August-September 2020 Edition of Corona Crash or Everything Bubble Pop?

I created this series to serve as a set of living artifacts. This is the 3rd post in the series. I’m striving to capture major current events and financial market action from the lens of a retail investor in the US. It’s essential to understand how one feels and behaves during times of economic uncertainty and market volatility. What better way to do that then keeping a log here to reference in the future? This is not investment advice!!!

20182019

2020

February-March


April-May


June-July


August

August 1
Saturday. It’s the weekend so most markets are resting. Crypto is showing some signs of life though. The combined market cap just crossed $330B for the first time in over a year.

I toyed around with the free trial for Simply Wall St. It’s pretty cool and I wish Koyfin combined forces with them for their stock analysis report.

The $600 unemployment benefit expired, and a new package still hasn’t been agreed on yet. It’ll be interesting to see how long it takes to wrap it up and what it’ll look like. It sounds like it could take at least one more week. Next Jobless Aid Bill Could Decide Path of U.S. Economic Rebound.

I wrapped up my June-July edition of Corona Crash or Everything Bubble Pop? I’ll continue with the series for the rest of the year, but I’ll probably decrease my frequency from daily to just a few days a week.

We’re supposedly getting hit by a tropical storm or hurricane here in Florida today, which would be our first since moving last year. The weather has been beautiful so far all day, though, so we’ll see what happens.

India reported its highest daily case increase to date– a total of 57,118 cases.

Japan saw their third day in a row of record new COVID cases.

August 3
Monday. All green. The Russell 2k and Nasdaq closed +1.5%, Dow +.9%, and S&P 500 +.7%. Tech led, closing +2.5%. Gold and Silver were both relatively flat.

Todays edition of COVID-Bankruptcy-Mayhem features the parent company of Men’s Wearhouse and Jos. A. Bank. “Tailored Brands is gradually returning to normal operations after the coronavirus temporarily shut its doors. It re-opened just under half of its stores as of June 5, according to a statement. All of them, as well as e-commerce distribution centers in the U.S. and Canada, were temporarily closed in the first quarter.”

UPS Readies Freezer Farms to Ship Virus Vaccine — If We Get One. “The facilities, under construction in Louisville, Kentucky, and the Netherlands, near UPS air hubs, will house a total of 600 deep-freezers that can each hold 48,000 vials of vaccine at temperatures as low as -80 Celsius (-112 Fahrenheit). That’s on par with some of the coldest temperatures in Antarctica. Distributing a Covid-19 vaccine — if one is approved for use — will be the second huge logistical challenge spawned by the pandemic for delivery giants UPS and FedEx Corp., which earlier this year mobilized to airlift thousands of tons of protective gear across the world for health-care workers.”

This story is heartbreaking: Georgia teen loses parents to coronavirus four days apart. Donate here.

August 4
Tuesday. More green. The Russell 2k led, closing +.7%, followed by the Dow +.62%, and the Nasdaq and S&P 500 +.35%. $GLD increased 2% and $SLV flew 6.6%. Spot gold hit $2,000/oz for the first time.

Still no signs that stimulus discussions are nearing an end.

Tropical storm Isaias completely missed us in South Florida but caused some damage up north after making landfall yesterday in North Carolina.

August 5
Wednesday. Green everywhere. Seriously. Why wouldn’t it be? Everything is fine and dandy. The Russell 2k led again, closing +1.7%. The Dow closed +1.3%, S&P 500 +.64%, and Nasdaq +.5%. Gold is up over 1.6%, and Silver is up nearly 4%. As for my portfolio, I shifted my 401k to be significantly more conservative than it already was. I also bought a little more $KRMD on today’s 13% dip. We’re up ~15% overall YTD, and we’re now allocated over 41% to cash & alts. I’m happy to secure gains and miss out on a little upside if the rally continues. I value my ability to sleep and can’t do that without being positioned securely.

Now that gold as topped $2,000/oz, folks are calling for $3,000.

An ADP jobs report today was bleak. “ADP said companies added 167,000 jobs in July, far short of the 1.2 million economists polled by FactSet expected. That follows bigger gains in June and May, when employers added a total of 7.6 million jobs.”

Howard Marks & Oaktree published Time for Thinking, his first since mid-June. This one is a reflection on the health crisis, the failure to fix it, the non-cyclical nature of this situation, the shape of the recovery, the Fed, and a bull case. Excerpts:

  • Not a Cycle: “My main response is that the developments of the last five months are non-cyclical in nature, and thus not subject to the usual cycle analysis… I’m convinced cycles will continue to occur over time, highlighted by excessive movements away from “normal” and toward extremes – both high and low – that are later followed by corrections back toward normalcy, and through it to excesses in the opposite direction. But that’s not to say that every event in the economy or markets is cyclical. The pandemic is not.
  • What Shape Are We In?: “Fast down and slow up: to me, that’s no V. I prefer to think of it as a checkmark.”
  • The Markets and the Fed: “…These are the traditional concerns with regard to monetary expansion. Modern Monetary Theory (“MMT”) stands ready to refute them. The actual outcome is unknowable. But does it really make sense that bank reserves, the Fed balance sheet and the federal deficit can be increased ad infinitum without negative effects? My answer is the usual: we’ll see… “
  • Bottom Line: “That leads me to end with a great bit of wisdom from Charlie Munger concerning the process of unlocking the mysteries of the markets: ‘It’s not supposed to be easy. Anyone who finds it easy is stupid.'”

Eric Cinnamond at Palm Valley Capital Management published Believers. I always enjoy his writing style. “Conviction is one of the most important attributes of a successful investor… Investing with conviction isn’t easy. The future is unknowable, making it difficult to invest with certainty and according to plan… Facing uncertainty can be particularly challenging when standing apart from the crowd, or as a contrarian… Investing differently and fighting the seductiveness of the crowd is extremely difficult—significant conviction is required… While we believe investing with conviction has never been more difficult, we also feel it’s never been more important… Every cycle is different, but in our eyes, the fundamentals of investing have not changed—prices matter, cycles revert, and risk may hide for extended periods, but it never disappears and should not be underestimated.”

There was a terrible explosion in Beirut yesterday.

The trend in cases is looking promising.

August 6
Thursday. The Nasdaq closed +1%, Dow +.68%, S&P 500 +.6%, and the Russell 2k lagged a bit, closing -.1%. $GLD rose another 1.3% to $193 and $SLV flew another 7.3% to nearly $27– the highest since 2013.

Jobless claims rose another 1.186M. The total since mid-late March is ~55M. For context, the entire GFC of 08-09 saw just over 37M. This was the first weekly decline in almost a month and the lowest claim count since the pandemic rocked life as we knew it.

A model from the University of Washington is predicting 295,000 COVID deaths in the US by December.

Covid Tracking Project published their weekly post and titled it, The Last Thing We Need Is Fewer Tests. “For the first time since early March, the number of people tested in the United States went down. This week’s tests were 9.1 percent lower than last week’s national peak of 5.7 million tests… As testing declines in many US regions, K-12 schools, colleges, and universities have begun to reopen for in-person classes in many US states, we have already begun to see on-campus and residential outbreaks that mirror those we’ve seen from summer camps. In Hong Kong and Israel, where the pandemic was under greater control than it remains in the United States, school reopenings were followed by spiking outbreaks.”

August 7
Friday. A little more red than we’re used to these days. The Russell 2k closed +1.6%, Dow +.17%, and S&P 500 +.6%. The Nasdaq closed -.87%, gold dropped -1.3%, and silver dropped -.8%. I suppose it’s reasonable for them to cool off a bit given their recent rise. Here’s a weekly:

Little progress is being made on a new stimulus package apparently.

I start a new job next week so I published joining Wise.

MarketWatch published 55% of coronavirus patients still have neurological problems three months later: study. “Now a study of 60 COVID-19 patients published in Lancet this week finds that 55% of them were still displaying such neurological symptoms during follow-up visits three months later. And when doctors compared brain scans of these 60 COVID patients with those of a control group who had not been infected, they found that the brains of the COVID patients showed structural changes that correlated with memory loss and smell loss.”

August 9
Sunday.

NPR published States Are Broke And Many Are Eyeing Massive Cuts. Here’s How Yours Is Doing. “Record-high unemployment has wreaked havoc on personal income taxes and sales taxes, two of the biggest sources of revenue for states.”

Ben Carlson wrote about how this is The Most Counterintuitive Recession Ever. “It’s possible all of this government spending is a one-off because of the nature of this downturn. This was the first recession in history where everyone knew the exact moment it began. The telegraphed nature and shutdowns forced government officials into action. But it’s hard to believe voters won’t push for politicians to enact further fiscal rescue packages in the future. If the government can stop a depression in its tracks, why wouldn’t they do so during future recessions?2 No one knows the unintended consequences of these types of policies moving forward but it sure feels like 2020 is going to mark a turning point in the way we look at the response to economic crises in the future. And regardless of the policy implications, this will go down as the strangest recession ever.”

We struggled to find anything great on Netflix or Prime this weekend. Good thing Shark Week starts tonight!

Here’s an updated shot of the COVID death situation globally from FT.com:

The US crossed 5 million cases.

Tomorrow – August x


Back to the start of 2020


Advice

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