Fuggedaboutit Friday – What Virus, I Don’t See No Friggin’ Virus?

It's over. 

We can all go outside and go back to work and enjoy a ballgame.  I'm relieved, aren't you relieved?  President Trump declares all is well as the US passes the level of 1/500 citizens being infected and 1/10,000 dead from the virus (so far).  One in 500 infected means that, if you go to a football stadium with 50,000 people in it – 100 of those people has the corona virus and can pass it to you easily if they come within 6 feet of you.  I'm sure that will be fine.

Trump was enjoying the virus as long as it was giving him "ratings" but now that his approval numbers have dipped in the polls, he's done with it so he's declaring victory and moving on – shifting the responsibility and future blame onto the Governors (as I predicted he would) who will now each be clearly in charge of their own state's timelines and protocols (because there is absolutely no leadership at the Federal level).  

Well, there are "guidelines" but The guidelines don’t suggest specific reopening dates. Instead, they encourage States to base their decisions on data. The White House’s plan says States should move to the first phase of reopening after exhibiting a downward trend of documented cases or positive tests over a two-week period. States could move onto the other stages after showing that cases aren’t surging.

Under the first phase, movie theaters (WTF?), restaurants, sports venues (WTF?), places of worship, gyms (WTF?) and other venues could open with strict social-distancing guidelines in place, though bars would stay closed. Schools and day-care centers that are closed would remain shuttered. The plan recommends that vulnerable individuals remain at home during the first phase, and prohibits visits to nursing homes and hospitals. Some people could return to work in phases, though telework is still encouraged under the plan.

dolittleYep, I just can't wait to go to the gym and hold onto that bar that 100 people have been holding before me!  I guess we could practice social distancing in the movie theaters, I think they were already practicing it when I went to see Dr Dolittle – as it was just me and my daughers and
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Forward-Looking Thursday: Will Things Ever Get Back to Normal?

When will things get back to normal?  

That's the question on everyone's mind these days and it's very hard to get a clear answer.  As you can see from the chart on the right, the global lockdown does seem to be flattening the curve and China has been getting back to work without too many new cases popping up but it's still 45 new cases today – certainly what a Capitalist is going to call "acceptable losses" in the context or restarting the economy.  

China's lockdown began 45 days ago and our lockdown began 30 days ago while South Korea (52M people) never had a lockdown but instead went with testing at a very early stage (they had their first case the same day the US did).  Testing and early detection have given South Korea the lowest death rate from the viurs in the World, with just 169 deaths out of 10,000 cases discovered.  Rather than rely on people with symptoms volunteering to be tested, SoKo authorities took a proactive approach which helped identify cases without symptoms which may have otherwise gone on to spread the virus further.

Using technology developed during the MERS outbreak, authorities were able to track cases using credit card records, GPS and security camera footage to find who those individuals came into contact with and ensure they were tested too.  The government sent texts out to residents informing them when a case was discovered nearby and allowed access to its tracking data.  Many chose to self-quarantine, and using the tracking data, they could also see which public spaces were high-risk areas for infection and should therefore be avoided.

Coronavirus: What can the Bay Area learn from South KoreaNow, unlike many other ghost towns across the world, South Korea’s cities are full of people going about their usual business. Crucially, many are practicing social distancing and almost everyone is wearing face masks.  To counter the risk of travelers from abroad spreading the virus, authorities announced on Wednesday strict rules for anyone arriving from abroad, including a mandatory two-week quarantine.

Like many Asian countries, South Korea also has extensive spraying campaigns to sterilize all public areas to prevent the virus from lingering and accumulating day by day.  To me, this is
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Weakening Wednesday – Another Insane White House Briefing, Another Market Drop

WATCH WORLD LEADERS BURST INTO LAUGHTER THE UNITED NATIONS 1038 AM ...Trump wants to cut support to the World Health Organization.  

The WHO is part of the UN so this falls in-line with the general attempts by Putin Trump to destroy the United Nations, which is the only thing standing in the way of many Dictator's and Despot's plans around the World.  Our own self-proclaimed despot has always had it in for the UN but much more so since they laughed at his speach last year when he attempted to proclaim himself the best President in US history.

As ridiculous as dismantling the UN might seem, defunding the WHO in the middle of a pandemic is simply insane but not at all surprising since the WHO's job is to set standards and guidlines and that would include how to handle the coronavirus and Trump already knows he doesn't want to listen to that one.  Trump is also looking to blame the WHO for the Administration's failed response to containing the virus – he'll blame the Girl Scouts if he has to – anything but face the truth of his incompetence.  

Trump claims that he read the WHO report on Jan 15th that said they had not yet confirmed human to human transmission of the virus but he also claims he did not read Peter Navaro's (White House Trade Adviser) Jan 29th memo TO TRUMP which said:

“The lack of immune protection or an existing cure or vaccine would leave Americans defenseless in the case of a full-blown coronavirus outbreak on U.S. soil,” Mr. Navarro’s memo said. “This lack of protection elevates the risk of the coronavirus evolving into a full-blown pandemic, imperiling the lives of millions of Americans.”

Navarro warned the coronavirus crisis could cost the US trillions of dollars and put millions of Americans at risk of illness or death.  So, very, very clearly, Trump and his team KNEW the virus was coming and KNEW it was a huge threat way back in January but Team Trump kept on telling Americans through March 9th that there was nothing to worry about.  These are Trump's actual quotes over 45 days of willful inaction that has cost America 25,000 lives already:

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Two Million Infections Tuesday – US Has Over 25% of the World’s Cases

Isn't Trump doing a great job?

As the President says, he has ABSOLUTE POWER (much like Palpatine) to do whatever he wants and that includes ordering the Governors to lift quarantine restrictions so we'll all be going back to work "soon" – despite what those "scientists", "other World Leaders" and "Governors" have to say about it.  Only Trump's decision matters and that was made very clear by Dr. Fauci's opening ass-kissing of the President at yesterday's briefing.  

Don't blame Dr. Fauci, Trump threated his job over the weekend and Fauci is swallowing his pride and kissing the President's ass to keep us alive because he is the only voice of sanity we have to cling to in this crisis and he has been some help in getting Trump to do some of the right things – which is far better than NONE of the right things.  That's why the US "only" has 1/4 of the World's virus cases and that's "only" 7 times the number of infections in China, which has 4 times our population.  

In case you weren't convinced by Fauci's gun-to-the-head performance yesterday, Trump had a propaganda video prepared (at the Taxpayers' expense) that re-spliced history to make it look like he was the ONLY person who saw this crisis coming early on and took the decicive action necessary to save us followed by more hostage videos from Governors who were told to say nice things about Trump if they wanted to get Federal Aid (remember that last week?):

See, Trump is doing a PERFECT job so let's stop saying otherwise and, if the virus continues to rage out of control or if quarantine is lifted too early and the virus comes back for a second round – that will certainly not be Trump's fault either because he has ABSOLUTE POWER – but no fault at all.  Clear?

Good, now we can get back to other idiocy, like Tesla (TSLA), which is back at $700 this mornng, up 20% in 2 days as the company announced that they delivered 88,400 vehicles in Q1 and produced about 103,000 vehicles
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Make or Break Monday – Oil Cuts, Virus Counts and Emerging Markets

Global GDP tracker suggests a sharp downturnIt’s a make-or-break moment.”

That is according to former IMF chief economist Maury Obstfeld who went on to say: “This may be the greatest global crisis we’ve faced in the postwar period.”  Having all taken steps to support their individual economies, failure by the leading Group of 20 countries to now act together could consign the world to “reservoirs of disease” and trigger outward migration from poor countries on “a biblical scale,” said Obstfeld, now a professor at the University of California, Berkeley.

Social distancing and hand-washing are not options in countries where having your own room and running water are luxuries few can afford.  The IMF says emerging markets will need Trillions of Dollars worth of aid from developed nations or they will simply become long-standing viral hot-spots that could re-infect the rest of the World at any moment.  We are, indeed, all in this together!

We'll hear more about this at the IMF's annual meeting, which starts tomorrow.  At the same time, emerging markets are facing a massive liquidity crisis as they don't have Central Banks that can simply crank up the printing presses when they need to throw money around.   Capital has simply flown out of Emerging Markets and is continuing to do so and those are the people who supply a lot of the parts and materials that make American factories run.

While I could write a whole article on that crisis and it's implications – we don't have time because we need to talk about the Oil Crisis, which also affects Emerging Markets.  This weekend, OPEC finally agreed to cut production by 10M barrels/day (9.7 actually) but the US had a 30M/b net build last week and generally we use about 130Mb/week so that's a 19% overall build and, as I said to our Members over the weekend:

Meanwhile, we had a net 30M build this week and that's out of 130Mb production so 19% too much oil being produced gives us an idea of the extent of the pullback in the economy.  I know I last filled up about a month ago. 

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TGI Thursday – Up 20% From the Lows, What Happens Next?

We're short.  

That's what happens next.  Our portfolios are long but very well-hedged and positioning ourselves pretty neutral going into the long weekend (markets are closed tomorrow for Good Friday) so we are able to use just a couple of S&P 500 (/ES) Futures shorts to flip ourselves more bearish into the weekend.  

We discusses our reasons in detail in yesterday's Live Trading Webinar, after which I reiterated to our Members in our Live Chat Room:

I find it hard to believe people won't sell into the weekend, 2,750 is a good short on /ES with tight stops above.

As expected, we hit our entry goal this morning and we're back to 2,735 as of 7:10 but I expect a lot more selling into the weekend as Congress has no concrete plan for more stimulus and Team Trump continues to look inept in their handling of the situation and the numbers (which we also went over yesterday in detail) paint a pretty disturbing picture as 1/500 people in the US will be infected by Monday and World Wide Deaths will cross over 100,000 and, a week from Monday, over 2M people World Wilde will be infected with less than 500,000 recovered so it's a LOT early to be declaring victory.

Victory in the US is not victory.  Team Trump doesn't get that.  They don't even get that victory in Red States isn't a victory if Blue States still have the virus – they have an imaginary wall that runs through everything.  The Trump Administration won't even allow masks to be exported to Canada – Canada! – it's like a state! 

Lies Liar GIF - Lies Liar SouthPark - Discover & Share GIFs

Ontario's Conservative Premier Doug Ford also expressed disappointment.

"It's like one of your family members (says), 'OK, you go starve and we'll go feast on the rest of the meal.' I'm just so disappointed right now," Ford said.  "We have a great relationship with the U.S. and they pull these shenanigans? Unacceptable."

China is helping out by sending Canada 8M masks so, while we are distracted, Trump is alienating our allies and sending them into China's
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Which Way Wednesday – Fed Minutes Edition

Image result for joker money burning gifWhat does the Fed think?  

Well, at least we'll find out what they WERE thinking on Sunday, March 15th (emergency meeting), just as the virus was starting to shut down the US Economy.  At the time, the Fed said: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress" and they lowered rates 0.5% to essentially zero

Until the Nobel Prize Committee recognizes my "Microwave Oven Theory of Behavior" I won't be considered one of the World's leading Economorons but this group of Economorons seems particularly clueless, don't they?  I mean, it was an EMERGENCY meeting and the Fed had already promised $1.5Tn in QE funding on Friday, the 13th and the market went limit down on that news.  As I said that morning:

"Pouring more money on the fire is not going to make the virus go away and won't dampen the economic impact of the virus.  It's like giving everyone on the Titanic one Million Dollars and a bucket and claiming you "saved" them.  It's what people who aren't actually able to fix things do to buy time (and votes) but it accomplishes nothing in the end – we need to do better!

"So we will sit back today and see what kind of bounce we get from the Fed's action and whatever BS the Government spins out today but none of it matters – even if we move up over 10% to the Strong Bounce line because that then brings us into the weekend, where things could get worse or better – it's a coin

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Tuesday Market Workshop – Portfolio Protection Part 5 – Don’t Get Excited

Don't get excited!  

The Futures are up another 3.5% this morning, pre-market as China reports NO new cases of the virus and Trump touts his "miracle cure" that people have already died from taking.  Day after day, the salesman turned president has encouraged coronavirus patients to try hydroxychloroquine with all of the enthusiasm of a real estate developer. The passing reference he makes to the possible dangers is usually overwhelmed by the full-throated endorsement. “What do you have to lose?” he asked five times on Sunday. 

As it turns out, the real question is "What does Donald Trump have to gain?"  If hydroxychloroquine becomes an accepted treatment, several pharmaceutical companies stand to profit, including shareholders and senior executives with connections to the President.  Trump himself has a small personal financial interest in Sanofi (SNY), the French drugmaker that makes Plaquenil, the brand-name version of hydroxychloroquine.   

"Some associates of Mr. Trump's have financial interests in the issue. Sanofi's largest shareholders include Fisher Asset Management, the mutual fund company run by Ken Fisher, a major donor to Republicans, including Mr. Trump," said the report. "Another investor in both Sanofi and Mylan, another pharmaceutical firm, is Invesco, the fund previously run by Wilbur Ross, the commerce secretary. As of last year, Mr. Trump reported that his three family trusts each had investments in a Dodge & Cox mutual fund, whose largest holding was in Sanofi."

While China may have gone a day with no new cases of COVID-19, the US blasted up from 337,933 cases yesterday morning (4 times more than China, which has 5 times more people than the US does) to 368,449 (up 9%) this morning and we now have 10,943 deaths – the third highest count in the World behind Italy (16,523) and Spain (13,798), which are both openly considered disasters (and they got hit hard with infections 3 weeks before we did – so we may just be lagging on deaths as we have double their infections).  

How does America have 4 times more virus cases than China (1.44Bn people) and India (1.4Bn people) combined with 1/10th the combined population?  According to Donald Trump, it is Obama's fault.  Italy and Spain say it's…
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How to Buy Stocks for a 15-20% Discount

Value Investors: 3 Dirt-Cheap Stocks Trading at a Massive Discount ...Are you down 50% one or more of your stocks?

That's the position a lot of people are fiding themselves at the moment and some part of that is, of course, from the overall market drop but a lot of that is from paying too much when they bought the stock in the first place.  At Philstockworld.com, we teach our Members to NEVER pay retail prices for a stock – that's what retail traders do – not professional traders!  

First of all, see our article about Scaling Into Positions from the Strategy Section of Philstockworld.com.  The very short story is that you should never make a full commitment to a position early on.  You should break your portfolio down into Allocation Blocks (see Strategy Section) equal to no more than 10% and preferably 5% of your portfolio so that no one position can break you and THEN you break your allocation blocks into quarters and each position should be started with a 1/4 entry.

Now, not only can no single position damage your portfolio but no single entry should be able to damage it either.  For example, Disney (DIS) seemed like a very safe stock and, even at $140, it wasn't terribly overpriced but then the virus hit and all the movie theaters closed and the theme parkes closed and POOF! – half their business disappeared and the stock dropped to $85 before recovering a bit to $94.  Had you bought DIS for $140 in February, you'd be down 33%.  

Had you, however, made a 1/4 allocation to DIS in Feb, let's say buying 100 shares for $14,000 in a $50,000 allocation block, you would have plenty of buying power to buy 100 more at $90 ($9,000) and your average on 200 shares would be would be $115 ($23,000) – not even 1/2 of your $50,000 and down only 18.3% on the larger position.

Don't miss out! How Disney uses FOMO (and other marketing gimmicks ...If DIS dropped another 33% to $62 (and we're assuming you still want to be in the stock, of course), you would have $27,000 on the sidelines in your allocation block and you could buy 200 more shares for just $12,400,
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Friday Market Workshop – Portfolio Repair Part 4 – Adjusting Our Goals to Reflect Reality

Time to get real.  

We've had 3 Workshops so far on fixing our portfolios this week:

Now we move onto a very important topic that combines what we have learned and that is Adjusting our Goals.  I talked about this on Tuesday (Part 2) in the Boeing example for someone who bought Boeing at $350 and now it's $150 (today it's $123!) and we do not sit there and HOPE (not a valid investing strategy) that BA will go back to $350 because it's no longer realistic!  

As much as you may love a stock – you have to be realistic when there is damage done to it's financial position or outlook and you have to adjust your expectations accordingly – perhaps even considering abandoning the stock altoghether – especially in times like these when there are other fantastic stocks on sale and, even as I say this, I'm thinking that BA is not really a fantastic stock anymore – they simply have too many troubles to be excited about them – even at $123.

So today we'll take a look at our Earnings Portfolio, which started out with $100,000 on October 21st and was originally supposed to be just quick earnings plays but, the way things went, we ended up getting "stuck" in some good bargains (or we thought as the time) and we rolled them into longer-term bets.  So now it's a bit of a hybrid but that makes it interesting.  At the moment, we're at $132,078 so up 32% for the year but, as you'll see – NOT because our picks were any good – but because our HEDGES saved us!  

Notice we have more cash than the portfolio has value – that's because we follow our core Philosphy, which is:  "Be the House – NOT the Gambler", which means we always try to be sellers of premium, not buyers and that gives us a huge advantage in our trades while also dropping a lot of cash into…
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