Coronavirus

[TheStig]

I think there will be sectors that will be crushed like hospitality and multifam and retail landlords. Even if they clear up the virus in a month, people won't have the money or willingness to travel, retailers are closed and will be well behind on rent and multifam properties will likely be hit hard too and operating on slim margins.

That being said, since this is not a cause of the system, I think most will recover quicker than normal.

I don't think there is a "normal" baseline to compare this against.

Best case, there is the short term spike in unemployment claims but within 6 weeks this drops back to normal ranges. Hopefully employers have enough cash reserves to start hiring again in anticipation of the economy picking up, minimizing the unemployment lag. But I'm not sure how realistic that is, that employers will just wake up one day and all decide to hire.

Not very likely I would assume because unless there is a big movement (as in everyone goes back to work like normal instantly) they will be slow to rehire people. Likely will have larger debt incurred with less business. We are going to have to erase so much of the economy for this to even make sense.

I think the gov will prop this up. Loans and grants will be available.

[moorhosj]

I didn't read anything in that article that is either earth shatteringly new, or very specific. Yeah, China under-reported cases early on. But by what factor is not known. If it's by 100x, that is a big deal. If deaths were 500K and not 3K, that's a big deal. But they haven't said that yet. It's just speculation. And people are running with it as it was a fact.

Imperial College of London just last week issued a report that China was pretty accurately reporting numbers now, to the best of their knowledge.

I find it laughable that Pence is now using this story to shift blame- as if we had known earlier the full extent, maybe we would have acted differently. But would we? As the first case was found in the US, Trump was still telling everyone that it would not be a problem in the US, and soon we'd be back to having zero cases. Even when we knew it WAS becoming a big deal in other places, they were still very slow to react to the gravity of the situation, and make adequate preparations, like ordering more PPE to be made.

It was revealed recently that one of our agencies had submitted a report to the Trump admin. last year, warning of exactly this sort of a pandemic. So why didn't they act on that information back then, to get better prepared? He also blames Obama for "leaving the shelves bare"- yet he's had 3+ years to correct the situation. They disbanded a pandemic unit within the CDC. The abolished an office they had in China that studied infectious diseases. Yet now they want to say it's all China's fault we were caught blind sided?

This story about "thousands of funeral urns stacked out Wuhan" sounds suspiciously like the many false reports the US intelligence services and military put out in the run up to the Iraq War. The supposed yellow cake uranium that was being sent to Iraq, the satellite photos showing a purported biological weapons factory being built outside of Baghdad, the centrifuges that were supposedly being used to enrich uranium (even though international observers pointed out that they were not the kind used to enrich bomb grade materials). All later proven to be false.

Until we know more about exact figures, and about exactly how this got spread around the world, I'm taking all this China blaming with a grain of salt.

Obviously, China cannot be trusted, that isn't news to anyone. It's knowledge like that which leads the US to place specialists in countries we can't trust. Which is exactly what the CDC did for years, until the position was eliminated by our current administration. https://www.reuters.com/article/us-health-coronavirus-china-cdc-exclusiv/exclusive-u-s-axed-cdc-expert-job-in-china-months-before-virus-outbreak-idUSKBN21910S

Several months before the coronavirus pandemic began, the Trump administration eliminated a key American public health position in Beijing intended to help detect disease outbreaks in China, Reuters has learned.

The American disease expert, a medical epidemiologist embedded in China’s disease control agency, left her post in July, according to four sources with knowledge of the issue. The first cases of the new coronavirus may have emerged as early as November, and as cases exploded, the Trump administration in February chastised China for censoring information about the outbreak and keeping U.S. experts from entering the country to help.

[Chi town]

Dresden, to your point above... Trump made a massive mistake by not taking precautions early to prevent the spread. He has not shifted his tune but him and Pence talking about China is tiring. Fix your country. Let China worry about China.

We have intelligence in China and I guarantee Trump knew and knows what the real numbers are.

Trump has made the same mistake all the other countries have made... underestimating and underpreparing. Only South Korea moved early and pivoted well. They have a history of dealing with this... us not so much.

[Chi town]

Italy underreporting deaths by nearly 50% too. Not reporting anyone that died outside of a hospital due to the virus.

https://apple.news/AcLyuae-kT6Ky-TCvC94NIQ

[Michael Jackson]

I don't think there is a "normal" baseline to compare this against.

Best case, there is the short term spike in unemployment claims but within 6 weeks this drops back to normal ranges. Hopefully employers have enough cash reserves to start hiring again in anticipation of the economy picking up, minimizing the unemployment lag. But I'm not sure how realistic that is, that employers will just wake up one day and all decide to hire.

Not very likely I would assume because unless there is a big movement (as in everyone goes back to work like normal instantly) they will be slow to rehire people. Likely will have larger debt incurred with less business. We are going to have to erase so much of the economy for this to even make sense.

I think the gov will prop this up. Loans and grants will be available.

Yeah they will throw loans out there but that will only help with the loss and debt they have already. Many of these businesses will be able to bring on full staffs, because the market for them won't be there. A loan is great and all but you have to outpace your debt just to get even, one of the major ways is cutting overhead and that is often in the form of employees. I have run a few small businesses and currently do now. We are pretty transparent with our employees on how much the company makes, but hardly any of them understand the overhead and cost. For instance a package with us say you make 70,000 what it actually costs at the end of the day is the company around 137,000. WE bonus everyone and contribute to 401K's way more than any other company I have have ever seen (our new financial adviser dropped his jaw) so we are a little higher on cost and those two factors depend on how well we did financially year to year. Still, most don't understand the actually cost of a person is a lot more than their paycheck.

[dice]

Not very likely I would assume because unless there is a big movement (as in everyone goes back to work like normal instantly) they will be slow to rehire people. Likely will have larger debt incurred with less business. We are going to have to erase so much of the economy for this to even make sense.

I think the gov will prop this up. Loans and grants will be available.

Yeah they will throw loans out there but that will only help with the loss and debt they have already. Many of these businesses will be able to bring on full staffs, because the market for them won't be there. A loan is great and all but you have to outpace your debt just to get even, one of the major ways is cutting overhead and that is often in the form of employees. I have run a few small businesses and currently do now. We are pretty transparent with our employees on how much the company makes, but hardly any of them understand the overhead and cost. For instance a package with us say you make 70,000 what it actually costs at the end of the day is the company around 137,000. WE bonus everyone and contribute to 401K's way more than any other company I have have ever seen (our new financial adviser dropped his jaw) so we are a little higher on cost and those two factors depend on how well we did financially year to year. Still, most don't understand the actually cost of a person is a lot more than their paycheck.

would it be beneficial to your business to have government-provided health care available to all americans?

[dice]

Italy underreporting deaths by nearly 50% too. Not reporting anyone that died outside of a hospital due to the virus.

https://apple.news/AcLyuae-kT6Ky-TCvC94NIQ

i don't doubt that, but the article you linked does not mention it

[dice]

You won't have to worry about the virus if we lock down until September.

We won’t though. We still have most of the states not doing shelter in place. Don’t know if people or our economy could survive a true 4 month lockdown like China did.

down to 17 states w/o shelter in place orders. when you include the city/county orders, over 80% of US citizens are being asked to stay home. with more almost certainly to come

add the state of florida to the list. previously their governor said he was waiting on trump to issue a nationwide order. today he changed his mind, saying he didn't realize that asymptomatic people could pass on the virus

mississippi, pennsylvania and nevada added today too. we're going to 100%. nobody wants to be embarrassed by falling behind mississippi

[Chi town]

Italy underreporting deaths by nearly 50% too. Not reporting anyone that died outside of a hospital due to the virus.

https://apple.news/AcLyuae-kT6Ky-TCvC94NIQ

i don't doubt that, but the article you linked does not mention it

Really?

In the hardest-hit area around the city of Bergamo, some 4,500 people died of coronavirus in March, according to data analysis firm InTwig, while only 2,060 were included in the data provided by the Civil Protection Agency.
Most of the elderly victims died in their homes or in old peoples’ homes and, because they never made it to hospital, were never tested for the virus, according to the study based on data from doctors and overseen by a professor at Bergamo University.

[dice]

Italy underreporting deaths by nearly 50% too. Not reporting anyone that died outside of a hospital due to the virus.

https://apple.news/AcLyuae-kT6Ky-TCvC94NIQ

i don't doubt that, but the article you linked does not mention it

Really?

In the hardest-hit area around the city of Bergamo, some 4,500 people died of coronavirus in March, according to data analysis firm InTwig, while only 2,060 were included in the data provided by the Civil Protection Agency.
Most of the elderly victims died in their homes or in old peoples’ homes and, because they never made it to hospital, were never tested for the virus, according to the study based on data from doctors and overseen by a professor at Bergamo University.

the entirety of what i see when i click on that link:

ROME (Reuters) - The death toll from an outbreak of coronavirus in Italy has climbed by 727 to 13,155, the Civil Protection Agency said on Wednesday, a significantly smaller increase than seen on Tuesday and the lowest daily tally since March 26.

However, the number of new cases rose more sharply than a day earlier, growing by 4,782 against a previous 4,053, bringing total infections since the outbreak came to light on Feb. 21 to 110,574.

In Lombardy, the epicenter of the outbreak, the daily tallies of deaths and cases were both up compared with those of the day before, reversing the recent trend.

Of those originally infected nationwide, 16,847 had fully recovered on Wednesday, compared to 15,729 the day before. There were 4,035 people in intensive care, up from a previous 4,023.

Italy has registered more deaths than anywhere else in the world and accounts for around 30% of all global fatalities from the virus.

Italy’s largest daily toll from the epidemic was registered last Friday, when 919 people died. There were 889 deaths on Saturday, 756 on Sunday, 812 on Monday and 837 on Tuesday.

Reporting by Crispian Balmer, editing by Gavin Jones

[TheStig]

Not very likely I would assume because unless there is a big movement (as in everyone goes back to work like normal instantly) they will be slow to rehire people. Likely will have larger debt incurred with less business. We are going to have to erase so much of the economy for this to even make sense.

I think the gov will prop this up. Loans and grants will be available.

Yeah they will throw loans out there but that will only help with the loss and debt they have already. Many of these businesses will be able to bring on full staffs, because the market for them won't be there. A loan is great and all but you have to outpace your debt just to get even, one of the major ways is cutting overhead and that is often in the form of employees. I have run a few small businesses and currently do now. We are pretty transparent with our employees on how much the company makes, but hardly any of them understand the overhead and cost. For instance a package with us say you make 70,000 what it actually costs at the end of the day is the company around 137,000. WE bonus everyone and contribute to 401K's way more than any other company I have have ever seen (our new financial adviser dropped his jaw) so we are a little higher on cost and those two factors depend on how well we did financially year to year. Still, most don't understand the actually cost of a person is a lot more than their paycheck.

I understand there is more cost to employees and it will be gradual to get everyone back. We already have a lot of jobs people just aren't willing to do that will get filled and it'll likely be a lot of pt's or temps to avoid those costs but I think the fundamentals of the economy haven't changed and things will get going.

[Axolotl]

Apparently, Lauri Markkanen is currently practicing at home, honing his shot. Here's a video of him shooting at his private practice space: https://areena.yle.fi/1-50494763

[Habs72]

Watch on YouTube

[disoblige]

It came from Chinese Researchers.

Watch on YouTube

;feature=youtu.be

[Michael Jackson]

I think the gov will prop this up. Loans and grants will be available.

Yeah they will throw loans out there but that will only help with the loss and debt they have already. Many of these businesses will be able to bring on full staffs, because the market for them won't be there. A loan is great and all but you have to outpace your debt just to get even, one of the major ways is cutting overhead and that is often in the form of employees. I have run a few small businesses and currently do now. We are pretty transparent with our employees on how much the company makes, but hardly any of them understand the overhead and cost. For instance a package with us say you make 70,000 what it actually costs at the end of the day is the company around 137,000. WE bonus everyone and contribute to 401K's way more than any other company I have have ever seen (our new financial adviser dropped his jaw) so we are a little higher on cost and those two factors depend on how well we did financially year to year. Still, most don't understand the actually cost of a person is a lot more than their paycheck.

I understand there is more cost to employees and it will be gradual to get everyone back. We already have a lot of jobs people just aren't willing to do that will get filled and it'll likely be a lot of pt's or temps to avoid those costs but I think the fundamentals of the economy haven't changed and things will get going.

I hope so and it is hard to predict right now too. It isn't like we haven't pulled out of economic crisis before (money is fake but laborer and resources aren't) so we have the ability for sure, it is more just how long this will take to even out.

If you look at WWI in 1914-1918 than we had a pandemic in 1918 the the market crash in 29 its a pretty big segment of time granted we have ways to correct it faster these days. The reassuring this is that as a country and the world we have faced this in the past and can indeed face it again.

[dougthonus]

I understand there is more cost to employees and it will be gradual to get everyone back. We already have a lot of jobs people just aren't willing to do that will get filled and it'll likely be a lot of pt's or temps to avoid those costs but I think the fundamentals of the economy haven't changed and things will get going.

Prior to the coronavirus, there were lots of indications that the stock market was in a bubble and was probably inflated by about 20% relative to earnings/growth/etc...

The price of the stock market now is reasonable if there were no coronavirus impact. It would still represent about 7% growth per year since 2016 at its current price level, if you look at GDP growth or earnings growth that's actually a lot more in line with this value than the high.

I generally track the sp500, a fair value of the sp500 now is probably sub 2000 based on growth / earnings potential / risk relative to other investments and historical levels. This was a pandemic that destroyed our economy in the middle of what should have been a bubble anyway.

I don't know where the market will go, because there are lots of reasons people may pump money into the market regardless of what the real value should be, but based on a rational value of return on investment, the market is heavily overvalued at this point IMO. Though the market has often sustained heavily overvalued states for extended periods of time.

If you look at a rational value for the market, it's probably about 5%-6% yield above the risk free rate (typically viewed as the return on the 30 year US treasury). That rate is 1.29% today, so you'd expect the yield on the stock market today to be rationally priced at 6-7%. The backwards PE ratio of the market at today's price is 18.72 which is 5.3% which would signal undervalued if we thought this future 12 months was the same value as the past, but we don't expect that. So right now, we've probably priced in a decline in earnings of about 5-10% or so, but we probably really expect earnings to be about 50% worse.

Granted, this isn't a pure analysis, because it really depends on whether you view this earnings hit as one time or pervasive of a recession that lasts for years and there are obviously more factors at play, and the market can just stay way overvalued regardless. However the return on investment case is something which is generally true.

We certainly will enter a point that's likely similar to May 2009
https://www.multpl.com/s-p-500-pe-ratio

Where basically, everyone was betting on teh market to recover and the earnings weren't there yet, because earnings are a trailing indicator. Whether we're at that May 2009 point now or not would be an interesting question, but I don't think so, because I think job loss and economic conditions will get worse for a long time, and we won't fully be on the road to recovery until there's a solution for coronavirus other than social distancing (vaccine, quarantined out of existence, effective treatment that removes mortality risk, etc..)

[TheStig]

Yeah they will throw loans out there but that will only help with the loss and debt they have already. Many of these businesses will be able to bring on full staffs, because the market for them won't be there. A loan is great and all but you have to outpace your debt just to get even, one of the major ways is cutting overhead and that is often in the form of employees. I have run a few small businesses and currently do now. We are pretty transparent with our employees on how much the company makes, but hardly any of them understand the overhead and cost. For instance a package with us say you make 70,000 what it actually costs at the end of the day is the company around 137,000. WE bonus everyone and contribute to 401K's way more than any other company I have have ever seen (our new financial adviser dropped his jaw) so we are a little higher on cost and those two factors depend on how well we did financially year to year. Still, most don't understand the actually cost of a person is a lot more than their paycheck.

I understand there is more cost to employees and it will be gradual to get everyone back. We already have a lot of jobs people just aren't willing to do that will get filled and it'll likely be a lot of pt's or temps to avoid those costs but I think the fundamentals of the economy haven't changed and things will get going.

I hope so and it is hard to predict right now too. It isn't like we haven't pulled out of economic crisis before (money is fake but laborer and resources aren't) so we have the ability for sure, it is more just how long this will take to even out.

If you look at WWI in 1914-1918 than we had a pandemic in 1918 the the market crash in 29 its a pretty big segment of time granted we have ways to correct it faster these days. The reassuring this is that as a country and the world we have faced this in the past and can indeed face it again.

Right but what you're missing is the in between the WW1/pandemic time and the great depression was the roaring 20's that saw a lot of growth. It wasn't a 15 year crash.

[TheStig]

I understand there is more cost to employees and it will be gradual to get everyone back. We already have a lot of jobs people just aren't willing to do that will get filled and it'll likely be a lot of pt's or temps to avoid those costs but I think the fundamentals of the economy haven't changed and things will get going.

Prior to the coronavirus, there were lots of indications that the stock market was in a bubble and was probably inflated by about 20% relative to earnings/growth/etc...

The price of the stock market now is reasonable if there were no coronavirus impact. It would still represent about 7% growth per year since 2016 at its current price level, if you look at GDP growth or earnings growth that's actually a lot more in line with this value than the high.

I generally track the sp500, a fair value of the sp500 now is probably sub 2000 based on growth / earnings potential / risk relative to other investments and historical levels. This was a pandemic that destroyed our economy in the middle of what should have been a bubble anyway.

I don't know where the market will go, because there are lots of reasons people may pump money into the market regardless of what the real value should be, but based on a rational value of return on investment, the market is heavily overvalued at this point IMO. Though the market has often sustained heavily overvalued states for extended periods of time.

If you look at a rational value for the market, it's probably about 5%-6% yield above the risk free rate (typically viewed as the return on the 30 year US treasury). That rate is 1.29% today, so you'd expect the yield on the stock market today to be rationally priced at 6-7%. The backwards PE ratio of the market at today's price is 18.72 which is 5.3% which would signal undervalued if we thought this future 12 months was the same value as the past, but we don't expect that. So right now, we've probably priced in a decline in earnings of about 5-10% or so, but we probably really expect earnings to be about 50% worse.

Granted, this isn't a pure analysis, because it really depends on whether you view this earnings hit as one time or pervasive of a recession that lasts for years and there are obviously more factors at play, and the market can just stay way overvalued regardless. However the return on investment case is something which is generally true.

We certainly will enter a point that's likely similar to May 2009
https://www.multpl.com/s-p-500-pe-ratio

Where basically, everyone was betting on teh market to recover and the earnings weren't there yet, because earnings are a trailing indicator. Whether we're at that May 2009 point now or not would be an interesting question, but I don't think so, because I think job loss and economic conditions will get worse for a long time, and we won't fully be on the road to recovery until there's a solution for coronavirus other than social distancing (vaccine, quarantined out of existence, effective treatment that removes mortality risk, etc..)

Doug, I think the difference here is that this will hopefully be an isolated incident. I'm not saying we're at the bottom. But I don't think this type of black swan event will lead to a long protracted recession. I think with it's nature, it will be shorter.

[dougthonus]

Doug, I think the difference here is that this will hopefully be an isolated incident. I'm not saying we're at the bottom. But I don't think this type of black swan event will lead to a long protracted recession. I think with it's nature, it will be shorter.

There are lots of reasons to think this isn't true though.

Unemployment is real. Many (most) of those people are now in critical financial condition and will not be spending the same way. With lack of spending, you will also see business pick up slower and companies slow to hire back in many cases. Tons of companies are expect just to go under.

There are all kinds of structural problems that these issues cause, because companies are heavily leveraged to enhance earnings and aren't built to survive a long time with abnormal cash flows. There are whole industries that may not bounce back for years.

If we were to bounce back with everyone working and unemployment back down to 2-3% when we stop social distancing then I'd agree with you that a quick bounce back would be possible, but I think while this event wasn't caused by structural problems, it has created very real structural problems.

Pumping trillions of dollars into the economy may help but also causes different long term problems that we'll have to cope with down the road. The response to this pandemic has been unlike anything we've ever seen. It is highly unlikely, IMO, to end up being a V-shaped recovery for companies and earnings. Market prices, who knows, but again, market prices were at very high levels relative to fundamentals prior to coronavirus news.

[Cowbulls]

Italy underreporting deaths by nearly 50% too. Not reporting anyone that died outside of a hospital due to the virus.

https://apple.news/AcLyuae-kT6Ky-TCvC94NIQ

This is a double edged sword. If they are under reporting deaths by nearly 50 % then they are under reporting cases/recovered by probably 90%. Think about this for one second.

On February 1st America reported 10 cases.
On February 29th America reported 20 cases.
March 1st - 24 cases were reported in America.
on March 31st - 250,000 reported cases in America.

Are we really to believe that only 20 people got sick over a 29 day period in February, only to have a quarter of a million people infected over a 31 day period in March? Come on...of course not, but the reason is because WE STARTED TESTING for it in March.

The numbers are WAY off all over the world. There is a realistic chance that the recovered rate is 3 to 4 times the amount that they know of right now. That should at least provide a little optimism for people who are in pure panic mode right now.