I'm pretty sure we are retesting the March lows - and possibly going to 2150 on the S&P

I"m adding a few stocks now though - but not many -

Possible.

My main point has been that shorting the market because "everything is shut down" or because "we're seeing 1k/deaths per day" is a bad position. Most of the panic has evaporated, and if you're short, you're betting on panic returning back to those levels. Panic will only be back to those levels if this evolves into a financial crisis and/or the lockdown is significantly prolonged.

I'm on sidelines waiting for re-entry not because "1k/deaths!" but because people genuinely think Q2 will be a dip and that Q3+Q4 things will start to trend back to normal. At a high level I feel the market is priced as if we just need to get through this hump (perhaps peaking in a ~month or so) and then it becomes a slow/long recovery. It's not that easy in my eyes. This is how I feel it plays out:

1) We develop a vaccine: I put this at likely, but from what I can tell extremely (<~3%) unlikely to be mass produced+distributed before 2021. And in the meantime;

2) We continue to try and thread a needle of social distancing/quarantine where pockets continue to emerge+flare up, but we're just buying more time before 1) happens. We balance between economy back on/quarantine (it's a false dichotomy to say it's one or the other)

For 2) I think people are way too optimistic about how hard it will be to turn things back on and have a semblance of real life/economy flow before we get to 1). You said a few posts back we have a good idea of when things will return back to normal. Are you insane? How are you not more humble after whats unfolded over the last few months. Also, when exactly is that -- given we have such a good idea? Please be as specific as possible. We have no real clue and this is uncharted waters. We have institutions and business leaders adding their 2c -- and their hopes/expectations -- but covid-19 is going to do what it's going to do. All we really have are some weakly held assumptions of what might be possible in a few months, but these will of course change and I think at some point the market will likely reset to and calibrate to lower expectations (less of a V, more of a long shaped U recovery)

Btw,

In response to my own post above, it wasn't my intention to come across as hostile. Insane is way too strong of wording on my part. The point I am trying to make is it seems hubris to be very confident in any projections at this stage. Podcasts w/ epidemiologists + virologists, there are so many moving variables on how this can play out. The only strong assumption we should have at this stage is there is no clear concrete timeline moving forward. The discussion point I want to push forward is the market + institutional money is on the side that Q1/Q2 is likely the bottom (by %/consensus) and I think it's a market miscalculation to be too strong in that assumption. Simply: It feels like many many things have to go right for this to be true. And many many things could go wrong for this to not hold true. The latter seems way more likely.

So the jury is back on this one folks. California released the results of it's backlog of tests. 75k negatives and 1,300 positives added today. Barring some super weird, as in we are just making **** up weird, fluke in the reporting, that is definitive proof, as I said, things aren't about to explode in California.

Many people are clinging to the narrative that much of the rest of the country is simply days behind NY. That's wrong.

Yes, there will be some areas that are. Michigan, which is presumably being driven by Detroit, seems a likely candidate at this point. Per capita obviously.

But broadly speaking the COVID-19 epidemic in the US is basically the NY metro (including NJ) and everywhere else.

/dumbdumbemptycalorietake

I live in CA. When Di Blasio was telling NYers to go out and parade, our leaders were already beating the social distancing drum.

My kids have been out of school 3 weeks already.

Plus a large part of the population, even lower classes, live in private residences and drive their own cars.

I really hope it makes a difference and there isn't a NY level outbreak here.

The homeless are a pretty big wildcard. A lot of them are junkies and dont care about anything but their next hit.

Nursing homes another wildcard, but more contained. Probably not much risk of community spread at this point. The suburb my in-laws live in one nursing home got hit hard and 51 members tested positive.

We have better idea of when things will be back to normal now than we did during financial crisis. Agree / disagree?

As for when things will evolve back to normal:

Up here we have Provinces talking about shelter orders until July. "Conservative" provinces are saying June.

I'm not sure we've really seen panic yet, socially speaking.

By panic, I meant VIX going from 90 to 47. Lower volatility makes stocks attractive to investors.

It doesn't mean we're in the clear though. In Nov 2008, VIX spiked back up from 44 to 81.

What people underestimate now are the cracks already running through the economy.
We are not getting the specific bad economic news because news are dominated by health news.
A lot of productivity and income is gone forever.

I have no idea when things will be back to normal. A pre-virus world, certainly not.

When is that and what does normal mean?

Some definitions I came up with. Let's abbreviate "normal" as "N". By normal, I've been referring to N2 so far. I feel like N2 is the turning point, as it marks confidence in returning back to regular day-to-day life. N3 may be delayed due to precautions.


N1: All but maybe a few states lift stay-at-home orders. Shops and restaurants reopen.

N2: Remote workers return to the office.

N3: Large group events reopen, e.g. amusement parks, conferences, live sports.

N4: Schools and universities reopen.

N5: Employment returns to pre-shutdown levels.

N6: S&P back to ATH


IMO:
N1: May
N2: June
N3: Aug
N4: Aug
N5: Spring 2021?
N6: Spring 2021?

There's obviously some dependencies here. If you're wrong about N3, you're likely wrong about N3-N6.

Large groups aren't happening this year. If attempted, they wont last long.

I don't know how you can even fathom that its possible.

Some schools might have to reopen to some degree (lesser density, let the kids with internet learn from home), but 10-100k people in packed stadiums...just lol.

So you don't agree with these projections:
http://covid19.healthdata.org/projections

I can understand it being delayed past Aug due to precautions.

Restaurants in May? No chance

I started a new thread here:
https://forumserver.twoplustwo.com/3...tions-1766240/

Have a lot of sympathy for views like this and this is prob not far off my base case. However possibly out of buying opportunity FOMO itchiness I'm trying hard to find where it might be wrong and ways further market + economic downside from here could be limited, and market bounce + economic reflation could be faster. Here are a few things I’ve got:
*
1. Oil oversupply is a wider economy tax cut, leads to more money in consumers’ pockets while it lasts
2. A good chunk of the unemployment now is “funemployment” and furloughed workers are accumulating $ while playing playstation.
3. For the very valid point of fear and human behaviour changing for a meaningful % of people (permanently less travel, restaurants, more saving etc), there’s a meaningful potential offset from another meaningful % of people exhibiting a big release of pent-up demand and “revenge shopping”. Points 1 and 2 above are helpful with that.
4. Free market generating business model innovation in new safer ways for consumers to spend money on entertainment, food etc (e.g. more expensive/premium online services, massive increase in home delivery capacity). Agree tourism is lower – tourism is a gross import (and foreign tourists visiting you is a gross export) so the shift towards domestic consumption creates winners out of richer countries with more vibrant and underweight-tourism economies. US looking in fine shape here
5. Extreme bipartisan political appetite to reflate the economy ASAP and replace any missing net consumption (relative to pre-covid levels) with investment to get to an overall acceptable (rapid reflative) GDP result. Save a bit of filibuster grandstanding we’ll see phase 4 infrastructure-related stimulus pass just as smoothly as phase 3 did.
6. While we’re here on pivot to bigger govt, very near term unemployment support to individuals + employment support to business starts extending beyond immediate term. "Whatever it takes".
7. Above two points herald a new age of “Treasury put” and permanently bigger, more interventionist govt. This could change the LT historical pattern of slower reflations coming out of recessions/depressions due to the ‘low aggregate demand/business investment chicken and egg problem’.
8. According to view above ST reflation is faster, but main longer term risk becomes capital misallocation and inflation. What assets are good stagflation hedges for longer term? Gold? Tech stocks? Houses? Is today a good buying opportunities for these on a longer horizon?
Also hypothesis we don't see any painful second lockdown or prolonged restrictions even if we find it's an IFR 1.5% disease and we're far from herd immunity - NT pre-vaccine therapeutics and clinical management strategy advances (e.g. Monoclonal antibodies used in acute and prophylactically for vulnerable pop) and another order of magnitude step-up in testing capacity limit deaths/healthcare capacity utilisation even in this case. Any and all clinical trials for therapeutic candidates are enrolling so fast and easily right now. Even if you think experts are rigidly keeping these timelines slower than they need to be I'm optimistic there should be some mechanism of pressure from the politicians side to reopen things (e.g. Constantly pressuring the experts 'how can we make this faster?', hopefully listening to voices and suggestions from multiple places and someone ambitious for career advancement in the 'expert' community catching the ears of political decision makers with suggestions that are more aggressive from an ethics and standard protocols standpoint)

Yeah under lockdown this looks fine, and when you reopen again you get a 2nd wave proportional to the level that you reopen.

Infections wont go to zero this year, and ~1% of the population will be infected/recovered by July at best.

You absolutely can't reopen to full normal without a vaccine or 50%+ of the population being infected/recovered. Aka, a vaccine in 2 years is far faster than herd infection/immunity unless you can tolerate lots more dead.


Stuff will reopen slowly and with distancing being paramount. Schools to some degree probably, maybe restaurants bc people need jobs but with strict rules, same with shopping areas, sports without a crowd etc. But large concert/event 10k+ crowds are impossible.

Ya all this. Everything will be at a trickle until a vaccine. I could envision headcount caps in places like malls even.

What I don't understand is the fact that there soon will be millions of people who have gotten CV and recovered (some not even knowing they had it). Are they going to be expected to stay home as well for the next 6 months+? Is the solution antibody tests + some sort of certification that allow those who are now immune to go to work, teach, go to bars/restaurants, etc.? Is mass antibody testing possible before the potential 18 month+ vaccine timeline?

yes

something randomly interesting i read last week was that vix tends to be lower with each additional downward move because you're shaking out more and more people who have already blown their brains out via vol plays or options plays on the previous downmove.

intuitively i would have thought additional downmoves would garner larger and larger vix spikes but that's turning out to not be the case.

After the shock phase, we may see a slow grind down that a lot of people can sustain for a limited amount of time.

that's very interesting, thanks for sharing

definitely different clientelles...... and who's going to aggressively sell now? i think you would have already if you were so inclined..... so maybe more of a slow steady decline.....

not trying to depress, but is usa the new japan? and check out its long term stock chart.

i think dip buying was a really big thing and now that's completely gone.

probably no buyers more than lots of selling now