Break out your ol' dcf notes: this is all nothing more than a call on future earnings.
Some thoughts:
• Two things caused this de-valuation: the CoVID-19 and the Russo-Saudi oil upset.
• Humans are a social species -- gathering together is instinctual.
• The majority of world economic activity is directed towards humans gathering together.
The whole "social-distancing" thing is counter-instinctual, and a bit of a chore to even conceive. But our traveling, our day-to-day consumption, our construction of facilities to gather together and consume -- all are impacted by this current imperative (or even, enforced rule) to stay apart.
So: for as long as CoVID-19 commands a counter-instinctual, society-wide distancing, then our entire economic structure is crushed into a tiny sphere of groceries, paints and plumbing (reminds me of "toilet-paper, tunafish, and .22lr(s)"
) -- *that* portion of the economy (and of the financial markets) should do just fine. But for every week of which the CoVID-19 stays in the headlines, that is a week of $0 revenues for the majority of the market. And that will go directly towards the next earnings season: total f-ing disaster. What we have seen as a "crash" is no crash at all -- it is the real-time discounting of forward earnings, and the instant that the CoVID-19 picture changes, there will be a face-ripping Limit-Up surge in the markets.
The Russo-Saudi imbroglio?
"Pfffft." 
It's much broader than that -- Russia is re-engaged in a game which they could not afford to play 20 years ago, and they are budgetarily much worse off now, so while their re-engagement is a puzzle, their lifespan at the table is not: the Saudis have them by the short hairs, and despite the disastrous world-politique moves of The Kingdom over the last decade, they will seek to bring Syria, Iran/Hezbollah, and Russia into line with their wishes sooner than later, and this oil-price disagreement will disappear in a friendly little "Poof!" in a matter of a few weeks. The markets, of course, will re-value all petro-stocks in a similar swift wave.
But think of it this way: if the CoVID-19 is 2/3rds of the current down-turn, and oil prices the other third, and 30 days will tell us a lot about both of them, then we're status quo for another week or two, then small buying for two weeks after that, and then watch the headlines for a r-r-r-r-R-R-R-RRRRIP upwards after that.
Short-term? Buy HD (down -20%); sell CZR (down -50%)
Next week-or-three? Sell HD; buy CZR. (or AAL or DIS or....)
Some thoughts:
• Two things caused this de-valuation: the CoVID-19 and the Russo-Saudi oil upset.
• Humans are a social species -- gathering together is instinctual.
• The majority of world economic activity is directed towards humans gathering together.
The whole "social-distancing" thing is counter-instinctual, and a bit of a chore to even conceive. But our traveling, our day-to-day consumption, our construction of facilities to gather together and consume -- all are impacted by this current imperative (or even, enforced rule) to stay apart.
So: for as long as CoVID-19 commands a counter-instinctual, society-wide distancing, then our entire economic structure is crushed into a tiny sphere of groceries, paints and plumbing (reminds me of "toilet-paper, tunafish, and .22lr(s)"
) -- *that* portion of the economy (and of the financial markets) should do just fine. But for every week of which the CoVID-19 stays in the headlines, that is a week of $0 revenues for the majority of the market. And that will go directly towards the next earnings season: total f-ing disaster. What we have seen as a "crash" is no crash at all -- it is the real-time discounting of forward earnings, and the instant that the CoVID-19 picture changes, there will be a face-ripping Limit-Up surge in the markets.The Russo-Saudi imbroglio?
"Pfffft." It's much broader than that -- Russia is re-engaged in a game which they could not afford to play 20 years ago, and they are budgetarily much worse off now, so while their re-engagement is a puzzle, their lifespan at the table is not: the Saudis have them by the short hairs, and despite the disastrous world-politique moves of The Kingdom over the last decade, they will seek to bring Syria, Iran/Hezbollah, and Russia into line with their wishes sooner than later, and this oil-price disagreement will disappear in a friendly little "Poof!" in a matter of a few weeks. The markets, of course, will re-value all petro-stocks in a similar swift wave.But think of it this way: if the CoVID-19 is 2/3rds of the current down-turn, and oil prices the other third, and 30 days will tell us a lot about both of them, then we're status quo for another week or two, then small buying for two weeks after that, and then watch the headlines for a r-r-r-r-R-R-R-RRRRIP upwards after that.
Short-term? Buy HD (down -20%); sell CZR (down -50%)
Next week-or-three? Sell HD; buy CZR. (or AAL or DIS or....)
Last edited:
