was layed out by internal policy planning as part of what they learned from the 2008 09 financial crisis.
Some say the only issue Trump really has is being tough on China. Biden is viewed as friendly toward China, and they're trying to put the name Beijing Biden on him, although I suspect Trump will come up with much more creative and potent characterizations in the world wrestling style he's master at.
Issues Trump is focussing on include Beijing's alleged cover-up of early Coronavirus. Trump and some people in probably every country around the world blame China for the virus and for the things the virus is doing in their countries. Most countries are having it very difficult right now, and that probably breeds a lot of resentment at whatever they can target. It doesn't help that there was a bio research plant that does just this kind of work about half a mile from the seafood market where the outbreak is thought to have started, as I mentioned in the talk of recession and Coronavirus log. This is being investigated by the US and UK governments it seems. China for it's part is trying to focus blame and resentment on other nations and nationalities, suggesting the virus originated in US service members, saying new cases come from people flying in from overseas, and that cutting off flights from China was racist, while doing it themselves inside their country, cutting off Wuhan to stem contagion.
China formally approved yesterday a new stricter security law for Hong Kong which criminalizes most types of political protest, using a blanket concept of 'sedition' and 'subversion.' We've seen this in Tibet and Xinjiang for decades.
US politicians are taking the position that Hong Kong is now under the power of China and doesn't have a high degree of autonomy any more. This shift also may change Hong Kong's trade relations. It has enjoyed an absence of the trade tariffs that Trump put on China in the trade war. This change, if it is what's going to happen, as will be announced today by Trump, will have an affect on markets, particularly Hong Kong companies and ones that do business with HK. This would be a bit of a new development in that since the economic issues that started in March, Trump has been signing a ton of things to help the economy and probably doesn't want to sign anything that would hurt it.
People talk about the negative consequences of problems with China. The US doesn't make it's own PPE or medicine, and it might take time to rearrange things, but maybe not. It seems the Trump government can be pretty quick to move and has displayed determination in doing things.
Congress this week approved a bill for the government to make reports identifying Chinese government individuals responsible for the forced detention of 2m Uighurs. The State Department is going to conduct an investigation of the human rights violations in Xinjiang. It seems to me this all might be from a political motivation though, as China has been shitty in Tibet for decades and Xinjiang for years and the governments of the US, Canada, and other countries have been purposefully silent on this, as well as the human rights abuses in the Mainland. US and Canada etc. politicians have consistently avoided having the issues brought up in front of them, so they don't have to take a stand when the only stand possible for them would be against the Chinese government. Now there seems to be a lot of action, but I wouldn't say it's likely to contribute to better human rights because the governments involved don't care about human rights. There is also rising anti-China sentiment in the US, although there has been significant anti-China sentiment before. I'm not sure in Canada. From what I've seen, Canada avoids this information becoming public since Canadian politicians probably depend on heavy investments based on Chinese house buying, etc in the cities it has sold to China and India. I wouldn't join the camp that says Well, whatever it's for, it's a good move, a step in the right direction,' because we've seen how Western government involving themselves in this way never create real good outcomes. Sometimes it leads to them doing other harmful things themselves.
India is also going to be an interesting issue. India already hates China, and they have border disputes and things, blocked rivers. India houses Tibet's government in exile by the way. India has been passing really terrible laws over the past years. Right now it's overcrowded and unsanitary population is facing a health challenge. How will it's leader want to appear?
Friday morning, the morning Trump is scheduled to talk about China and Hong Kong, after the announcement of his talk before the close yesterday, which sent markets down, the markets opened all in red. Only a very few on my watchlists were green, and none of the ones I'm holding. Yesterday also they almost all went down, although OLP went up probably because news that house sales were up for single family dwellings, etc. I didn't read or watch much on it but it seems property sales aren't really down that much or are up, just less houses were for sale, and this meant little bidding wars for those available.
Yesterday's market downs followed the Tuesday and Wednesday after Memorial Day and all stocks were green for two days. I got caught up in and increased and invested in a few new stocks.
Late Friday, when people were worried about the US-China trade deal and the value of stocks, which were largely down, the relief of not having Trump say anything brutal about Chinese trade caused a sharp last-hour rise in stocks, maybe most in Alibaba and similar. This may mean that Trump might not be ever going to jeopardize US money when it comes to Chinese companies.
Social Media is an issue this month, as Twitter put little advisory notes on some of Trump's tweets 'fact-checking' them. Zuckerburg actually commented on this, the headlines saying that he said that social networks should not be fact-checking political speech, 'Political speech is one of the most sensitive parts in a democracy, and people should be able to see what politicians say.' Facebook has fact-checkers too, but he said it was to 'really catch the worst of the worst stuff.' 'In terms of political speech, again, I think you want to give broad deference to the political process and political speech' and not 'try to parse words on is something slightly true or false.' The company has decided to continue to allow political campaign ads even when they include misinformation. Zuckerberg said there were 'clear lines' for what content should be allowed, framed in terms of causing violence or harming people's selves, and misinformation that could lead to voter suppression. Facebook, Google and others continue to use the concepts of 'hate speech' and 'racism' and other concepts to censor content. This has been most prevalent over the past year or two on YouTube where many content creators have had videos demonetized, removed, etc., although they contain nothing really of that sort, because the content caused a flag for the algorithms that check content. This week people are talking about YouTube finally facing a challenger in Slack, although Slack doesn't have any better privacy protections that YouTube.
Markets are trading at a 21 stock market multiple. It might be that the Fed has pulled forward years of returns in the last few months, taking it away from future results. In 1999 the multiple in the Nasdaq was in the 40s.
During the trade deal, China showed how it could do lots of unofficial action, like slowing down shipments and gumming up the works.
Headlines included a $850,000 bill for a 2-week intensive care stay in a hospital for Coronavirus. And lots of comments mentioning similar incredible rates for stays for various things, and the US fear of hospitalization. However, I've heard the US has the highest rates of good outcomes for it's services although they are expensive, because they are private. In Canada, there is first rate heath care but if you want it you're going to get in a long line up. Also, a lot is not covered, like a lot of medicine. Overall, I think I prefer Canada's system as long as you can also fly somewhere else if you can afford it to pay for private service. The reason is that the costs can be devastating if you can't and also if you can afford them. But preferring Canada's system doesn't mean I'd advocate trying to put it in anywhere else, because it's grown up with Canada and Canada's tiny, European-origin population, policies, education, and taxation, whereas that's not the case in private health care countries. I have no answers for health care systems in general, and haven't given them enough thought to really comment.
In April in the US, personal income went up 10% partially due to government stimulus checks, and spending went down 15%. Personal savings jumped a record-high 33%.
Trump said the US would terminate it's relationship with the corrupt WHO.
SpaceX launched two astronauts to the ISS for the first time, all live on YouTube, although they 'had technical difficulties' and lost signal, black screen, when the rocket stage landed again on it's drone platform in the ocean, and just cut the feed back to show an already landed rocket. You can't invest in SpaceX. You can invest in Alphabet which is an investor in SpaceX but that's pretty far removed.
Some businesses that are reopening seem to be raising prices, which may or may not be inflationary. However many businesses aren't raising prices, so maybe dis-inflationary, although on the other side the smaller supply for demand might lead to companies then raising prices.
2018 more money finding its way into investing in San Francisco and maybe that technology going back to China
after years of looking the other way on Chinese companies, it may be a bit messy but we've gotta find a new way of doing this
IP theft, imbalance in the trade, if China gets the upper hand in 5G or other tech, are they going to use that against the US, or if they get the upper hand in technology.
what is classified research and what is not, and what is tech transfer and what isn't?
where did the gains from globalization go?
China doesn't need to be the cheapest labor market to still be the cheapest to produce since it controls trade rates, taxes, environmental policy, etc. It has invested in other countries where factories are cheaper, a portfolio of countries, building ports, factories and modern farms in Senegal, Pakistan, Nigeria, Zimbabwe. Chinese state run banks loan money to countries to develop as China sees fit, with the stipulation Chinese companies do the building. Belt and Road, potentially the largest economic network, loans in Chinese currency. It can claim securities back if not paid by countries with poor records for paying back it's low 1% interest debt, like Mombassa Port in 2019 Kenya, the largest trading port in Africa, some consider it debt trap diplomacy. A center of wealth in China without having to produce anything in China. Giving those countries the economies of scale to compete with Canada and Australia which have infrastructure, what makes rich countries rich producing more with less making people more wealthy, in exporting natural resources although with lower wages so maybe cheaper than Canada, plus a guaranteed customer in China.
China has large currency reserves and can buy up nations if prices go down in a global recession.
China has been damming it's rivers over the decades until they're all basically dammed, reportedly, and maybe now they're going to look at damming Tibet's rivers, which nourish half of the world's people, and China can dictate terms better dealing with those nations who want water. If the dams were high, above where animals live in the rivers, I don't see how it would be a problem, but I don't think any of the dams are up there. They have three dams on the Brahmaputra for example. There are no international agreements between the countries that share the rivers, so China has run of the road, exercising it's territorial jurisdiction. Over the next couple decades of global warming, along with Asian peak population projections, some rivers around the world will diminish while others will grow. There are no legal restictions on China which literally has the power to flood and draught places like Bangledesh. Asian countries prioritize their relationships with China over opposing Chinese dams though.
Tuesday, June 2 Recovery is one of the main subjects of talk. The jobless claims were I think 4m more the last report, so people expect this is peak unemployment and numbers will improve. US GDP is expected to shrink according to a report today, about 60% and then go up 10 or 20% in Q3 and then slowly increase. Others think the markets are telling us, by their 30% recovery, there will be a V-shaped recovery after all. This guess has been improving from a U or L, to a swoosh, to now maybe the V. No one knows. After the report was published stocks went down a few percent, including ones I just increased. I got rid of Vale, right before it went up a bit, which wasn't doing that impressively. I don't understand the stock. I increased in Norwegian, Spirit, and Carnival, buying them at around their highpoint today this morning. I'm almost 100% in equities right now.
A little talk about retail stores and if they have to look at private security if cities aren't going to protect their businesses, ie side with the protesters.
Trump made a ban Chinese passenger airlines from flying to the US, in response to China not allowing US carriers to resume flights there yet. A day or two later China opened up more flights in from foreign airlines or something.
Social media platforms are themselves becoming politically affiliated. Zuckerburg has said he won't remove Trump or other posts. reportedly, due to the 'factualness' of Trump's tweets. Slack is also on the Democrat side. Facebook will block ads from state-controlled media outlets, whatever that means. Twitter got a new CEO reminiscent to me of when that happened at Google, and Twitter's owner made a new rule for the president,
Zoom's CEO said he wants to 'work together' with law enforcement in regards to encryption. Zoom has been criticized for privacy concerns because it's Chinese owned, so people assume the Chinese government has basically full access. Does working together mean Zoom will share the info it has about people not only with China but with the US too?
Job losses and private payrolls. Mortage demand with record-low interest rates.
Insurrection Act signed for the George Floyd protests. This is a highly political issue.
AMC isn't sure if it can continue. I first heard of AMC because they made Mad Men, and was surprised they had theaters. Why don't they make more shows like Mad Men?
Amwell IPO, a tele-health IPO is going forward confidently because of what markets are doing. In past months there was talk IPOs wouldn't be launched. I think it was the second or so IPO to launch.
May unemployment expected to be 20%.
Biden reportedly has a lead in the polls.
Lots of companies making headlines for producing or possibly producing millions of doses by a month a few months ahead.
The other three officers in the George Floyd death have been charged with abetting the alleged murder, and the main officer's manslaughter charge was elevated to second-degree murder.
NBA made headlines to resume in August.
Fiscal movements are happening in Europe, for the first time analysts say. Talk of an integrated basis for financing, and in EU bonds. Valuations are thought to be very low in Europe like banks and stuff compared with the US in terms of valuations, price to book or multiple of earnings, although US ones are stronger, healthier and better capitalized.
Stragesists think a six-month recovery and a three-month cloudiness because of a second wave possibility. USD and Yen are seen as uncertain. There has been a lot of good news for the dollar over the past months and some think it hasn't had that strong an effect on the value of the dollar, while now with a Europe economy strengthening, seen as bad news for the dollar, maybe it'll go down.
Brent is up to $42. No one is adding rigs at $40. $45 or $50 is needed for adding rigs, according to drilling business top men, although investers might push for growth. Many companies are going to add new cash flow to repair balance sheets because the equities markets are closed. Most shale producers have an average decline rate of 35-40% per year, so if new wells aren't drilled production can slump in 6 to 9 months. Predictions include that US shale will be below 11m barrels a day in 2021 because of 'natural decline' that they can't keep it growing. If the countries open up oil will be OK but stagnate until something happens with the airlines like a vaccine, since airlines consume 8m barrels per day. Most of the job layoffs have been in the service industry. Overlevered companies have laid off because of debt. They're asking it they'll be in a $40 world or a $50 world or return to a $60 world. The US is down around 2m per day, to around 11m, but we'll see only one month of curtailment.
Banks and insurance companies are becoming more interconnected and intertwined with their governments in the US and Europe, implementation of Fed programs, willingness of regulators to raise or lower capital. May never reverse completely. Larger institutions have more concentrated risk than before and more correlation of risk with the underlying economy.
Friday, June 5 there were some green days this week, and one started out red but turned green slowly and then greened more. A lot has to do with jobs reports, there was a bad one Thursday but then there was a good one Friday. The Friday jobs report confirmed the growth hypothesis, although the numbers on the report that 2m jobs have been added are doubted. Most of those jobs are in retail, leisure and hospitality, and construction too. Hardly any data points confirm the report, reportedly, so it might be a bit doubted. Fake it till you make it? Also Thursday morning or Wednesday JPM downgraded Norwegian before markets opened and cruises went down, but throughout the day they went a few percent above. I think I mentioned last week Credit Suisse upgraded Norwegian. Airlines made headlines this week. I still have cruises but I actually feel less confident about the industry than in weeks past but I'll hold. They put in airline-grade air filtration and will have a CDC guideline thing where ships with cases of Coronavirus will be yellow, orange, red or green. This move is something airlines I suspect won't have nor busses. I'm not sure how it will play out, or if they meant that was just for the CDC and the cruises, or if it was to be a public thing. The Fed may be less supportive of markets now because of the numbers claim. Relief may not be continued, thinking the economy and market are doing the lifting now. We're seeing how powerfully the Fed moves have been, where some analysts look at it for the market as win-win, where if the job numbers are correct it's a win because the economy is improving, and if they're not it's a win because the Fed will do more. In a tug of war between liquidity and fundamentals. The Fed build a foundation we can move off of, some analysts say. Bailing out ETFs directly buying some of the credit market concerns that people were so worried about, the JNK, OQD. In the jobs report although employed whites and hispanics went up employed blacks went down. Would like to see a real drill down of how this happened. Although part of it might be that owners and bosses of companies identify or prefer people along those generalized lines. That's even less than what I would call a guess. Something I'm curious about.
Some say we'll see more of a distinction between monetary which serves the markets mainly, and fiscal which serves the real economy mainly.
There was also indications of panic buying upward in the VIX, where usually panic transactions are for selling.
There is a lot of talk about racism.
There's also something about mortgage rates going up. I didn't understand it yet. .25% for most, higher or lower for people depending on their credit situation.
2/3ds of people unemployed are receiving a little more than they were before. Disposable income in the US is going to be higher than it was last year. Minimum wage workers are receiving double their paycheck value. $25 dollars plus the stimulus. That program cuts off in July. Unemployment right now is predominantly low wage and in services.
Some price deflation pressure because of reduced demand, but when cyclical demand returns we may see goods price increases lead the way, which is different from what we were looking at the last 2 cycles. Wages for service workers will maybe not increase quickly because of the large supply of workers and difficulty reintegrating supply chains, whereas we've before seen services wage-led inflation, and may now see a goods-led inflation.
Some say 20% of the market needed significant corporate design change inside, and companies will redesign to match what they've learned from the companies that were more successful. Many companies had supply lines that ran 10,000 miles through many single points that could be points of failure and had big issues during this, and no one will do this again, everyone will make sure they have multiple suppliers and that there's flex in their supply chain. And the redesign will give a whole new structured supply chain.
It's June 8 now, but looking back at a fund manager from two months ago some of the things he was looking at were that a recovery is often a mirror of a drop, sharp or gradual, that usually in a drop half of wealth recovers in half the time it took to lose it, which in this case would have been at the $2800 level for the S&P which is currently at $3200, in prior market bottoms, stocks bottom before jobless claims peak, in 2002 it was 6 weeks, in 2009 it was 3 weeks roughly, and in prior bottoms GDP takes another year to recover but stocks are already deep into recover. The analyst who said these things has in his record predicted wrong at other times.
Bitcoin is at almost $10,000. It's low was $5,000. Gold is at $1700. It's low was a dip to $1500 from around $1600 for the first part of the year.
Other things to add to the list of companies that experienced changes during the pandemic. Anything with a drive through was doing well.
Without the vaccine, the population is divided and some feel safe going out and doing normal things while others are petrified to go outside. For normality the majority or supermajority would have to feel safe.
Institutions devoted to this sort of thing. why were they not able to be effective? WHO made a statement that asymptomatic spread was unlikely the other day, and the US health officials said that wasn't true. Headlines that science says facemasks necessary to curb second wave.
South Korea and Taiwan knew almost exactly what to do almost the moment they got wind something unusual was happening.
The Federal Reserve is doing what it set out to do, pushing people into risk assets.
Data in air travel, turnstiles in public transport, weekly gas demand, consumer signals. Real hard data may come in June and July and test the market.
Tuesday, June 9 New Zealand has no cases they report. Does that mean New Zealand will be cut off from the rest of the world until further notice?
In the Netherlands they're looking at killing 4m mink, milk farming is big there it seems, because some have confirmed infections. They figured out the family caught it from the mink by looking at the viral strain. Denmark and Spain also have mink farms.
Some dogs are able to detect Coronavirus from armpit sweat. Dogs varied in the tests, but a couple were 100% successful in 70 tries.
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Deaths in Sweden and other Nordic countries:
Deaths per 100k population:
- 55 UK
- 42 France
- 39 Sweden
- 10 Denmark
- 6 Finland
Italy's debt level will be 160% GDP after this. EU countries are thinking about how to figure out loans and things.
Consumer prices are falling but food prices are up 5% from a year ago. Beef and veal up 18% due to shortages the highest of the foods. Retailers are not doing promotions because they want to keep food on the shelves, and higher shipping costs are being passed on.
In bonds, money is flying up the curve from 2-years to 5s. 5s are the new 2s because the Fed said they'll keep rates at 0 through 2022, creating a sort of date-dependent forward guidance, underwritten, because the 2-year is going nowhere because they've just locked it down, the 2-year is linked to money, and the 5-year in 2 years will be a 3-year piece of paper. People are saving, lots of demand surge for bonds, because they're worried about the future.
Talk about dividend yield being the new sought-for yield. Analyists don't expect yielf from fixed income as it had produced over the past 5 or 10 years.
A mix of supercompanies and new small companies.
Household net worth declined $6.5t in Q1 and equities $7.8t. Offset by 400b increase in value of real estate. Fed debt rose by 14.3% and business debt rose by 19%. In 2018 there was a V and net worth returned. In 2008 it took about 5 years.
$5t in money market funds is expected eventually to find its way into equities is uninvested.
Low interest rates have propped up the housebuying market, particularly milenials, and particularly if jobs return. May be a bias to new versus possibly renovating. Sales are up 17% or something versus last May. The most popular age to be in the US right now is 29, seen as good for house starts.
UAE's Dubai, Oman, Bahrain, Kuwait, Quatar are seeing a big expat flight, as companies have cut jobs and wages. Population in UAE could shrink 10%.
Friday, June 12 the markets this week have been swinging. Last week there were a few days of ups. I expected a correction down a bit, and JPM downgraded Norwegian that morning, and most of those stocks, cruises and airlines, were down 4% and 2%, but after open the started up. Over the weekend, too stocks went up. Monday stocks went up. I went to bed Monday night quite calmly seeing afterhours up another 5 or 7% on the most volatile stocks, but by morning when I woke up an hour or two before markets they were down fluctuating between 10 and 15%. I didn't sell that day, and they stayed around that level. I usually will use the number for the most volatile stocks I hold, so when I say 15% for Norwegian or Spirit, that means 12 for Carnival and 6 or 7 for Delta and less for Southwest, and a few percent for Canadian Tire. That night stocks also went down after hours and I closed on the morning down a bit more. I closed everything except Canadian Tire and OLP (and the two way down stocks I hold just for psychological reminders and bookmarks from a year ago). My US portfolio was up almost 50% at the height Monday when the markets closed, but when I closed I think it was up maybe 30 or 35%. I closed Canadian Tire and OLP down the next open and the Canadian side was up maybe 15%. I wasn't sure if there was going to be another crash. Stocks went down the next day. The market had it's worst day since March, with the Dow down like 7% and the S&P down about 3% I think. After hours Thursday stocks began to rise though, and continued to rise. They were up (again the most volatile) between 10 and 15% by the morning. I did not expect that. I thought maybe some small bounce back or further down. However, no economist, host or guest or anyone I've seen, is doing any better predicting. I suspect the machines are doing great, that can monitor the fluctuations of interest in buying, the volumes and amounts of cash still uninvested for those people, etc. There's quite a bit of talk about the retail investor, who knows nothing and doesn't analyze for actual value, causing unexpected investments and harder swings in both directions. I wondered this week if the markets were going to become gambling markets entirely. So much liquidity, lots of cash left in investors accounts, lots more players, and no good pricepoints, gambling and sports events shut down and people say stocks are the new sports gambling. Some say it's a special time with huge upside and a downside that is capital debilitation. The markets continue up this morning and it's 9am. I'm still wary of another smaller crash. With so much money left, it does make sense we won't retest lows, but could see some very jagged action. I'll let the weekend pass and see how things go. There's also a disadvantage in that some people are able to trade after hours better. 24 hour trading I'm not sure is a good thing in general, as who can sleep with that going on? Another thing people are talking about now and they say it's been controversial for a while is organizations who place trades. Apparently they don't actually buy and sell the shares. Instead they buy them from some other entity. They take half a penny for each time or something. But they're also able to see when people are buying and selling and in what volumes, mearsured against the buyers accounts I'd guess, and so they can themselves sort of be 'tipped off' to what people are going to do a second before it happens, and can buy 1,000,000 shares instead of the 1000 people are ordering. This drives prices up higher and lower in these swings.
Some speculate that Wall Street pros might be buying Robinhood favored stocks in the premarket and then selling them to retail investors during market hours. So the time to buy is 9:30 they think. I've been watching also for the good morning time and 9am seems too early sometimes. I guess they could be doing the other side too, where after a green day they sell everything after hours, causing morning panic selling to below value which they can buy the next day.
The social media story continues this week. Twitter closed down a bunch of Chinese propaganda accounts and accounts meant to boost those accounts comments, mostly written in Chinese. Zuckerberg, who has faced a lot of liberal backlash for not removing Trump's post, said alongside his Chinese origin wife they were disgusted by Trump's posts. Slack's CEO kid in an interview said they were within their constitutional rights of speech to remove comments and content they didn't want on their platform, taking the take that the platform and everything on it is their's rather than the users. The Trump tweet in question is everywhere said to be inciting violence, but the language of it is this: 'When the looting starts, the shooting starts.' A reddit CEO or something resigned 'because of his half black little daughter' saying that when she asked him what he did at this time he would be able to tell her this, advising reddit to hire a black CEO. They did, hiring a guy from hackernews. These things, sex, race, drugs, speech, privacy, make me glad I don't have to live in the West. It's like a land 60% full of that kid who always complains to the teacher about every little thing anyone else does. I don't think it's entirely the prudish, entitled culture though. It's also the complete lack of experience and understanding caused by the sheltered condition almost all Westerners grow up and live in. Their experience is extremely small, limited and similar.
I'm not sure if I wrote this already but the market turndown was a response to a huge ramp up and also new fears about a resurgence of the virus as states now starting to open are seeing new highs in hospitalizations. The day before I sold everything was down a bunch and my options were hold through whatever as I still had lots of room to go down before I broke even and thing's come up eventually, sell some until the point where I feel comfortable like I had waded in, just sell everything and not worry about it for a few days and take some gains. I eventually thought to just man up and take the losses and go for larger long-term profits and was basically decided on that. Then more relaxedly I opened some of my email updates on the companies, and the cruises really didn't have much going for them in the projected future, and ports will be closed. NZ will be totally shut off I take it. Australia when it has 0 cases will be open with NZ. Latin America is under quarantine and people talk about the month of December. Airlines like Delta were opening and seeing returning customers increase but they were having to take airports off their list because of resurgences it seemed, and their reopening was at a fraction, and their planes were only permitted a fraction. This lined up with what people were saying about the companies, like JPM who downgraded Norwegian, although CreditSuisse had upgraded it. All this seemed to me to propose a decent possiblity of further downside as more people accepted possible negative futures for business, and a possible crash. So I thought about it and then decided to sell and did sell in the morning before open. However, when markets all bounce back the idea of a crash almost evaporates, but the possibility I still think is real or some kind of real downside based on fundamentals which are currently ignored to some degree.
I wasn't the only one who thought of Warren Buffet, the Oracle of Omaha, who sold all his airlines, which he'd over the years always said he'd basically never sell. He sold them at their lows. They've rebounded about 100% some of them I think.
People are talking about a swoosh shaped recovery now, with volatility. JPM and others said the drop wasn't a new crash, just some consolidation after a massive upramp in an overall still bullish trend.
More things that are up in Q2: staycations,
Despite being a buyers market, Hilton isn't buying or building new hotels. China hotels are reopening at like 40 or 50% with most of that in leisure travel, but the rest of Asia is in the low single digits.
Japan is lifting it's state of emergency.
It's expected that when more resurgences happen hospitals will be better able to treat Coronavirus, so less deaths although the same amount of hospitalizations.
Antibody cocktails prevent mutants from evading treatment.
This week the market seemed to start as it had been the last few weeks, but then it seemed to slow down, and the trend was downwards while slowing down. I went in at the end of Thursday into one stock, Spirit, for 2.5% of my portfolio. when stocks were mostly down a few percent. For weeks there's been between green and red days. I sold on the open when it was a couple percent up and the market looked like it wasn't going to be bullish, and it wasn't.
Funny the experts on CNBC and others have been almost 100% wrong. I've sometimes wondered if you did exactly the opposite of what they said (in terms of approach to the market , not always individual stocks since they always liked the top 20 stocks) if you'd have made a good return. They maybe should stick to what they can do, which is explain after it happens what happened.
Innovations in care: remdesevere, don't intibate aggressively, hydrate patients early, anti-coagulation with low molecular-weight heprin (?) as well as direct-acting anti-platelet drugs. Coronavirus, US experts currently think, seems to make platelets sticky and cause blood clots. Higher capacity and stockpiled PPE in hospitals.
Camping World stock keeps going up. I suspect people might think it's a stock that does Camping, and are piling into it for that reason, like people did with Zoom or something early on, thinking one stock was another stock. I at first saw Camping World Holdings and thought the same thing and wanted to invest in camping, a year or more ago. I found out they just make motorhomes and RVs, and I invested anyway in them, maybe a different day. I sold when they bounced higher than entering March, but it continues up. It's low was like $4 something, and I was watching them. Insiders were buying, at like $9 on the way down. RVs sales are up, and the stock went up to over $20 when I sold and now it's over $25 I think.
25% of companies are benefiting because of changes in demand patterns
people who dont want to go back to work because theyre making more on unemployment, and businesses shutting down because they didnt get the stimulus they could have passed on to their employees.
A couple more notes on Cuban: he seems like a bro, and not strict or a tightass, but also he's experienced the range of being poor, partying, entrepreneurs, growing big businesses, and staying involved the whole time which isnt what everyone does once they get some position and paycheck. Also he reads a ton. hes looking for things to do. But my question would be if he took the White House would he continue to read an hour or three or whatever it is every day. However I saw him in a casual friend-like interview and his views on some things seemed kind of limited. I could be wrong though. Maybe he in his broad experience with employees saw something I didn't see in my experience of employees. But anyway that doesn't matter too much, presidents always are weak in some areas.
Headlines that Apple is looking to ditch intel chips, the same week Intel says its going to 'bake in' 'anti-malware' into their chips. About a year or two ago we learned that I think both AMD and Intel had been building their chips with backdoors which were found out as 'vulnerable to hacking.' Are we entering a world where it's not enough to have a safe OS, because the hardware has government-friendly backdoors that unsecures our data? That is definitely what governments would like so the answer is yes I guess. Who will make secure chips though?
The more stocks go up, the more experts leave the bear camp and switch to the bull camp. The same thing keeps happening by the day. Red day, green day. Swings about the same level, with Norwegian swinging 15% down and up. I'm not sure if any of the stocks are up to where I sold at yet, except like Canadian Tire I think, but it could go up more.
Most economists seem to think this market is totally liquidity-driven. My guess would be the same. Money is there, so what are you going to do with it except invest. S
Desynchronization and desynchronized reopening.
Total savings in US banks have gone up 15% since March 9, to $11.4t. Money market funds are up 30% in 2020 to $4.7t.
18% of fidelity retail accounts (largest brokerage firm in the US $7t) sold all the stocks they had. 1/3 of retired or older age people sold all their stocks between Feb 20 to May 15. Markets calmed down in a couple months, but they were 40% higher. The buy back in opportunity was missed by many, and they would have to buy back in much higher.
US banks are up $2t in deposits since January. Partly it's because all the stimulus and lines of credit made its first stop in banks. Personal savings hit a record 33% in April. Personal income went up 10% last month thanks to $1200 stimulus checks and unemployment benefits. Checking accounts with less than $5000 had up to a 40% increase in funds last couple months. Banks don't know what to do with all the money.
Friday, June 26
There might be a thing in the markets as discussed on some market news broadcasts, people who had money in the market and lost a ton in March, or people who finally stopped holding off and went into the market in the past 6 months, and lost a ton of money, psychologically would not want to go into stocks again. Couldn't bring themselves to do it. So they're holding cash. They missed out on the surprise rebound, and now prices are all seemingly overpriced, so there's no entry point they want to make. That money is sitting outside the market. On the other hand, I suspect there is also a bunch of investors who came in when it crashed, and lots of retail investors have reportedly been actively trading. Anyone who came in after March would probably have made significant gains, some people who came in early a 100% increase or more in some cases, but probably lots with 20 to 50 or 70% increase. Those people probably feel comfortable gambling a little more and taking the chance of losing some for the chance to gain more. If that's the case, then only continued market jaggedness and downward progression would discourage them as they occasionally lost sums as well. Market bulls. The economy now is getting a regular bad news and maybe the depressed global outlook is entering people's consciousness and they might start being less bullish. As markets go down more, and some people lose money (anyone in them except a few people who really can time things maybe), the markets might become less volatile and more down. Things might lay like that and people might forget the optimistic future of business for some time, until things start looking positive based on news and then people holding cash would probably want to come in.
The thing now is many people want to come in. There's lots of cash and willing buyers. As long as they can remain bullish the market will fluctuate, although perhaps not increase now because prices seem so high.
People have since before been talking about how prices of popular stocks are driven by news rather than PE, and some commenters say that is like the dot com bubble. One thing both have in common is rising stock market and rising prices for tons of stocks, making people want to make money in the market. The dot com bubble didn't have any recession background though, so we might expect it to be a much larger bubble, although perhaps the bubble relative to size of the economic outlook could be closer in scale.
The Fed has been putting in a floor for markets, so that people who want to sell can sell without devastating the value of companies or spooking or devaluing the investments of other people. Zoom, despite being rife with privacy concerns and basically subject to the Chinese government, keeps going up, even on red days, which makes me wonder if the asset is too valuable to the Chinese government and they have investers propping up it's value. If I'd have thought of that months ago I might have bought stock in this terrible company. Will this move by the Chinese government have the same effect as the moves by the US Fed? to prop up investor sentiment? 'Look even on red days Zoom goes up, let's invest in it.' Today literally no stocks I have on my lists are up except Gold, Clorox a bit, and Zoom. Amazon and a couple others went into the green a couple times but is in the red. The markets are down over a percent. Later on, everything was red, I think even both gold options, except Zoom. Zoom went down .2% at one point but then went back up to +.80.
Wednesday and Thursday I think were the days, maybe Tuesday, when the broader market started going down a bit. Whereas before many stocks were going down in the indexes, but the indexes were going up because of handful of large-cap tech and medical stocks. Then sentiment about reopening went positive and reopening stocks went up also, sometimes making quarantine stocks go down simultaneously, but this week the market was all red a few times. Thursday the market was up and down all day, not just in value, but green and red, green and red, all day. I went into Ford about 2.5% I think Monday or Tuesday, partially to put a toe in which for me 1) makes me feel I made less of a mistake if the market goes up, and also puts me involved into the market in a real way which I think is better for feeling it, and also when it goes down tempers my mind so I'm not always thinking of going into this or that stock. It went down a few percent Thursday, and then Friday a few percent and I sold it. What we also saw was that while in past weeks the Dow had many red days the Nasdaq and often S&P were green at the same time. But this week they were all three red, and by 1 or 2 percent each. Some respected investors are still sitting on the sidelines waiting for a better time to invest.
The news this week has been more and more hospitalizations. In news segments people talk about better ability to treat it than before. Some states that opened or were opening scaled back or stopped reopening. The World Bank or IMF I forget which made a lower projection for global GDP. They've been thought of by market analysts as optimistic in their numbers before and still. Big famous companies are in headlines for lower sales, layoffs, downsizing, closing stores. Consumer spending eased upwards a little in May. Employment numbers are lower again, and mortage bailouts 'suddenly' swelled. In July the stimilus checks stop, unless they're renewed. Polls have Biden leading in everything except the economy, and headlines say investing experts are preparing for a Biden win in some cases. The same stories say the Democrats might flip the Congress as well, or maybe it would be Biden with still a Republican Congress. The big banks had restictions put on their dividends because the Fed thinks they could be stressed. These banks may slash dividends. Analysts are clueless on earnings and it's expected to continue, since there's no guidance now. Unions are seeking more funding to extent payrolls. Entry level job postings are down 70%.
Kanye West is partnering with Gap. How can he think he'll be viewed as anything but lame for this? However, the money might interest him more and also Kanye is somewhat I think immune to that because he's always done his own thing more or less whether it's popular and profitable or not. Plus, perhaps the effect of this kind of thing is less when your market audience is black pop culture, which seems to be a lot more about money is the main thing, and is itself a part of credibility because it has such real value, compared with for example the grunge or hippie music movements where anything like that would be defined as selling out real value for the dubious value of money. That this even occurs to me may be because I have a background in European culture and these movements in it, whereas if I came from a lot of other places Kanye's move would probably seem undoubtedly pure.
There was a headline the other day the Fed is responsible for no one being able to invest in low-income housing because of what the Fed is doing. For a long time, lower-income housing has been very difficult or kind-of impossible to build. In cities land value is the main cost, and there's not enough houses at all for demand and real estate investment at all levels, so if you buy a piece of land to build apartments or houses, you can build an expensive one that will fill up right away or a cheap one that will fill up right away. However, I'm starting to wonder if the Fed with it's liquidity might make it impossible for the investor to invest in any actually valuable stocks. The liquidity propped up the market and made prices go up, but now those stocks are priced beyond value, although some investment authorities upgrade this one or that one higher than they are valued, like Amazon, PayPal, etc. So it might get to the point no one CAN invest in them because the price is too high, and they can't invest in the other companies because their future as businesses isn't certain, so everyone might end up holding cash. Bonds are so devalued, and short-term bonds, as I mentioned above, are par with money because the Fed said they'd keep interest rates at 0 for a couple years.
Social media platforms increasinly are being politicized. The politicized part isn't in the discussion yet, just that Twitter, Slack, etc are censoring the president, Facebook isn't censoring anything except like hate speech and things that would suppress voting. There's been lots of headline backlash against FB for this from employees and there's a movement where giant companies are pulling advertizing from FB and Insta in response, most recently Verizon, Unilever. You might expect these companies are all Democrat. Maybe they want to cut advertising anyway because of the situation, and they can look good with the Democratic party by doing it in a way where they look like they're joining this movement.
A new platform, actually years old but not much used, went from 1 million to 1.5m users last week because Republicans don't like Twitter sensoring the President. Unilever in their statement said they were withdrawing from all social media platforms due to the polarizing nature of them. At first I thought Unilever was boycotting Facebook like the other Democrat companies, because I'd just read the headlines and first paragraphs of the articles on my mainstream news app, but in the fineprint later on I learned that wasn't true. Other big companies are doing the same, but also saying they were going to cut spending anyway due to what's going on. Even in CNBC news the headlines and most of the article refers to companies as joining the boycott of Facebook when they clearly stated they were withdrawing from all social media including Twitter, but in the articles it sounds like they're joining the anti-Republican movement when they're not. The new app is called Parler and in statements the CEO says 'anything you can say on the streets of NY you can say on Parler' but then when you read what's prohibited it's exactly the same as Facebook and Twitter, which is not free speech and definitely not everything you can say on the street. For Zuckerberg who it looks like doesn't want to take a side in this and actually be open to R and D both unlike Twitter it's tough because Democrats are all mounting an offense against him, which includes the current BLM wave which is calling on them to do more things with 'hate speech.' This is really what you get though if you don't stand for freedom of speech which isn't qualified or limited in this area and that area as the owners see fit to change or implement. If you go that route, I mean actual free speech, first of all you couldn't do it with a US (or Canada or European etc) domain or server, because those places don't allow free speech on their internet, and you'd have to go through a less famous country, but besides that you'd have to fend off initially a mass of people disliking you because they don't like what other people are saying. However, it might be able to pass through this to the point where people actually accept free speech as a thing on a platform.
And when I say 'that's what you get,' I mean not only that your platform is weak and that you support a country that doesn't have human rights. Speech, thought, and belief in this case. But you also get a situation, maybe unavoidable, where your platforms will be fractured because political power groupings will dominate them through the control of speech, driving the less powerful opposing groupings off the platform to their own platform. Divisive along clear lines of dominance battles, just like tribal politics in Africa.
Everyone had expected that the virus would have a second wave or a possible second wave when the northern hemisphere gets cold again in September, October, November. This was a consideration for markets. What happened though was at least in the US states quarantined a bit and then as things looked better everyone got euphoric about things going to be better and better and states all reopened and hospitalizations spiked to new highs within a couple weeks of reopening. So rather than a second wave, the first wave continues. That was a surprising development to analysts and myself.
Biden is the Democratic candidate after Bernie and the others dropped out amid depressing probabilities for them. This is evidence the lessons from Trump's election haven't turned into actual changes in the party. Biden is so unimpressive and besides smiling nicely doesn't seem to have much to bring. Why couldn't they in 4 years bring out a new, exciting, competent candidate? From their massive pool of Democratic people? Maybe someone not before involved in politics, like Trump and Trudeau. Biden is currently, according to headlines in news, which is mostly written by liberals and Democrats, leading in almost everything, but I haven't heard him talk yet anywhere. And when it gets to the debate I suspect Trump is going to destroy him. Even though Trump could easily be destroyed also by a competent adversary, he hasn't faced one in the R and D career politicians he went up against on TV, Trump has the ability to attack a person in a public way to put fear in them, and so far none of those guys knew how to fight back the same way. Cuban would be exciting to watch in debate with Trump, but I don't think Cuban is ready to run for president yet. But the next term is 4 years from now, and it would be time for a probably change to D if Trump keeps office, just given that they seem to switch every term or two. He'll be 65 in 2024. He seems so much younger, like in his 40s, sometimes almost 50, but he's three years older than Obama.
This is a really fast paced market. Reading this, you have to keep in mind that any given day during these months you could only consume news from that day or a day before. News from three days ago was outdated to irrelevance. News from 6 or 12 months ago was talking about expectations that were completely changed, which may be different from the past many years of steadily rising markets with somewhat segmental events like the China trade war affecting parts of it and overall in a lesser way, but news from analysts from 6 months or a year earlier were still relevant as talking about expectations for the future that were still the model. Now, the expectations change every 24 hours. In other words, there is no certainty. Every day we look at what's happened in the past 24 hours compared with the past four months, contrasted with the past 10 years and the 2008 09 crisis and the dot com bubble and the Great Depression of the 1930s, and try to make new predictions based on that, as if it were going to continue as a trend tomorrow or next week.
Broadly, people still think the markets and economies will resume as they had been going for the past 10 years and for the past 100 years maybe, after this whole virus thing has passed, when there's a vaccine or something. But that's not certain. The current actions of the Fed pumping liquidity is unprecedented, and economists were already projecting a recession based on the market cycle and economic circumstances. It seems therefore possible that there could be a new turn. If past recessions were beaten without liquidity and artificial market bottoms and other supports by the Fed, and had to actually restrengthen and wealth was lost and had to be rebuilt, and this time we have tons of perhaps-artificial liquidity and an perhaps-artifical market, something different could happen, different from past recoveries. The liquidity could lead to inflation, which could be combined with less production and less employed and less actually earned money, and then other events would trigger other events. Who knows. Personally I'd really enjoy getting into a room or even these days a video room with a few other people who know either about history or economics or are creative in terms of thinking of unthought of things, and working out possible projections, but I don't know people who are either educated or willing to do that sort of thing.
In a couple days it'll be Q3.