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InvisibleAsante
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The Economic and Investment Consequences of the COVID-19 Coronavirus
    #26509387 - 02/29/20 08:21 AM (3 years, 10 months ago)

Covid-19 Coronavirus has increasingly important medical and social impact which we document in a designated sticky Pub thread.

How bad the virus is or isnt or the human consequences, thats not what this thread is about, let's leave that to the Pub thread.

This thread is about the economic and investment consequences of COVID-19.

700 million Chinese are quarantined.

Manufacturing areas are shut down.

Ports are shut down.

There will be a Supply Shock.

People are selling, buying, to roll with this

Cryptos, Stocks, Precious Metals!

Let us discuss the Economic and Investment risks and opportunities that arise from this, because every event that tilts the table to any side has investment opportunities as well as investment nightmares.

Let's discuss the Economy and Investment consequences of COVID-19.


:biohazard:


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OfflinegeokillsA
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Asante] * 1
    #26509581 - 02/29/20 10:34 AM (3 years, 10 months ago)

As I noted over in the STOCKS thread:
Quote:

I cannot hold any confidence in medium to longer term trades, as the vast majority of businesses have some relation to China (either buying products made there or selling products there), so the collapse in that economy will be fairly devastating to global economic activity.  It is simply not knowable at this point when China will normalize, or whether the rest of the world, or to what extent, will experience similar disruptions as (in my opinion) futile attempts to contain SARS-CoV-2 are implemented.




In so far as the domestic US markets are concerned, sentiment readings were stretched rather far to the downside Friday, which would typically portend some sort of relief rally next week.  However, any positions should be initiated under a short-term "reversion to the mean" thesis, as the economic disruption derived from this event is fluid and not currently quantifiable.

There are a number of spec plays on the virus, such as Moderna (MRNA), a biotech working on a vaccine, and Lakeland (LAKE), a international protective clothing provider.  Secondary plays such as Netflix (NFLX) have been holding up well, as in the event of continued outbreaks, people will tend to hole up at home.  Clorox (CLX) is another company that stands to benefit from their lineup of disinfectant products.  Zoom Video (ZM) may benefit if more people are mandated to work remotely instead of coming into an office.  Teladoc Health (TDOC) could also benefit as concerned people flock to the platform to ask questions from the comfort of their own homes.  Airline stocks in particular, and other travel industry stocks like Bookings Holdings (BKNG) and Marriot (MAR) are likely to feel some of the most pain from this event as people scale back from both work and pleasure related travel.

Most industries will be affected in some way, as supply chains are very much global, which is why the smart trade right now is to preserve capital until more clarity is gleaned.  Big money is hiding out in treasuries, driving yields to ever lower levels.  Central banks such as the Federal Reserve may attempt to support markets through rate cuts, which could lead to some quick rallies that I suspect to be short-lived, as while it can provide additional liquidity, it won't really do anything to address the fundamental economic effects of the containment effort.  Without clarity, the markets will remain volatile with a downside bias.  And at this stage, clarity is not something you're going to find, even as the talking heads in the media are constantly trying to sell it to you.  In big events like these, it usually pays to be patient and conservative.  There will undoubtedly be great opportunities for active traders, but if you don't have experience doing that, I wouldn't recommend starting here.


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: geokills]
    #26510208 - 02/29/20 06:48 PM (3 years, 10 months ago)

I have spent a lot of time thinking about this, but within 6 months there will be a vaccine and many things will bounce off the lows when it gets announced.



Still, airlines, cruise ships, hotels, chemical manufacturing, railways, oil markets are all affected and probably a bunch of other things too.


El-erian is saying that credit markets will freeze up, and I can see it. If your debt servicing is based on full year revenue and your revenue gets slashed in half you start bleeding cash. I could see this sinking a lot of US frackers.


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26510216 - 02/29/20 06:53 PM (3 years, 10 months ago)

Personally, I work for a global manufacturer of heavy equipment with global supply chains for parts. Fuck, like I got a foreign work visa that is all drafted up and ready to send out and to go for my interview at the embassy or whatever. I'm fully expecting a lay off for a few months once we run out of Chinese and Spanish components. It's probably still a few months out, but supply chains have been slimmed down to "just-in-time" for almost everything.


Fast-fashion might also suffer greatly once it spreads to the textile industry countries in Asia. That instance is probably way worse for the workers than society as a whole, but it's extremely far reaching. It will be on par with the Oil Crisis in the 70s.


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InvisibleAsante
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts] * 1
    #26510764 - 03/01/20 04:27 AM (3 years, 10 months ago)

Air pollution in China has decreased sharphly as COVID qyarantine ground production to a halt:



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OfflineSempeur
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26511108 - 03/01/20 09:42 AM (3 years, 10 months ago)

Quote:

Ahab McBathsalts said:
Personally, I work for a global manufacturer of heavy equipment with global supply chains for parts. Fuck, like I got a foreign work visa that is all drafted up and ready to send out and to go for my interview at the embassy or whatever. I'm fully expecting a lay off for a few months once we run out of Chinese and Spanish components. It's probably still a few months out, but supply chains have been slimmed down to "just-in-time" for almost everything.




This is what I'm more curious about. With corporate debt being as high as it is, can companies survive a shock to their supply chains and still service their debt payments? Bad debt in the business sector has been a major concern for a couple years now.

Many of the problematic loans (20%) are due for repayment by the end of 2020 as well. We may see a thinning of the herd, depending on what the central banks of the world are willing to do.


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Edited by Sempeur (03/01/20 09:44 AM)


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Sempeur]
    #26511885 - 03/01/20 07:32 PM (3 years, 10 months ago)

Some industries are worse than others. Automobile manufacturing is probably going to get shit kicked when they run out of parts. I think Ford is having trouble with debt repayment as it is. Airlines are run on debt. US fracking also US coal mining. Industries that are teetering already will be pushed over the edge.


Some might be able to consolidate, some will be fucked.


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OfflineTripsurfer
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26512819 - 03/02/20 12:53 PM (3 years, 10 months ago)

Already having issues sourcing parts


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Ach en wee ben ik de klos, met mijn boog schoot ik een albatros...

A philosopher is a person who knows less and less about more and more, until he knows nothing about everything.



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InvisibleAsante
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Tripsurfer]
    #26512989 - 03/02/20 02:44 PM (3 years, 10 months ago)

A lot of pharmaceutical precursors, pharmaceuticals and medical supplies are Made In China.

Imagine lack of availability of medical necessities. Physical patients and mental patients not getting their necessary medications, nurses and doctors not getting their disposables such as gloves, masks, gauzes, syringes, desinfectants :blah:

Old people not getting their meds, doctors not getting their supplies AND especially old people getting slammed by a dangerous virus.

Those ships with those containers are NOT sailing NOW. Ports are closed, manufacture has largely stopped in China, to the point of air pollution, ceasing.


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OfflineSempeur
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Asante]
    #26513401 - 03/02/20 06:35 PM (3 years, 10 months ago)

Quote:

Asante said:
A lot of pharmaceutical precursors, pharmaceuticals and medical supplies are Made In China.

Imagine lack of availability of medical necessities. Physical patients and mental patients not getting their necessary medications, nurses and doctors not getting their disposables such as gloves, masks, gauzes, syringes, desinfectants :blah:

Old people not getting their meds, doctors not getting their supplies AND especially old people getting slammed by a dangerous virus.

Those ships with those containers are NOT sailing NOW. Ports are closed, manufacture has largely stopped in China, to the point of air pollution, ceasing.




This is a much more serious problem. If I need to wait a few months to buy a new car that's not a big deal. But what if medical professionals don't have PPE and basic tools? What percentage would willingly expose themselves to that kind of risk? Likely not 100% (and I can't blame them).


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OfflineTripsurfer
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Sempeur]
    #26514420 - 03/03/20 10:56 AM (3 years, 10 months ago)

Production is running again in China

Just ordered a bunch a stuff from Shenzhen


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Ach en wee ben ik de klos, met mijn boog schoot ik een albatros...

A philosopher is a person who knows less and less about more and more, until he knows nothing about everything.



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OfflineBrian Jones
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Tripsurfer]
    #26514481 - 03/03/20 11:44 AM (3 years, 10 months ago)

The FED lowered interest rates a half percent to combat Corona economic shock.


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Brian Jones]
    #26515332 - 03/03/20 07:33 PM (3 years, 10 months ago)

An interest rate cut is probably the least effective tool for a pandemic. Fiscal stimulus is unlikely because of the upcoming election and Trump's need to hold to the line that the economy is so strong. There needs to be huge public funding programs like it is a natural disaster, but that won't come. You have to look at the other times the Fed has had emergency cuts in recent years, Post 9/11, 2008. Both times the market fell hard after the cut. The fed knows it's late and it doesn't have the tools or mandate to deal with the virus.

The USA not having a public healthcare system or widespread paid sick leave could be disastrous. China was able to quarantine, monitor and isolate those affected, but I don't think that will be possible in America. I think best case the S&P still falls to 2700, worst case it goes to like 2000.


I opened up a june put for Walmart, bought some TQQQ, and PSQ. Not giant positions like 2-3%, but I think the genie is out of the bottle for the USA. It isn't going to be contained, and it's still a year away from being cured. I'm still like 1/3 in gold, 1/5 in bonds and the rest long stocks.

I don't think it is the apocalypse or anything, but it might be a negative earnings for the USA for like half a year. It could rock financial markets. A cure will come and the world will move on. The virus affects mostly older populations, so it might kill many boomers and cause a realestate glut, but who knows.


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26517041 - 03/04/20 06:13 PM (3 years, 10 months ago)

I won't lie. I'm on Wallstreetbets.


This is the port of LA today. A fucking ghost town. 10 year is going to zero, recession incoming. It's a 4 month shut down.


https://twitter.com/someknew/status/1234322630468984832


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26517070 - 03/04/20 06:31 PM (3 years, 10 months ago)

I'm buying TQQQ all the way down man. Going for a Cadillac or bust!


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OfflinegeokillsA
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26517647 - 03/04/20 10:38 PM (3 years, 10 months ago)

I'm not saying we aren't going lower.  I get the feeling that this is the first shot across the bow and we will ultimately see lower levels.  On the other hand, I live in Los Angeles, and I was down at the Aquarium of the Pacific right next to the port just a few days ago and still saw lots of traffic on the docks.  Not sure what that Twitter post is all about, but I don't really use Twitter ('less someone links me to a feed) 'cause I feel like it's susceptible to that sort of sensational BS.


On top of the 0.5% rate cut that the US Federal Reserve implemented yesterday, expectations are being set for another 0.25% cut on March 18th (the usual Fed meet date), and another 0.25% during their April meeting.  A 1% cut in the Fed funds inside of a few months is a pretty massive amount of liquidity.  On the other hand, they've kept rates low for so long, they don't have a whole lot of fire power available.  Bad February numbers coming out on economic activity, a lot of major industrials telegraphing "business as usual" within a month (hah!), we'll see how it goes...  I have no confidence in either direction, but I will pay attention to price and do the best I can.  Buy the dip has been the motto.  Maybe it won't be, this time.  Maybe it will?  The weekly chart remains intact.


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InvisibleAhab McBathsalts
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: geokills]
    #26519491 - 03/05/20 08:01 PM (3 years, 10 months ago)

The 10 year is at .832 right now overnight. Italy reporting 42 deaths in the past 24 hours and the Nikkei is down 3.2%. I think we are are headed lower into the weekend and it will be a grim monday.


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OfflineTripsurfer
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Ahab McBathsalts]
    #26520248 - 03/06/20 09:06 AM (3 years, 10 months ago)

My mate is in the gold trading business and he says invest, invest, invest in gold right now.

He expects it to break the september 2011 record real soon


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Ach en wee ben ik de klos, met mijn boog schoot ik een albatros...

A philosopher is a person who knows less and less about more and more, until he knows nothing about everything.



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OfflineManianFHS
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: Tripsurfer]
    #26520987 - 03/06/20 05:12 PM (3 years, 10 months ago)

I wonder if that means silver might move with it


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OfflineTripsurfer
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Re: The Economic and Investment Consequences of the COVID-19 Coronavirus [Re: ManianFH]
    #26521594 - 03/07/20 03:04 AM (3 years, 10 months ago)

Im assuming it will. Any crisis of the money kind usually lifts the value of physical investment assets


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Ach en wee ben ik de klos, met mijn boog schoot ik een albatros...

A philosopher is a person who knows less and less about more and more, until he knows nothing about everything.



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