I truly feel that society as we know it will change from here....sounds alarmist and extreme, but dont mean it that way...the way we think about epidemiology, social justice, pensions, leverage, supply chains.
1. 2 months ago when I first started hearing about Wuhan, it got my attention. Being in the medical field myself, I could tell this wasn't a SARS type of situation. I bought my N95 masks on Amazon 7 weeks ago when they were plentiful and people laughed at me. During the first crisis in 2008 I also bought dry food, propane tanks, propane generator, solar powered chargers and etc...and yes people laughed at me then also. My point, people need to realize that supply chain stability walks a very fine line between normal and chaos and empty shelves. Bottle of hand sanitizer going for 80.00 on eBay now and local groceries shelves emptied out. People are starting to get this now and in this way, people from here on out will realize that the foundations of society is abit more precarious than they thought.
2. TSLA the stock...now this one is tricky cause everyones situation is very different. For the average person who isn't adept at technical trading and relying on solely on fundamentals, they should probably just hold despite the pains. We are at crucial technical levels right now barely bouncing off the intermediate term bottom channels but if the mkt accepts prices below friday's low with conviction, we will be testing the long term bear channels which is a long way from here...people like me will not hold during this process if it happens.
If we can't hold this week and we head toward the long term bear mkt floor , I feel SPX 1300-1700 would be the target. But just know this, if we head there(and I really hope we don't), please please have some dry powder ready cause just when things look hopeless and dire that will be the time to buy and you can easily double and triple you money form these bottoms...but this also means TSLA will go down withe the general mkt's....mkt's will move in parallel with Corona news...when GILD's new antiviral drug results released in May the mkt's will move.....when I see IT targets taken out to downside, I see repercussions of what this means...I see layoffs, social fear/anxiety, anger, empty shelves, people dying on ventilators...if we can't how IT lines, I see a severe recession lasting this entire year.
People already being laid off now and certain sectors, all sports have shut it down, restaurants rez's down 30-50% already, even my golf club has shut it down.
3. Social Injustices--when the Fed Reserve says they will pump 1.5T into the mkt's, what they mean is that the US govt will print govt bonds(IOU's which will never be paid back if you think about it) and the Fed Reserve will print electronic 000's and buy the bonds.Then the govt gets it first, followed by banks and large corporations as cheap cheap money. The govt expects the avg Joe to get the benefit years later, when businesses start to spend it, make loans, govt can create some new social programs and etc, but during the acute time of need, not much happens.
But if you read social media and mainstream media, UBI(universe basic income) is gaining traction now. There is no better way to help the masses and stimulate the economy than giving this money directly to the people who will laid off and hurting....the mainstream will start to better understand this and demand that the govt do something for them...I think this is coming...Biden and Yang will be best friends soon.
4. The Big Unwind--HF leverage was the highest ever measured like a month ago...as mat's march downwards, this has to unwind...within interest rates so low and borrowing costs so low, they were forced to take huge risks in a bull mkt...with deleveraging liquidity of mkt's become strained the gap between bid/ask alarmingly high...the decoupling of bond prices and equities shows this...even "perceived" safe assets like gold/bitcoin not behaving normally...ETF mkt's are huge now and for the same reason people are excited that TSLA will get accepted into the SPX soon, the same forces were driving equities upwards. During downtimes, the same forces will drive the indexes and its stocks downward as people will pull out of ETF's in mass and amplifying the down forces...hence the mkt's are even more volatile now than 2008 when the entire financial system was on the verge of total collapse.
5. Social Unrest--when we think social unrest, we think of the far left or right with masks on but this won't be the case in 1-2 years...we will see the teachers/firemen/cops with signs protesting broken pension promises...the states can't print money and won't be able to meet obligations soon... people will decry "I had a guarantee"!...but when they realize that the choice is between 70% and nothing, they will take the 70% but they will do it with a lot of yelling....the PBCG will likely go bankrupt and will not be paying anything just like AIG didn't really insure CDS's in 2008 and etc...these entities are there for show and if a few institutions fail they may help but a systematic failure cannot be addressed...PBCG set to go bankrupt within 3 years or so....many teachers/cops who retired at age 52-3 will be going back to work.
6. healthcare--while China, Korea, Iran, Italy gave us the flow chart what was going to happen, the US for whatever reason didnt prepare or even admit this was going to be huge problem...people need to understand exponential growth...in Italy if your 65 years old or younger with significant comorbid diseases, if you get a heart attack they will not pull out the paddles or even do CPR...you will die,..all beds including hallways are used for critically ill and OR's are shut down so no elective surgeries are done now and traumas aren't being treated. While the US has the best healthcare, the number of ICU beds are severely lacking. Even Japan has way more ICU beds per capita.
The Who declared a pandemic a month too late and the US is fumbling around with the testing kits...Korea is testing more per day the entire number of tests that have been done in the US in its entirety.
Our hospitals will be over run soon and medical tents will prob be seen soon. The number of cases we admit to you need to multiply by 20-30...we have no idea how many cases we have due to lack of testing and we are telling people with URI's to stay home and not come into the med clinics and ER unless you need to be admitted...so only 10-15% off the true cases are even seeking medical care...thats why the cases are exploding cause 90% of ill people have no idea of they have a regular cold or corona.
Experts think that the penetration rate will be 20-40 million people will get infected eventually(analogous to the common flu).
But the good news is that social distancing does work and when you shut things down, the spread will slow down.
Sorry for the long rant , but we are in unprecedented times right now...prob a once in a generation event as nobody in their wildest imagination could they have guessed schools would close, sports will entirely shut down, and etc...but people are resilient and we will bounce back as always...and yes the stock mkt will take out all time highs ...may be 1 year from now, or 5, but it will happen...and yes, TSLA will dominate the automotive and energy sector I have no doubt.
