https://www.youtube.com/watch?v=1pv2N98-O14
https://www.youtube.com/watch?v=5h7ulAg3_Ls
https://www.youtube.com/watch?v=NnAOh2_ZFbg
https://www.youtube.com/watch?v=L5EHxsuPSl8
https://www.youtube.com/watch?v=GmNGlwAxRDI
https://www.youtube.com/watch?v=xTdcHQr0_Ag
https://www.youtube.com/watch?v=Fx8oJCzRJUk
Key takeaways on White house press releases
- White house has taken very decision steps since the start of the spread in China to limit the import of viruses within the US
- It has followed through with further travel bans of air travel from Europe
- The next step is the 15 day shelter at home notices as of 15th March 2020
- Its a trade off between financial markets turmoil and health system turmoil
- To reduce maximum potential casualties, White house has opted to drag out the time it takes for the virus to spread throughout the community through social distancing measures.
- The process can be modified to have each state go through its own bell curve of peaking
- When health facilities are not overload, healthcare workers can afford to provide the necessary level of care to patients so as to limit the number of fatalities
- In times of crisis, democratic systems after much bickering will align and perform execution with tremendous velocity. Private sectors will get mobilized to deal with the crisis as well.
- Crisis are opportunities to remove red tapes and refresh platforms that are otherwise outdated. This makes the system more robust and able to handle future scenarios
- Media do not always accurately report what is the official communication from the White House. When possible always seek out the original communication.
- Targeting to reopen the country by 12th April 2020, Easter
Stock market price actions
[gallery ids="4361,4362,4368,4366"]
- In prior two pandemics (2003 SARS, 2009 H1N1), the height of the shock was experienced during the month of March before a subsequent rebound was observed
- Federal reserve announcements of interest rate cuts ironically caused markets to dip
- During period of turbulence, euphoria and subsequent price spikes due to government promise of bail out will not be long lasting
- Oil is a leading indicator
- Percentage coverage of media on pandemic is also a leading indicator of drops in markets
- SPY might go through periods of denial before acknowledging pandemic is cause for concern
- Gold which is considered a safe haven during time of crisis will dip when traders experiencing margin calls on their equity positions start unloading their gold to fulfill margin calls
- US Treasury yield curve will start steepening when Federal reserve starts lowering interest rates and performing quantitative easing
- Gold and bond prices decline will quickly follow the steepening of the yield curve.
- Global markets will experience sharp retreat as funds exit from global markets for US treasury when steepening compared to negative interest rates worldwide
- US dollar exchange rates will start surging as liquidity exit from emerging markets
- Execution of fiscal policies will usually lag monetary policies
- Share prices levels of directly impact companies can be seen trading at
ratios on 19th March 2020
PE ratio: 1.5 - 2.5X
- PB ratio: 0.25-0.30
- Discount from peak: 80-90%
2020 Corona Pandemic: NHCL, RCL, CUK, CAR, MGM
- 2019 California forest: PCG
- affected industries: cruises, hotels, airlines
Related references
- [Trend lines of various asset classes price movements during the 2020 COVID-19 pandemic](https://docs.google.com/spreadsheets/d/14-PQrLtyQLjX1r1A_nTBwz26n2ibEvSEKJhiTQawQPQ/edit?usp=sharing)
- [Loss aversion reversion to mean trading strategy capitalizing on hyper media coverage](https://garyteh.com/2018/04/trading-strategy-capitalizing-on-loss-aversion/)
- [Understanding big debt crisis, Ray Dalio](https://garyteh.com/2019/09/book-summary-understanding-big-debt-crisis-by-ray-dalio/)
- [The bank credit analysis handbook](https://garyteh.com/2019/07/book-summary-the-bank-credit-analysis-handbook-by-jonathan-golin-and-philippe-delhaise/)
- [Fall in Gold follows as gold is sold to fulfill as margin calls requirements in equities](https://www.bloomberg.com/news/articles/2020-03-15/gold-climbs-after-fed-cuts-interest-rates-as-virus-spreads)
- [Fall in Bond follows as Central government cuts rates and starts performing QE](https://www.bloomberg.com/news/articles/2020-03-18/global-bonds-plunge-on-fear-of-debt-deluge-from-pandemic-defense?srnd=premium-asia)