Recession Time: A Very Non-Technical Analysis
This idea is mostly based on observations of COVID-19 throughout the world, news and social media reactions, and the U.S. government's responses (White House and the Federal Reserve). I believe a recession is coming, which is not a direct cause of COVID-19. In fact, COVID-19 is the perfect excuse for one. This contraction is highly anticipated but ignored like a world war that nobody wants but still has to participate in.
So far:
1. (NOV '19) COVID-19 outbreak first confirmed in Wuhan, China
2. The world reacts to China's response;
Stock markets begin to tumble;
Questions loom about a possible recession - but CNBC and other news analysts scoff at the notion of a recession
3. (JAN '20) South Korea confirms community spread
4. Countries that underestimate the virus succumb to it very quickly (i.e. Italy, France, Iran, etc.)
5. Some people are finally accepting the reality of the virus (MAR '20);
Panic ensues as this reality sets in;
Reactions are similar to a hurricane - stock up on toilet paper, canned goods, and water (highly unnecessary if you were already using tap water...)
6. Stock markets continue to tumble
7. (MAR ’20) A brief sigh of relief comes on Friday March 13th as Trump gives State of Emergency declaration - during market hours (probably intentionally);
S&P surges
8. The Fed cuts interest rates and commits to purchasing $500 bln in treasury bonds and $200 bln in mortage-backed securities - despite this, S&P futures plummeted;
New York City’s public school system (the largest in the country) is officially closing during the COVID-19 outbreak;
COVID-19 memes are all you see on social media – this is a good sign that the public is finally taking notice even if it’s a disruption to their lives, however, I don't think this is enough to slow it down.
Every U.S. state has at least 1 confirmed case of COVID-19 (www.nytimes.com/inte...avirus-us-cases.html)
Italy – 24,747 cases (+3,590 in the last 24 hours) (www.worldometers.info/coronavirus/)
Going forward – what you will notice:
9. The insidious fear of a corporate debt bubble returning
10. News outlets will increasingly use “recession” as part of their daily talking points – what happened to “it will never happen”?
11. Trump and the Fed will do everything desperately possible to delay fears of an inevitable recession prior to the Presidential election
12. COVID-19 infections will continue to occur in the U.S. until the end of the year at the earliest;
The S&P will continue to decline until vaccines are successfully tested and are produced;
By then, we will be in a full-blown recession where many will have accepted it.
While some (American) folks are now cautious about COVID0-19, not enough are taking it seriously;
Many New Yorkers are still traveling across the city like it’s nothing.
Instagrammers are still traveling and taking advantage of cheap flights;
Some are literally taking these flights just for the bragging rights.
Many say, "The chances of me dying is very low." Yes, but the chances of you spreading it to someone who could, is very high.
I'm saving cash and also shorting. I believe the panic and uncertainty will continue throughout the rest of the year. A simple exponential graph will tell you how high the confirmed cases of COVID-19 will be. I’m watching
VIX
and
SPY
very closely. The stock market will be blood red next week.
If everyone just self-quarantined at home for 2 weeks, it could significantly improve the spread of this virus. But no one will. So, during this COVID-19 crisis, a recession is going to take the reins. I say "crisis" because it's going to be called that very soon. Today, it’s just an "outbreak".
I really hope we turn this around but I'm not very sure given these basic observations. I wish you all good health and safety. I'll update this periodically.
WASH YOUR HANDS, STAY HOME (if you can), and STOP SCREWING AROUND.
Random note: I found this podcast episode along with other resources very insightful: Joe Rogan Experience Episode #1439
So far:
1. (NOV '19) COVID-19 outbreak first confirmed in Wuhan, China
2. The world reacts to China's response;
Stock markets begin to tumble;
Questions loom about a possible recession - but CNBC and other news analysts scoff at the notion of a recession
3. (JAN '20) South Korea confirms community spread
4. Countries that underestimate the virus succumb to it very quickly (i.e. Italy, France, Iran, etc.)
5. Some people are finally accepting the reality of the virus (MAR '20);
Panic ensues as this reality sets in;
Reactions are similar to a hurricane - stock up on toilet paper, canned goods, and water (highly unnecessary if you were already using tap water...)
6. Stock markets continue to tumble
7. (MAR ’20) A brief sigh of relief comes on Friday March 13th as Trump gives State of Emergency declaration - during market hours (probably intentionally);
S&P surges
8. The Fed cuts interest rates and commits to purchasing $500 bln in treasury bonds and $200 bln in mortage-backed securities - despite this, S&P futures plummeted;
New York City’s public school system (the largest in the country) is officially closing during the COVID-19 outbreak;
COVID-19 memes are all you see on social media – this is a good sign that the public is finally taking notice even if it’s a disruption to their lives, however, I don't think this is enough to slow it down.
Every U.S. state has at least 1 confirmed case of COVID-19 (www.nytimes.com/inte...avirus-us-cases.html)
Italy – 24,747 cases (+3,590 in the last 24 hours) (www.worldometers.info/coronavirus/)
Going forward – what you will notice:
9. The insidious fear of a corporate debt bubble returning
10. News outlets will increasingly use “recession” as part of their daily talking points – what happened to “it will never happen”?
11. Trump and the Fed will do everything desperately possible to delay fears of an inevitable recession prior to the Presidential election
12. COVID-19 infections will continue to occur in the U.S. until the end of the year at the earliest;
The S&P will continue to decline until vaccines are successfully tested and are produced;
By then, we will be in a full-blown recession where many will have accepted it.
While some (American) folks are now cautious about COVID0-19, not enough are taking it seriously;
Many New Yorkers are still traveling across the city like it’s nothing.
Instagrammers are still traveling and taking advantage of cheap flights;
Some are literally taking these flights just for the bragging rights.
Many say, "The chances of me dying is very low." Yes, but the chances of you spreading it to someone who could, is very high.
I'm saving cash and also shorting. I believe the panic and uncertainty will continue throughout the rest of the year. A simple exponential graph will tell you how high the confirmed cases of COVID-19 will be. I’m watching
VIX
and
SPY
very closely. The stock market will be blood red next week. If everyone just self-quarantined at home for 2 weeks, it could significantly improve the spread of this virus. But no one will. So, during this COVID-19 crisis, a recession is going to take the reins. I say "crisis" because it's going to be called that very soon. Today, it’s just an "outbreak".
I really hope we turn this around but I'm not very sure given these basic observations. I wish you all good health and safety. I'll update this periodically.
WASH YOUR HANDS, STAY HOME (if you can), and STOP SCREWING AROUND.
Random note: I found this podcast episode along with other resources very insightful: Joe Rogan Experience Episode #1439
Comment:
Bank of America's Head of U.S. Economics declares the U.S. in a recession (Source: www.cnbc.com/2020/03...ll-be-destroyed.html)
- Trump Administration approves of stimulus package that includes monthly checks of $1,000.00 to qualified citizens with salaries up to $75,000.00 (#YangGang anyone?)
- I'm searching for undervalued Puts that expire end of year and early next year.
- Trump Administration approves of stimulus package that includes monthly checks of $1,000.00 to qualified citizens with salaries up to $75,000.00 (#YangGang anyone?)
- I'm searching for undervalued Puts that expire end of year and early next year.
Comment:
New York has now confirmed a total of 15k cases with 4,812 new cases in the last 24 hours.
Comment:
Comment:
You might think the recession was induced by the COVID-19 or you might think the recession was always coming this year. Either way the recession is here, we are in it. Time to accept it and strategize for it.
Comment:
- We may see a decline in the rate of infections until then but I believe it will surge again once the warm Summer weather arrives