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gaj


Total Posts: 115
Joined: Apr 2018
 
Posted: 2020-06-04 04:26
@EL: I had a similar, maybe more naive, thought process. If PE ratio was 18, subtracting 2 years of earnings should decrease the price by 2/18=11%. So 30% drop looked excessive.

My concern is the long term fundamentals, especially debt. Debt-to-GDP ratio has only increased in the last two decades. We hadn't paid off the stimulus for 2008, and now covid sends the debt through the roof. I wonder what will happen when we start deleveraging. Also, what will trigger the deleveraging phase?

EspressoLover


Total Posts: 458
Joined: Jan 2015
 
Posted: 2020-06-04 21:11
@gaj

That's probably my biggest bearish risk as well. That being said, if we're specifically talking about the impact of Covid, I don't think the debt picture changes that much.

CBO projections say that COVID adds $5 trillion to US public debt by 2025 (with most of that occurring in 2020). So public debt to GDP goes from ~90% to ~105%. That's a big one-time jump, but doesn't change the long-term picture that much. Even before Covid, the CBO projected that number to be 180% by 2050.

What I'm saying is there are two separate questions. One is should the market be trading at a more significant discount relative to February highs? Two is was the price in February too high irrespective of Covid?

I don't really know the answer to the latter question. There are a lot of arguments on both sides. But I don't see many compelling reasons why the Covid discount to the fair price (whatever that may be) should be more than 10-15%.Maybe, maybe, maybe, if one thinks there's underlying rot in the system and Covid will catalyze a crisis that otherwise would stay dormant for a long time.

To tangent off on the debt/GDP question in general, the most compelling reason not to worry is Japan. At least in terms of forced deleveraging Despite having more than double our debt levels for several decades, interest rates are still zero, inflation is de minims, the currency is stable, and there's no fiscal or monetary crisis in sight. There's pretty good macroeconomic evidence that the decline in real interest rates is primarily driven by aging demographics.

The demographic picture isn't changing anytime this century. That augurs that real rates will stay zero-ish for a very long time. What really matters in determining the debt burden isn't the nominal value but the coverage ratio. Permanent zero rates would imply that the economically sustainable debt burdens is much higher than the historical 100-150% upper bound that we've seen in earlier eras.

Good questions outrank easy answers. -Paul Samuelson

frolloos


Total Posts: 126
Joined: Dec 2007
 
Posted: 2020-06-12 06:52
>I am not sure it is a good thing Wall Street quants (assuming Kolanovic is considered >a quant by the community) are turning to Covid-19:

>https://twitter.com/carlquintanilla/status/1263170459450978314


>The tweet is amusing, the chart is not even wrong.

And here we are 3 weeks later: number of infections and hospitalizations in the US are on the rise.

No vanna, no cry

shirleyjonesz711
Banned

Total Posts: 5
Joined: Jul 2020
 
Posted: 2020-07-15 02:20
I agree with you. It's been also affecting the mental health of all of us since we are being quarantined. I am just occupying myself playing games from forge of empires and akinator the genie to entertain myself and keep myself sane during these difficult times.

phopstar


Total Posts: 9
Joined: Jul 2020
 
Posted: 2020-07-30 17:09
It looks like the vaccines are making a lot of progress. Phase 1 data from Pfizer and Moderna look quite encouraging. Antibody production is initiated in significant quantities (which likely covers efficacy) and safety looks OK. It will probably be more unpleasant than a flu shot, but who's really going to complain about that..

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-08-06 18:51
Seems by october-November covid will be over.
Will there be recovery or the damage is done and we will see new "challenges" (so many without covid)?

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-09-10 13:08
Some analysis on the matter. It takes about 30 mins to watch.
Spoiler: we, humans, all go wrong way.

https://youtu.be/8UvFhIFzaac

Maggette


Total Posts: 1268
Joined: Jun 2007
 
Posted: 2020-09-10 13:24
https://elemental.medium.com/a-supercomputer-analyzed-covid-19-and-an-interesting-new-theory-has-emerged-31cb8eba9d63

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-09-10 13:55
I have read it. The death rate is still comparatively low (although terrible).

Updates:
- AstraZeneca suspends research due to unknown infection of 1 patient
- Russians pledge to make Sputnik-V affordable globally (like it was with poly in the beginning of 1960s)


pj


Total Posts: 3555
Joined: Jun 2004
 
Posted: 2020-11-13 10:35
> Seems by October-November covid will be over.

Which year? Piss

The older I grow, the more I distrust the familiar doctrine that age brings wisdom Henry L. Mencken

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-11-13 11:04
in China.
google: china covid

The other countries are either lazy, not willing to or maybe stupid (?).

Maggette


Total Posts: 1268
Joined: Jun 2007
 
Posted: 2020-11-13 11:27
I don't get how so many people in the US are still not willing to accept that COVID-19 is a serious problem?

Sure, It is not polio. Or even something worse. No reason to panic.

But all the smoke screens about bad tests (of course they are not perfect), bad testing practice (true ..not enough unsymptomatic testing), exaggerated deaths tolls, the true CFR (attention whore Ioannidis???) ...?

I get that it was quite complex and complicated back then. Nobody had a clue. Now that's not the case any more. And I am sorry to be combative here, everything else is just denial.

I think it is extremely simple now:
1) look at excess mortality. It's a robust statistic that even a 3rd world country like the US can measure relatively accurately.
2) Have there been spikes even higher in the 90s? Sure. Short spikes! But we are interested in the integral. And a prolonged excess mortality like that?
3) The risk for a population is defined by both CFR AND!!! R0. So Ioannidis needs to shut the fuck up. Seriously. Total costs are defined as number of items * price per item...not just price per item!

I really don't get it any more? I mean all the boooyaa about patriotism on veterans days and "heroes defending american citizens"? You could grab a couple of Jihadist and fly two airplanes in two towers every 2 weeks to create that excess mortality?

Science can't give you the right answer on how much you are willing to pay in order to keep the death toll down. There are trade offs that are a political and moral decision nobody has an definitive answer for.

But keep on pretending it is nothing is kind of weird? What am I missing?

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

pj


Total Posts: 3555
Joined: Jun 2004
 
Posted: 2020-11-13 12:55
@Maggette
Hear, hear.

Well, here in Europe I encounter lots of people who also refuse to
accept the COVID-19 or propose to treat it with hydroxychloroquine.

The older I grow, the more I distrust the familiar doctrine that age brings wisdom Henry L. Mencken

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-11-13 16:46
@Magette
"I really don't get it any more? ... What am I missing?"

People are being prepared for something drastic and terrible, I think. When they become desperate and shaken, their mind becomes cloudy, and they do weird things such as democratic election of Hitler.

Or another explanation. Since 2007 I heard (literally) mumbling about "we need to reset the economy. Only war can do it". Maybe covid is a soft version of such long-sought reset.

And amount of money injected into covid cure is huge without visible result. To pay ~billions for combinatorial robotic test tube research? It looks like a cover-up operation for something else (e.g. operation Hitler-2?).

Or we get hyperbitcoinization next year? )) ... of course, I don't know. Just exploring space of possibilities.
"Perhaps, perhaps, perhaps" sounds in my brain.

jslade


Total Posts: 1226
Joined: Feb 2007
 
Posted: 2020-11-14 00:10
>look at excess mortality.

Look at it by age group. Sweden burned their dry tinder. Now nothing is happening there, disease-wise.

The problem with covid is the treatment; blowing up all the small businesses in the world, the travel industry, and driving everyone insane by locking them up at home alone, is vastly worse than the disease. Beyond that, the treatment doesn't seem to help much.

FWIIW nobody shut down the world economy over polio, which was, as you say, a lot worse.

I stand by my previous statement in February: this is an example of mass hysteria. At best.

"Learning, n. The kind of ignorance distinguishing the studious."

chiral3
Founding Member

Total Posts: 5178
Joined: Mar 2004
 
Posted: 2020-11-14 01:12
The disease is surging there, more so than earlier in the year, but there's no death. So not lethal but far from costless. I suppose if I had a choice between being sick in sweden or sick in the us, as an average person, I'd choose sweden. The mass hysteria is a byproduct of not having a plan. The herds need leadership and a plan. They need steaks, flat screen tvs, dollar stores, and all the shit that's replaced a belief in god (lowercase g). Maybe if it doesn't work out God will save them; probably not from covid, but from diabetes.

Nonius is Satoshi Nakamoto. 物の哀れ

Maggette


Total Posts: 1268
Joined: Jun 2007
 
Posted: 2020-11-14 09:07
"age group".
https://www.cdc.gov/mmwr/volumes/69/wr/mm6942e2.htm

I did watch at age group. The US is not looking great there either. It isn't the end of the world. But it sure as fuck is not the flue. That's too long and way too many dead people. All age groups.

And that holds true for Germany also. We are back to >200 deaths again (all age groups, COVID19 related). Scale that up by population size and these are numbers comparable to the US. Individualism took over again....and we are back to the start.

Again. No Polio. A decent amount of social distancing will do. Look at South Korea, China or Singapore.

I think we Westerners need to do a post-mortem. I think we became a bunch of whiny and undisciplined egomaniacs.

"The problem with covid is the treatment; blowing up all the small businesses in the world, the travel industry, and driving everyone insane by locking them up at home alone, is vastly worse than the disease."

I don't know. I am torn on that one. I don't have many numbers on this theory. And the few numbers I get are from Economists. Macro-economic models suck even more than epidemiology.

At the end of the day we are still capable of creating more food than it is good for us. Shelter and energy, clothes. The essential things. The rest are just digits. I know this sounds horribly naive. But think of wartime economies. Maybe the whole "we are killing the economy" stuff is hysteria as well?

Beyond that, the treatment doesn't seem to help much."
To me it seems that it does help. At least in Asia. A treatment only works if you are a good boy and take your medicine.

I do think we have an ok understanding of what will happen if we ignore COVID19. And I think it is a necessary discussion among grown ups. People die. Sometimes many people die. We still sell alcohol, crazy pain killer drugs and liquid sugar bombs, well knowing they are causing disease and death. Of course. These are choices and don't grow exponentially. But we can't, and probably also don't want to, protect everybody at all times.

I do think the discussion is about the utility function. What are we willing to sacrifice? That is a moral and political discussion.

Everything else, at least to me, are smoke screens.

But you are older and smarter than me. I will hide in my cave and reevaluate my point of view.

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

Strange


Total Posts: 1668
Joined: Jun 2004
 
Posted: 2020-11-14 16:07
> It isn't the end of the world. But it sure as fuck is not the flu
That's what making it so difficult. If it was The Black Death, we'd shut everything down and nobody would argue against it. If this was just another flu, we'd keep chugging along. Instead, it is something that's right on the cusp of being "a big deal" based on severity metrics (e.g. case fatality and case hospitalization ratios). For instance, it unclear if excess mortality in vulnerable populations will be statistically significant - it's something that remains to be observed a posteriori (even the posteriori observations are going to be muddle due to the pandemic measures, too).

Personally, I have to agree with @jslade that we are seeing a mass hysteria that will bite us in the ass. IMHO, once we have established who the vulnerable population is, we should have changed the response to protect that population while preserving the overall fabric of the society. Instead (in big part because the vulnerable population is largely composed of the most politically active segment of the society), we are "saving" them at the expense of everyone else.

'Progress just means bad things happen faster.’

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-11-14 16:21
Chinese public does not follow hysteria, but the discipline of wearing mask, washing hands and distancing. Anyone else is a victim of own ego and stream of teasing news exploring the resulting fears.

Strange


Total Posts: 1668
Joined: Jun 2004
 
Posted: 2020-11-14 16:35
If it only really came down to wearing masks and washing hands, nobody would have a problem with it. Instead, we are literally reshaping our lives, at the expense of the younger generations, to save lives/health of a small portion of the population. I would also point out that the younger generations will be paying for this in more ways than one - first, by suffering through the actual lockdowns and then by suffering though the economic consequences of these measures.

PS. the media bullshit that accompanies is pathetic, both from the left and from the right

'Progress just means bad things happen faster.’

chiral3
Founding Member

Total Posts: 5178
Joined: Mar 2004
 
Posted: 2020-11-14 16:48
You guys aren't seeing the value in the virus, like all the little hard resets it has given us. It radically sped up the evolution of how we work. I am excited that it's transformed commercial real estate. I am glad less people are driving and stuffing their fat fucking faces as much at these suburban pop-ups that look like mini-Disneylands where the only attraction is Fogo de Chao, pseudobreweries, a steakhouse, and other various facsimiles of food. So Cody or Finn or Ashe didn't get to see the Pantheon this summer.

We need new metrics if we are going to argue about this shit. I did a back of the napkin and the perpetually fucked US government somehow nailed the stim number (literally, take the incremental that got U6 to 10 and change percent in August and multiply by avg income and you have the previous number). But, is everything copacetic? Hearing form the CEO of a bank the other week he said that every person in the US that make less than $50k spent their check and every person that made more banked it.

Turning more macro: 4 and change GDP Q4? ERP is getting crushed. Yes, variable "vaccine" noice, but stimulus, break even inflation,...., does this mean that rates are going higher even though they can't? After 15 years should I buy value stocks? Wouldn't it be ironic if all this culminated in a contraction in tech funding? Who saw that coming. Too fast and too hard and it's not fun for a girl - you want to be able to do it every Friday night, not just birthdays and special occasions.

Could it be after all this that that we have great employment, tight spreads (no fallen angels, maybe some tepid migration), maybe slightly higher rates, but not too high, increasing equal-weight S&P500 (remember, your 401k is not the economy!), zero vol weeks punctuated by 8sig burps. It used to be that looking at dealer gamma had predictive value despite the immense power of buy-backs and systematic, institutional flows.

It could just be as simple as a macro flight to quality is more probable. That would be ironic that the dither of the administration, the virus, all summed to improve the S/N ratio in that direction. The vol isn't in the base space. Vol has been lifted to higher and higher spaces like "yield curve control" and "MMT"; things with no numbers and no markets, that you can't point at and that can be alluded to in tweets and metadata. You have nothing to do if you live in these lower spaces as you wait for information to get lifted back down. You have no control over anything anymore, not even the illusion of control, which at least you had when you were trading in the 2000's. The microstructure is ex post and not ex ante. The virus has further locked in this tendency that was initialized in the 1970's, boosted at 9/11, hosted by maturing digital, circa 2008, and fortified by the financial crisis.

Nonius is Satoshi Nakamoto. 物の哀れ

chiral3
Founding Member

Total Posts: 5178
Joined: Mar 2004
 
Posted: 2020-11-14 17:10
Let me bolt another comment on here, as a thought experiment. Let's take something really obvious... not super-obvious like why do we still have delivery people? or check out people? or mail men? or contract lawyers? or doctors? How about "Why do we still have life insurance being sold?"

Think about this for a second in terms of what it is versus what it should be, and I will define the latter to be a tontine administered on a decentralized and distributed system. And let's think about the thing that mediates not the transition itself but the rate of transition. Regulation is an antagonist, so let's just think in terms of dissolution of antagonists and identification of agonists.

Google says there are about 500,000 insurance salesmen in the US selling hundreds of things that essentially amount to your wife and kids getting paid when you're tits up and powered down (yes, the perspective and gender was intentional; women, excluding a few anal births, still have children and that's actually a thing). I don't know, but I'll guess their average age is 50. They want their steaks and their cars and their flatscreens too. Anyway, whats the agonist that mediates the rate of transition, in this special case?

I think if you can figure that out you may have a job where you aren't in that base space getting carried by the currents. If you're making money being carried by the currents just remember it's transactional, very rentec, very orderbook mining, very 2000's.

Nonius is Satoshi Nakamoto. 物の哀れ

Strange


Total Posts: 1668
Joined: Jun 2004
 
Posted: 2020-11-14 17:11
I am not arguing from the economics perspective. I am simply unhappy that some group of population is being saved at the expense of my regular lifestyle. Why can't I travel, go to the gym or to a restaurant? Because some asshole politician has decided that my vote is less important than the vote of the old farts that are being saved.

'Progress just means bad things happen faster.’

Kitno


Total Posts: 497
Joined: Mar 2005
 
Posted: 2020-11-14 17:43
The ejection of cost benefit analysis since the pandemic began has staggered me since late March. In the UK it is the (historic) necessary mechanism to run the NHS. The absolute deaths were too high and too painful a political price to not flater and just on that. Perhaps we can forgive a little too - there wasn't much known about the virus then.

The most self-defeating thing the West did was to copy an eradication policy (of China) once it had become an issue of suppression (gloabl). That has catapulted China ahead of the West economically.

For me we are in the end days of our current economic system: ZIRP + 120-130+% Debt/GDP.

Yes, C3, the impetus to enact workflow reforms has been beneficial and it's reset many things but brought us closer to that economic endgame. Yet first is the huge tax rises and battle of population vs governments to hand back the power we have given them in the last 9m.

Humans now (last 2-3 decades) are now placing too much value on a life. Let us remember influenza entered the human population hundreds of years ago: if you were susceptible you died, if not you survived, thereafter death rates stabilized. We have pandemics every 30 years - this sets an horrific precedent.

On a laager on a hill. A long way from Avondale.

nikol


Total Posts: 1230
Joined: Jun 2005
 
Posted: 2020-11-14 18:19
I agree with chiral3 - every disaster has opportunities at every point we choose either to stay happy and seeing path out or to stay unhappy and blocking own mind from acting.

However, often some opportunities cross with morality (same as normality).

PS. Current regime of social development is called oligo-bureaucracy, where most of politicians make their wealth through the office. Those, who resist corruption become a prey.
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