Coronavirus and Stock Markets - Thoughts?

I’m amazed

If there are any tech people, like myself that want to help by volunteering to Covid related projects: https://helpwithcovid.com/

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We will hear from companies accounting for 18% of the S&P 500’s market value this week. By the end of it we will know more about the effect of the virus on business, but that will probably come from guesses executives make about the future, rather than any cold numbers. As the first quarter straddled a period when the virus went from having no effect on economic activity to snuffing out whole sectors, it will be difficult to tell much.

All can agree that things look much worse than they did on New Year’s Day. This chart is from David Kostin, U.S. equity strategist of Goldman Sachs Group Inc.:

If companies can find a way to minimize the damage, they will. If they can’t, they will probably offload all their bad news in one quarter, to set themselves up for the future. Either way, the numbers should be less trustworthy than usual.

https://www.bloomberg.com/opinion/articles/2020-04-14/coronavirus-netflix-rally-undercuts-hopes-of-v-shaped-recovery-k8zdod4u

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If companies can’t pay back their loans on time, banks have to reflect that in their financials.

JPMorgan:

JPMorgan’s profits in the first quarter nearly evaporated due to a substantial increase in credit-loss provisions — that’s money the bank has to set aside to cover potentially bad loans. That figure jumped from $1.5 billion last year to $8.29 billion last quarter.

The last time JPMorgan had to set aside that amount of money to cover potentially bad loans was the first quarter of 2009 — in the depths of the Great Recession.

Wells Fargo:

With or without those programs, the unpaid bills are stacking up. Under a new accounting rule, banks must predict losses over the life of a loan and reserve that cash now, which led Wells Fargo to set aside some $3.83 billion in credit loss provisions, up from $845 million a year earlier.

https://www.nasdaq.com/articles/wells-fargo-first-quarter-profit-decimated-as-coronavirus-boosts-provisions-2020-04-14-0

Vulture investors are waiting:

Legend:

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Bloomberg Opinion:

The chart is from Savita Subramanian’s quantitative team at Bank of America Corp. I include it because I had forgotten all about the earnings season that happened only three months ago, and also because I suspect the information that companies are about to give us for the first quarter will be no more useful. We will hear from companies accounting for 18% of the S&P 500’s market value this week. By the end of it we will know more about the effect of the virus on business, but that will probably come from guesses executives make about the future, rather than any cold numbers. As the first quarter straddled a period when the virus went from having no effect on economic activity to snuffing out whole sectors, it will be difficult to tell much.

Even this probably understates the extent of the damage. Subramanian reports that corporate guidance was “very sparse” in March. Just 33 companies offered guidance, the second-lowest for that month since 2000, while more than 70 officially suspended it, giving the virus as an excuse. Brokers also started to give up on predicting earnings, again citing the virus.

https://www.bloomberg.com/opinion/articles/2020-04-14/coronavirus-netflix-rally-undercuts-hopes-of-v-shaped-recovery-k8zdod4u?srnd=premium-europe

Prof. Damodaran:

That reminds me, I got a phone app the other day that’s supposed to help with Covid-19 research while my phone charges:

(Was originally built for cancer but there is a Covid project in there you can choose to ‘work’ on)

Shares in one of the world’s biggest makers of toilet paper and other consumer tissue products were suspended on Tuesday as it reported a stunning jump in profits after households stockpiled its goods during the lockdown triggered by Covid-19.

Stockholm-listed Essity AB said the pandemic had spurred first-quarter sales across many of its markets “as a result of hoarding among consumers and distributors.”

Ahead of its quarterly report on April 23, the company said organic net sales in the first three months of the year increased by 7.8%, while adjusted profit before amortization of acquisition-related intangible assets jumped 67% to 5.3 billion kronor ($351 million).

But the company said sales may yet “be adversely impacted” by the panic buying seen in March. Its Professional Hygiene unit could also suffer as a result of reduced travel, fewer restaurant visits and more people working from home, according to the statement.

Essity shares were up 3.9% at 4:10 p.m. Stockholm time, compared with 2.2% for the OMX Stockholm 30 Index.

https://www.bloomberg.com/news/articles/2020-04-14/swedish-toilet-roll-maker-delivers-67-profit-jump-amid-lockdown

From 2019. This aged well:

“He has missed this glorious bull market,” said Rolfe, chief investment officer of Wedgewood Partners Inc. His company, which oversees $2.2 billion, trimmed its Berkshire stake in the second quarter and exited completely in the third. “The bullish thesis that this massive amount of cash is going to come to bear incredible fruit – hasn’t.”

https://www.bloomberg.com/news/articles/2019-11-01/buffett-s-underperformance-splits-investors-ahead-of-earnings

The market right now is completely detached from what has happened the last 2/3 months. I took profits on PepsiCo today (I bought in at a PE of 25 so was overvalued anyway) I’m sitting on cash and not touching a thing until this reverses, if it goes on a massive bull run again then good luck to it.

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The thing is every week experts are saying the market is going to plunge but it’s just going up and up. Just wondering if it has already priced in Corona and the worst is over. Looking at some of the companies it looks Corona never occurred.

I took part in a property seminar last night and I’m considering just diversying into something I can at least control and make rhyme or reason of :smile: each day it’s like taking your money to the casino it seems!

The way to make money is to buy when blood is running in the streets. (not literally obviously in our case today)

John Rockefeller

I don’t understand.

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Fixed it for you.

#reddit

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Fire!

I’m available as a remote contractor. High impact management last minute graphics design:

Here’s my other work:

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Another one, our good friend Tesla up 105% during what is a once in a century pandemic. And the first time the world has been lockdown since Jesus and Moses were walking this earth …It’s almost as if Coronavirus doesn’t exist…:man_shrugging:t3::joy:

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McKinsey: A global view of how consumer behavior is changing amid COVID-19

https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/a-global-view-of-how-consumer-behavior-is-changing-amid-covid-19

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I don’t understand Tesla… Makes me feel completely stupid

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