The SPY was down 20%, but the story was much worse on a sector by sector basis. Although tech held up relatively well, posting a loss of only 22%, most stocks dropped by 40%. Some of the more severe industries hit hardest by the collapse in crude and quarantine dropped by 75%-90% of its value — teetering on bankruptcy.
Oil dropped 70% and the world as we knew it changed, seemingly overnight due to a BAT SOUP virus that has since gripped the world, plagued us with death and mayhem — pushing western nations to the brink and forcing central banks to intervene on a scale never seen before. The stimulus coming into the economy, as a result of this new born crisis, will likely top $10 trillion before it’s all said and done. The Fed has declared to have “unlimited money” to fight the deflationary scourge. One would surmise, seeing all of this printing, that gold would trend higher. Gold itself moved higher by 4.5% for the quarter, but the miners caught a battle-ax to the cranium, lower by 20% for the year.
Part of the reason is due to mine shut ins, which limits the profits and viability of miners. Retail foot traffic, according to Cowen, is down 97.6% year over year. Thus far, nearly 200k people in America have been afflicted with COVID-19. I lost my Uncle to it last night. More people have been lost to this than on 9/11, yet many still believe it to be a joke, since we’re living in an era of disbelief.
I have deep concerns about the future of the global economy and pecking order. These types of declines usually precede depressions. Goldman BallSachs is forecasting a staggering -34% decline in Q2 GDP, with 15% unemployment. They’re also projecting a +19% jump in GDP, largest on record, based upon the idea that everything will go back to normal. That’s the big bet here, isn’t it?
Leverage loans and high yield CLOs were blown the fuck out for the quarter. The S&P LSTA Index hit a low of -22% for the year before recovering half its losses in recent weeks. We’ve been on a nice roll the past week or so, up nearly 20% from the lows. Stocks like BA higher by 50% the past two weeks, but down 55% for the year. The chop has become untenable for some. The decline has dragged in all sorts of unsavory people into the market, persons of low information trying their hand at trading emboldened by the belief that what goes down must come back up. Dave Portnoy comes to mind with that, tossing $3m into the market for all to see him trading in real time, carelessly tossing millions of dollars into a single trade and declaring himself a genius after closing out a 1% return.
Life as we knew it changed. Since it happened so fast, we still believe it can go back to the way it used to be. But can it? Will people go back to cruises and PACK TIGHTLY into concerts anytime soon? I suspect it will take years to get back to January of 2020 and I am preparing for that eventuality. I cannot find a steady source of toilet paper and papered towels in North Carolina, a state with only 1,500 infections and a handful of deaths. These aren’t normal times and the damage done to the crude sector is bound to have deep and everlasting effects on many states dependent on oil money. Wyoming Asphalt Heavy Sour traded at NEGATIVE 19 cents a few days ago and is now worthless. Many landlocked crude prices in America are 50% below WTI spot. This is an industry that employs over 10 million Americans. We were the largest producer of crude in the world.
Bonds have been a safe haven, specifically treasuries, with the 10yr at 0.68%. But this drop hasn’t translated into a drop in mortgage rates, since the mortgage industry blew up amidst unprecedented margin calls. The corporate bond market has recently recovered since the Fed started to buy everything and we’ve seen RECORD issuance in recent days. But without the Fed, it was in free fall mode — with the LQD hitting a low of $105, presently trading above $124. High yield ETF HYG hit a low of $67, now trading at $77 — hasn’t done as well as LQD because the Fed can only buy IG.
I closed out the quarter +100% on my trading account, thanks to monstrous wins in virus stocks and a sundry of timely in and outs that pretty much marked the best trading in my career. I have recently struggled with some trades and have taken some losses. I am presently very long and in the worst sectors — hoping for a bounce. I say “hope” because it’s an extension of my intuition. My retirement account is still 100% cash and I might’ve pulled the trigger too soon on that — but I feel more comfortable this way — being in complete control to make changes on the go.
Q1 is in the books. I hope you survived it. If you didn’t, you’ll be shining my shoes before long.
NO BOOZE, NO CARBS. NOTHING. STEEL YOURSELVES MEN for the fires are here and they’re burning bright. Be on point for we can turn lower or higher on a drop of a dime.
Data dump for Quarter
Market cap over $5b
Market cap over $100b
Up for quarter, market cap over $100b
Virus stocks
Corona Fears Index, Exodus
Best Industries
Gold got flushed. I’m in for a few contracts.
2 weeks or less
Bigger metros
see civil unrest
Sorry I was such a dick last night. That’s all.
I did the same a few days ago. Lots of people losing their cool.
Yall can hug it out virtually but let’s respect social distancing.
Nah. We’re used to unbearable bullshit.
excellent post and Q1 debrief. Thanks Fly
Excellent. Love the Metheny.
DUST and UGLD is working out perty well for me. Momentum on UGLD is a buy for DUST. Then dump the DUST run and buy more UGLD.
Better than the $4000 beans I made and gave right back shorting oil last week.
No I haven’t learned my triple leveraged lesson. It’s the only way I know to turn pennies into dimes.
As long as men still like vaginas and the bodies attached to those vaginas still like shiny shit… Gold will print.
Powell is helping also.
Condolences for your uncle.
Still surprised that you could write that and then, “I am presently very long.”
Two points:
1) Q1, toast, Q2 toast, Q3…well, my math says that -xx, then -34%, then +19% is still down at least 20% Y2Y, so right or wrong, it’s nothing to go long.
2) With such high uncetianties, its hard to say what the true value of stocks are. However, I am much more confidant in the panic of investors when the bodies start piling up **everywhere**. This “visual enhancment” makes it a much differnt type of bear market than any in my lifetime Falling house prices or dotcoms don’t leave a trail of literal blood.
What do u do for a living numbers?
Sorry to hear about your uncle.
This is an opportunity to dismantle the Chinese manufacturing base and return it here.
Even if the plants are highly automated, there will be some jobs. We need to make stuff here again. The days of relying on countries who are our adversaries are over.
Why dismantle the Chinee manufacturing base?
They are great suppliers of HIGH QUALITY STUFF
at bargain prices that make our lives better.
The American worker is a lazy, non-productive
slob (except for the Mexcuns who work here).
We don’t need the fuckin’ jobs. Go to a 4-day
work week at $800 a week, slashing taxes on
under-$60K workers to ZERO.
Let the Chinee, Indians, Mexcuns etc be our slaves.
You think Americans will pay for higher priced products after this?
If the market totally collapses or hyperinflation occurs, universal basic income will be instituted. If fiat becomes worthless, most of us will be at the mercy of our government for a subsistence lifestyle.
Those gold bugs may not be so stupid after all.
Amen Nemo. the CCP of China must NOT be allowed to get ‘off the hook’ for what they have done to the entire world.
My condolences. That is truly unfortunate.
“Many landlocked crude prices in America are 50% below WTI spot. This is an industry that employs over 10 million Americans. We were the largest producer of crude in the world.”
Free markets.
Business cycle.
Everyone worth lending to isn’t borrowing at the end of a credit cycle.
American crude is the stripper with 3 houses in that big short movie.
Are we supposed to feel bad for the next generation of hedge fund managers who buy Argentinian bonds?
Anyone can get out of high school and get A+ then network + certifications and earn an above average salary.
Extracting stuff out of the earth and putting it on boats is not lucrative. Unless you are doing the bond offering of course
ERY ETF looked like shit when Google and FB were at all time highs.
10 year bull market.
Average hot potato game lasts 7 years.
Republican tax cuts during a bull market caused 6 out of the 7 biggest crashes in the past 100 years.
***Everyone*** had a chance to get out.
“Republican tax cuts during a bull market caused…” maybe the dumbest sentence I’ve ever read on this blog in 10 years. Well at least since this fuckhead narcist started posting a month or so again. There could be a correlation but tax cuts did not cause any market crash. Do not take this post personally peaches; narcist, you can take it personally.
Take what personally? I didn’t opine on “tax cuts” and I don’t think all tax cuts are terrible.
Whatever I’ve said that got you so butt-hurt about me, don’t make asinine assumptions about what I think about any particular issue.
But since you dragged me into a “tax cuts” discussion, my thoughts are:
1. The “middle class” has been overtaxed for decades and the regressive nature of the overall tax structure exacerbated the hollowing out of the middle class.
2. People are still not willing to accept that it is unwise to spend a trillion on the military-industrial complex every year.
3. Medicare is costing too much. Either we go for rationing (a la single-payer) or we tell the elderly to die sooner. I actually lean towards the right-wing solution (i.e., the “die sooner” approach).
Also, for future reference, I agree with Ron Paul on most issues other than abortion. (He is “prof-life” and that may have something to do with his OBGYN past.)
So find another left-wing straw-man to argue with. I’m not that person.
Sorry about your fam up there. Timing on the move to NC is a bit bitterweet. Onward…
sorry about your uncle Fly
Sorry for your loss.
Big topic in the administrations presentation was about how California is keeping their numbers down and that was critical to keeping the curve where it is… again California only processed 2,000 tests today with half of those coming back positive and the pending tests going from 56,000 to 57,000. Big problems in California that are still not being recognized or priced in.
Predictions in altmedia,
ABOUT A MONTH! AND! A HALF AGO!
Believed testing would be withheld or slowed by the Cdc
To get some spread.
And
That the charts would spike when full testing proceeded.
Those gameboard predictions or analytics were brilliant.
And I believe pretty observable over the last few weeks.
[everyone not privy to those hypotheses keeps posting
on the testing lag and impending predicaments, NO
OFFENSE, it’s great, but a few moves behind]
Do you think that China had this testing already available and that is why they went apeshit, which lead them to somehow know what they had to do in order to get rid of virus and thus reduced supply of tests to detect?
$2 trillion in infrastructure spending on deck
When the time is right
ROK – Rockwell Automation
USCR – US Concrete
RGI – Invesco Equal Weight Industrials
My condolences Sir.
I hope things get better for you Fly.
I’m concerned about the economy as we all are, but for the time being we’re OK.
Liquidity issues are solved for a few weeks or months.
We aren’t running out of money. Can’t.
Investors and other market creatures are starting to tolerate virus dangers.
It really is possible to spend our way through this.
Bearish sentiment is extreme.
We could get a rally here. After that who knows. We’ve never seen such a large wad o’ cash thrown at a problem this big. 6 sigma × 6 sigma. The smoke should clear in two years or so.
This could get wilder or milder.
Today sucked- chop got me. I’m going into tomorrow long, with finger on the sell button.
Btw. Todays tape. What a POS. Could it have been frustrating? Not for me, and probably many others. A beautiful shake out? We’ll see.
rally back into overheated overbloated extended levels?
do you realize the flaw of that thinking?
1. due to the maximum manipulation and added legs prior to the trigger
2. not impossible, they can ploy another few k Dow, but conceptually ridiculous
3.
you sound not-prepared for boombust #3
it was likely. hello?
we’ve been boombust since 99.
as I never yielded about of course.
The indexes were in boombust condition.
How can you legitimately feel woe.
And the mirage you experienced for several years,
was only because they zirped and easymoney cocaine’d the casino
Chill. I know that, wasn’t trying to write a book.
For the time being, like tomorrow until maybe week’s end we could see upside. There could be bouts of optimism occasionally after that but much turbulence…maybe we get lucky. Projecting the outcome of something so complex years from now is beyond human ability.
Not saying that the problems aren’t enormous.
One more thing: a fibonacci and two trendlines are just above today’s high which means a whole bunch of people think that will reverse things.
Happily, responding to public questioning, CDC “is considering” telling people to cover their face with something …anything. https://www.businessinsider.com/coronavirus-cdc-may-urge-face-covers-leave-masks-for-medics-2020-3 Hope they follow through …write your congresspeople. A month earlier and thousands of lives would have been saved.
Sorry Fly.
We’re three months late at every turn. If it wasn’t for one particular orange person who thought it politically wise to diss Asians we’d really be fucked.
It was the only thing he did right but for horrid reasons. We got lucky, he had no idea.
Welp, watch out for a bandanna shortage. Bandannas will trend the hardest since Fitty roasted the shit out of Ja Rule.
Sorry Fly.
Word is that face masks don’t protect you from catching COVID but the masks are needed to protect healthcare workers.
How is that?
N95 masks form a seal (air-tight, I think) around their border, but regular surgical-type masks or dust masks do not. Transparent face shields do not fully protect you either.
The virus (being airborne) can be sucked in around the borders as you breathe.
If you are infected, then wearing a surgical-type mask doesn’t **fully** protect those around you, but it greatly helps. Just think how far the virus could travel if you coughed with a mask vs. without one. (Simirlarly, wearing any mask will reduce your chances of getting infected, but won’t provide the protection of an N95 mask).
Empirical evidence suggests that masks do protect you from catching COVID. Look at the curves of the Asian countries. I saw they already started wearing masks en masse during my winter break visit to Japan and Singapore.
Condolences for your Uncle, Fly. These are bad times.
To echo the 60s during Nam, people outta line up outside the White House and chant: “Hey, Hey, Donnie J, how many grannies did you kill today?” (“Hey, Hey, LBJ, how many boys did you kill today?”)
He doesn’t understand what shame is but he knows about bad optics.
Condolence and sorry for your loss Doc.
I appreciate your excellent EOQ report.
My Deepest condolences Fly. This is real world stuff and hope a Dark Horse rises and destroys this damn bug.
The Dark Horse is an HIV drug, and the most effective one so far (Kaletra) may not still be the best one to be identified.
Ask any real doctor. He/she will explain to you why it’s showing good results.
Any chance you think there is a link between previous hiv med usage by people/generations from certain country/states being less susceptible?
I’ll be concise about the general idea of how the HIV drugs work: They circumvent the replication of the HIV virus. Different HIV drugs do that (i.e., the circumvention) in different ways, thus some are less relevant than the others for treating COVID.
The HIV drugs don’t completely cure the HIV patients because the HIV viruses (plural, since there are different strains) are “smart” and can “hide” in the human brain (see blood-brain barrier) but SARS-CoV-2 (the COVID virus) is comparatively “dumber” in the sense that it doesn’t “hide” itself as insidiously, thus allowing the patients to eliminate it (i.e., defeat the virus with his/her own immune system). The HIV drugs are showing signs that they can slow down the replication of SARS-CoV-2, thus helping the more vulnerable patients to fight the virus.
it doesn’t suprise me that you are knowledgeable about the fag drugs
Unlike you and the other morons, I am knowledgeable about most things.
They teach a bit of virology (and “the fag drugs”) in AP Biology, but it wouldn’t surprise me that you didn’t finish high school.
Dude, the 80s are calling and want their insults back
Condolences, Monsieur Fly. These are scary fucking times; sorry it hit so close to home.
I’m sorry for your loss. Stay strong!
Sorry, to hear about your uncle.
No Olympics, and now Japan suddenly has a spike? +14% after weeks of single digits. What a coincidence.
https://ibankcoin.com/flyblog/2020/03/14/liquidating-long-termretirement-accounts-next-week/#comment-567659
https://ibankcoin.com/flyblog/2020/03/28/progress-report-exodus-2-0-aka-stocklabs/#comment-569011
So looks like my calendar Put spreads are working to perfection: short puts expired worthless Friday, Monday, and Tuesday, and now I can cash in the long puts this week and next. In most cases, I’d expect the short side to lose money (as a hedge), but this was soooooo easy and predictable.
Futures down 3%, strap in bitches!
What are your other positions besides the spreads?
“The bruised and battered U.S. shale industry is poised to emerge from the oil crash a winner, according to Goldman Sachs Group Inc.”
they are already lining up the next group of suckers.
interest is literally the source of all human suffering
Fly,
I am truly sorry for the loss of your Uncle. I hope everyone on this board – including those I have disagreed with in the past will stay safe with their families and STAY HOME. Remember we are all Americans and we are all in this together.
Let’s flatten the curve and beat this thing.
There are still way too many among us who don’t take the the curve and this thing seriously.
So, the more realistic goal at this point is: Let’s be better prepared to deal with “this thing” for at least several more months to come.
every conservative person I grew up with who has a decent job either grew up filthy rich, or they are SUPER pro-Israeli’s who would fly to Tel-Aviv the minute things get rough here… (they only vote based on what candidate will give more tax dollars to a country whose standard of living is quickly surpassing ours)
or…
they live in the basement and deliver pizzas. stockholm syndrome.
*my mother is Jewish. we picked a country to support and its the one us and our community live in.
Good to know. My godfather is Jewish too. (The typically reliable left-wing type whose grandparents settled in NYC.)
I still see Tikkun Olam thru his lens despite my penchant for annihilationism.
I think the big money knew weeks ago. Mostly baked in.
Relatively good new out of CA. Locking things down just a bit earlier than places like NY has made a huge difference. Still need to prevail upon leaders re encouraging face coverings for everyone …and for them to better inform idiot drones who look to the central gov’t about this bug living on surfaces FOR WEEKS. Still seeing people bringing their kids to the store in rural zips.
Birx already set the bar at 100k minimum (and implied that the cities won’t end up claiming a lion share of all deaths). The Civil War parallel is that we’re still in 1861. By May/June, rural and Dixie will begin to suffer more casualties.
Sorry to hear about your Uncle, Fly. Thanks for the excellent Quarterly review, especially amidst loss of family.
Such panic. Trump said nothing that wasn’t already known. Long but not in a hurry to sell. I’ll not argue with the market but will give this time to play out.
A half of a years worth of GDP is being thrown at this and more is likely if needed. I may go short, but it’s not a trade I’d not like to hang around in.
First, I am really sorry for your loss. Such a horrible time now for many families.
Second, I live like 5 minutes from you. The stores arent that bad. If you need a place to go shopping outside of Cary that has TP hit me up. Hand soap and hand sanitizer are the only things I can’t find. Otherwise, its pretty normal in Raleigh.
The market fell out of the bear flag and that is the key. If it can climb back in we’re headed up, and if not, down we go. Good chance the bears run out of gas here IMO.
Dude you got to zoom out bro. Stocks aren’t going to make it back over 2700 for like 6 months
Hoover cut top tax rates taxes before 1929
Reagan cut tax rates in 86 (also before)
Bush cut tax rates in 2000.
Bush cut taxes after the war… 2008
Trump cut tax rates in 2018.
It’s no different than dumping a bag of ecstasy in the punchbowl at a frat party.
You’re too busy thinking about the color of our skin to realize… Regardless of what you think…
Selling stocks and buying long dated treasuries and gold after a republican tax cut and going back to a 60/40 portfolio 52 weeks after the crash…
Will beat whatever you’re doing with your pennies.