Coronavirus - Macro Investment Aspects Only

[redsturgeon]

I walked over a pedestrian bridge over the M3 today. A solitary red car was on the southbound carriageway. I waited until the next car came, it was over one minute!

The lockdown seems to be working down in Hampshire.

John

Fuel sales way down, tyres not being worn out, less tyres sold, service mileage not being reached, less money for service centres and for purveyors of service items like brakes, lubricants, coolants,...No mechanic salaries supporting the pie shops and the dominoes of the supply chain all going over one by one creating a great wave of economic trouble.

Also greatly reduced government fuel tax revenues.

This will drive the economy into shutdown.

Regards,

Yup. This is what I have been saying,

John

[odysseus2000]

Fuel stations predicted to shut, holding fuel bought before the oil price crash:

https://www.mirror.co.uk/money/petrol-s ... gn=organic

Regards,

[odysseus2000]

Are there any investment opportunities now?

Personally I don't see any but the firm that Rees Mogg stepped down from as a director to become leader of the commons is now saying that there are great opportunities in small caps, latin America and similar places and are touting for investors, dropping their usual 3/4% management fee:

https://www.mirror.co.uk/news/politics/ ... n=sharebar

Ignoring all the political stuff, can anyone realistic see why the areas outlined would be good opportunities to invest in now?

Sure we may have a bottom, but the big danger as I see it is that equity markets fall a lot more to the point where governments start to nationalise stuff often meaning complete loss for investors.

Most of the emerging markets weren't investible in the Great Depression so there is no lead from there, but I don't see any need to rush with no fear of missing out. Or am I being too cautious. Interested in what other folk think.

Regards,

[dealtn]

Are there any investment opportunities now?

Yes, literally 1,000s.

Knowing what they are without the benefit of hindsight is tricky though.

Constantly focussing only on the possible downsides will severely limit the chances of making spectacular gains. That's fine, of course, due to the asymmetric pain of getting it wrong, versus being right, but no doubt there will be many bargains out there at the moment.

[SalvorHardin]

Are there any investment opportunities now?

Pharmaceuticals. Medical diagnostics. They're in the news a lot nowadays and demand for their goods and services will rise

I have made just two investment decisions since early March. Sold half of my stakes in Central London property specialists (big city property doesn't have the same appeal in times of plague). Most of the proceeds went into Gilead Sciences, the American antiviral specialist (HIV, hepatitis and flu are its main areas).

The rest will be going into other pharma / diagnostic companies. Currently looking at Abbott Laboratories, Moderna and Teva Pharmaceuticals.

Gilead's anti-ebola drug "Remdesivir" is showing great promise as a treatment for late stage Wuhan virus infections. The shares are fairly cheap anyway.

Companies which don't depend on people engaging in face-to-face interactions are worth a look.

Avoid passenger airlines, tourism.

[dealtn]

Avoid passenger airlines, tourism.

Actually that might depend on their price. They could turn out to be magnificent investments (or 100% capital losses).

[odysseus2000]

Gilead making remdesivir, even though not approved and may not be used:

https://www.gilead.com/purpose/advancin ... r-covid-19

Regards,

[ursaminortaur]

Spain is going to roll out Universal Basic Income in response to the coronavirus crisis and aims to make it permanent after the crisis is over.

https://www.independent.co.uk/news/world/europe/coronavirus-spain-universal-basic-income-europe-a9449336.html

Spain is to roll out a universal basic income (UBI) “as soon as possible” to mitigate the impact of coronavirus.

Minister for economic affairs Nadia Calvino told Spanish broadcaster La Sexta on Sunday night that the move was intended to help families during the pandemic.

But Ms Calvino, who is also deputy prime minister, said the government’s ambition was that UBI could become something that “stays forever, that becomes a structural instrument, a permanent instrument”.

[dealtn]

Spain is going to roll out Universal Basic income in response to the coronavirus crisis and aims to make it permanent after the crisis is over.

https://www.independent.co.uk/news/world/europe/coronavirus-spain-universal-basic-income-europe-a9449336.html

Spain is to roll out a universal basic income (UBI) “as soon as possible” to mitigate the impact of coronavirus.

Minister for economic affairs Nadia Calvino told Spanish broadcaster La Sexta on Sunday night that the move was intended to help families during the pandemic.

But Ms Calvino, who is also deputy prime minister, said the government’s ambition was that UBI could become something that “stays forever, that becomes a structural instrument, a permanent instrument”.

It will be an interesting experiment, for sure. As was the one in Finland. Will it last as long I wonder, and are the Spanish different to the Finns?

[tikunetih]

It will be an interesting experiment, for sure. As was the one in Finland. Will it last as long I wonder, and are the Spanish different to the Finns?

And have they informed Germany yet?

[ursaminortaur]

Spain is going to roll out Universal Basic income in response to the coronavirus crisis and aims to make it permanent after the crisis is over.

https://www.independent.co.uk/news/world/europe/coronavirus-spain-universal-basic-income-europe-a9449336.html

Spain is to roll out a universal basic income (UBI) “as soon as possible” to mitigate the impact of coronavirus.

Minister for economic affairs Nadia Calvino told Spanish broadcaster La Sexta on Sunday night that the move was intended to help families during the pandemic.

But Ms Calvino, who is also deputy prime minister, said the government’s ambition was that UBI could become something that “stays forever, that becomes a structural instrument, a permanent instrument”.

It will be an interesting experiment, for sure. As was the one in Finland. Will it last as long I wonder, and are the Spanish different to the Finns?

As I recall it was just a limited trial in Finland which covered about 2000 unemployed Finns whereas it looks like this is planned to be a full roll-out by Spain. Of course the devil will be in the details ie what level of payment will be made, which state benefits (or other state payments eg state pensions) would this replace rather than being in addition to etc

[ursaminortaur]

It will be an interesting experiment, for sure. As was the one in Finland. Will it last as long I wonder, and are the Spanish different to the Finns?

And have they informed Germany yet?

Even for eurozone countries internal taxation and benefit payments are a national competance rather than an EU/Eurozone competance - so nothing to do with any other EU country (though as with benefit payments the measures would have to apply in a non-discrimantory manner to those who moved to the country under FoM.)

[tikunetih]

It will be an interesting experiment, for sure. As was the one in Finland. Will it last as long I wonder, and are the Spanish different to the Finns?

And have they informed Germany yet?

Even for eurozone countries internal taxation and benefit payments are a national competance rather than an EU/Eurozone competence - so nothing to do with any other EU country (though as with benefit payments the measures would have to apply in a non-discrimantory manner to those who moved to the country under FoM.)

Come on, show some imagination - the "Germany" reference was intended as joke (a tip for the hard of humour)!

The serious point being that any UBI has to be paid for, and the modeling I've seen suggests schemes are unviable (unsupportable by taxation) unless the amounts being doled out are largely token in nature...

So, if Spain intends to do something beyond a token gesture they'll need to clearly show how it's to be financed. There are fiscal constraints that EZ members are supposed to(!) adhere to, likely limiting the scope of any policy Spain wishes to implement, else if deficit-financed risk reopening issues faced during the EZ sovereign debt crisis once again, calls for/against pooled debt and fiscal policy, German pushback against "profligate Club Med" states etc etc.

If you have a political dog in the fight - which I think you seem to (but I don't) - this won't be such a concern for you, but it will certainly become one for Spain & others if the sums involved amount to anything very material. My guess is it'll turn out to be nothing very substantial, ie. just PR/politics.

[ursaminortaur]

And have they informed Germany yet?

Even for eurozone countries internal taxation and benefit payments are a national competance rather than an EU/Eurozone competence - so nothing to do with any other EU country (though as with benefit payments the measures would have to apply in a non-discrimantory manner to those who moved to the country under FoM.)

Come on, show some imagination - the "Germany" reference was intended as joke (a tip for the hard of humour)!

The serious point being that any UBI has to be paid for, and the modeling I've seen suggests schemes are unviable (unsupportable by taxation) unless the amounts being doled out are largely token in nature...

So, if Spain intends to do something beyond a token gesture they'll need to clearly show how it's to be financed. There are fiscal constraints that EZ members are supposed to(!) adhere to, likely limiting the scope of any policy Spain wishes to implement, else if deficit-financed risk reopening issues faced during the EZ sovereign debt crisis once again, calls for/against pooled debt and fiscal policy, German pushback against "profligate Club Med" states etc etc.

If you have a political dog in the fight - which I think you seem to (but I don't) - this won't be such a concern for you, but it will certainly become one for Spain & others if the sums involved amount to anything very material. My guess is it'll turn out to be nothing very substantial, ie. just PR/politics.

I haven't got any dog in the fight as you put it and as I said in a previous post the devil is in the details of how they try to implement this.

[odysseus2000]

There is some potential here for trouble in the EU. Italy has already asked for Coronabonds and put adverts in German news papers stating its case, according to the Telegraph, headlines, (I don’t subscribe so can’t read the rest):

https://www.telegraph.co.uk/news/2020/0 ... ts-deepen/

If the Corona bonds are issued it would be over severe resistance from Holland, Germany, Sweden and Finland which may well be the situation regarding the basic wage proposal in Spain.

France has proposed that every independent nation should transfer its treasury policy to Brussels which would then create a unified monetary system.

I have no idea what is going to happen, but these kinds of crisis are moments are when big decisions can be taken.

Whether this is the beginning of the break up of the EU I don’t know, but the mood in Italy that I get from contacts is now more critical of the EU than I have heard before.

A break of the EU and dropping of the Euro for say a new Lira etc would have dramatic impacts on trade and, if this virus is defeated, tourism.

Regards,

[odysseus2000]

These are preliminary results on anti-body levels in patients who have recovered from c19, many of the younger age group have very few anti-bodies.
If this research is substantiated later it suggests that herd immunity will be a slow process and social distancing will be required well into the future with consequent economic trouble:

https://www.scmp.com/news/china/science ... ions-about

Regards,

[dspp]

A useful read into the return to work issue, for Italy in this case

https://www.reuters.com/article/us-heal ... SKBN21P27C

- dspp

[PeterGray]

These are preliminary results on anti-body levels in patients who have recovered from c19, many of the younger age group have very few anti-bodies.
If this research is substantiated later it suggests that herd immunity will be a slow process and social distancing will be required well into the future with consequent economic trouble:

https://www.scmp.com/news/china/science ... ions-about

Regards,

This does not necessarily follow. The key to immunity is that B lymphocytes (a type of white blood cell) of a particular type, that can create the antibodies, are produced. Once that has happened, if there is a repeat infection then antibodies will be produced far more quickly the second time. Having low antibody counts may make people more slightly susceptible, but they are will still be much less likely to have a severe response, as their immune response should be rapid. The good news seems to be that older people, the ones most likely to be badly affected, seem to retain higher antibody levels.

Where these findings may be important is in developing antibody tests. If many people have low levels then testing may be more difficult or complex.

[odysseus2000]

Santa Clara executive officers says unlikely to have any sport before Thanksgiving and lucky if then:

https://twitter.com/AdamSchefter/status ... 61632?s=20

hat tip to smartertrader (twitter) for link


Science is finding more and more troubles with tests and vaccines and fundamental science of the vaccine is progressing slowly, no one has a demonstrated cure and to create a vaccine in significant quantities still seems to be months off.

The media and this board consensus that this is mostly over and that things will resume easily and quickly seems to me to be pure fantasy, typical baiting in of investor then to pull the rug out as per standard bear market "Pump & Dump"

If there is no sport in California that means no theme parks no disney, no cinemas (Hollywood dives) etc etc and with all the furloughing of employees by Disney et al., hit to banks in terms of bad loans as mortgages can't be paid, to Visa and MasterCard loss of gas sales etc etc, the economy will be significantly hurt. All of these things apply in the UK in various ways too.

Regards,

[dealtn]

The media and this board consensus that this is mostly over and that things will resume easily and quickly ...

Really, where is anyone saying that, let alone consensus?

But what about profits (and/or dividends) for 2022, 2023, ... , 2032, 2033 ... ?

A share price, and the stock market generally is a discounting machine for all periods going forward, not just for this year and next. Some companies will be bust, and have no profits to discount, but to suggest that is true of all is madness. Discounted cashflows of say 20% of the pre-Covid-19 levels may well be rational, or even unduly pessimistic.

You appear to be (constantly) applying a binary outcome to such things, of almost total gloom that hasn't been seen before. I don't think that "model" is the right one.