Talking Stocks 2.0

[GB-man]

Seems odd to have oil futures tank 40% and the markets relatively flat.

[beshannon]

Originally Posted by GB-man

Seems odd to have oil futures tank 40% and the markets relatively flat.

Traders are looking past the oil collapse and into value names. Also some profit taking was expected after last week. The NASDAQ is basically flat

[WatchEater666]

Bought a good chunk of JETS ETF today. Hotels tmr, then drip into indexes after.

[vipereaper30]

I can't help myself! Shorting TSLA here along with a few others. How the market remains at these levels confounds me and part of a few of my portfolios.

[Duey]

Originally Posted by GB-man

Seems odd to have oil futures tank 40% and the markets relatively flat.

This just shows you how blind people are in today's market. Traders are trying to look past reality with blinders on to come up with value stocks. It's all speculators, or investors who can't admit that's what's happening, now.

[Bearxj86]

Originally Posted by vipereaper30

I can't help myself! Shorting TSLA here along with a few others. How the market remains at these levels confounds me and part of a few of my portfolios.

Careful there - I see a crash only in the summer since Corporations aren't giving out the true damage yet... (unless the market somehow sees through it). So hopefully your shorts last that long.

TSLA has a battery conference in a few weeks and that can have a huge impact on share price both upward and downward. A straddle may seem better rather than a complete short ;/ (PS: I am long TSLA)

[beshannon]

Originally Posted by Duey

This just shows you how blind people are in today's market. Traders are trying to look past reality with blinders on to come up with value stocks. It's all speculators, or investors who can't admit that's what's happening, now.

There is certainly some of what you describe happening with respect to speculation, there always is.

The bottom line is where else do you invest? Cash is worthless, commodities are all going lower in a deflationary period. Yes the economy is a wreck but it will not always be that way and even now there are companies still doing very well, WMT, NFLX, AMZN, MSFT etc. Could we trade lower? Sure. However short interest is really high as is pessimism, contrary indicators.

In the end everyone needs to assess their risk tolerance as it relates to their plan and goals.

[cornerstore]

This article explains an interesting dynamic. We seem to be in a generational divergence of what value means vs never having been burned irrational exuberance.
https://business.financialpost.com/i...omers-cash-out

[cornerstore]

Originally Posted by Doc Savage

Great article. You see very little of this kind of reporting because we all want to believe that great strides are being made to help out the businesses hurt in this crisis. Instead, it's business as usual in legislation with massive loopholes purposely written into the Small Business relief loans, so they can be exploited by people who don't need the money.

These people are doing the right thing. Good to see .
https://www.cnn.com/2020/04/20/busin...sba/index.html

[cornerstore]

Originally Posted by jltait

This is a good article. Helps to show that this time is no different. Stocks will also continue to churn higher, decoupled from the real economy as ever, particularly on bad news which will further raise expectations of additional stimulus.

Real economy decoupling. Funny story. I have a nephew who started a world renown company several years ago and he and his partners are now multi Billionaires. They were bought out by hedge funds. The company looses billions and not likely to ever make a profit unless they find another business model. It’s a darling of Wall Street in it’s category. Eventually they will implode and be the poster child for this irrational market. Just because you create an app doesn’t make it a tech stock, that’s the root of this disconnect. Traditional business models masquerading as tech. Amazon was hemorrhaging until Prime and cloud storage came along,most of these so-called tech stocks will never be profitable unless they change the laws of physics.

[mgsooner]

[beshannon]

Yes that contract could go negative, need to see where the June contract begins trading.

Markets kind of hovering in the middle of the trading range for the day S&P is at 2853 an important resistance level

[mgsooner]

It appears it hit 1 cent for a moment.

[beshannon]

Originally Posted by mgsooner

It appears it hit 1 cent for a moment.

Yes

And it has now gone negative -$1.87 and falling

[cornerstore]

Wow

[ronricks]

Oil is now worthless. What a time we are living in. Crazy.

[Duey]

Originally Posted by beshannon

Cash is worthless .

I disagree with you here. Only investors say this, not people with cash. In situations like this cash is king, especially as it goes on.

[BroncoOne]

Originally Posted by Duey

I disagree with you here. Only investors say this, not people with cash. In situations like this cash is king, especially as it goes on.

I agree that hving cash is a huge advantage, pretty much always.
I believe that his post meant that you can get little to no return on unused cash right now versus getting yield by using the cash somewhere else

[Uggi]

Originally Posted by Duey

I disagree with you here. Only investors say this, not people with cash. In situations like this cash is king, especially as it goes on.

I think he just meant sitting on cash is going to give you a worthless (zero) return due to base rates.
At least that's how I read it

[BroncoOne]

Originally Posted by ronricks

Oil is now worthless. What a time we are living in. Crazy.

A big desk got stuck with a huge oil contracts position in a terrible market and its trying to minimize a big loss. Not that oil demand or storage capacity in increasing any time soon.

I wonder who it was?

[cornerstore]

What we witnessed today is the beginning of the end of the US shale and tar sands oil industry. Brent is at $26 if it hits $ 20 then the domino’s really start falling.

[Bearxj86]

Originally Posted by cornerstore

What we witnessed today is the beginning of the end of the US shale and tar sands oil industry. Brent is at $26 if it hits $ 20 then the domino’s really start falling.

The issue is that with the rolling shutdowns and no planes, there is no demand for the stuff. Once the shutdown eases, demand will retain but then you would have had 2-3 months of excess unused capacity to bleed down. Worst of all worlds.

[logo]

United Airlines reports $2.1 billion in losses, anticipates needing federal aid. Therefore, after hours trading sends it into the green. lol what?

[Bearxj86]

Originally Posted by logo

United Airlines reports $2.1 billion in losses, anticipates needing federal aid. Therefore, after hours trading sends it into the green. lol what?

Well if they can dig themselves out of a hole and write off all their oil future contracts. The operating cost of an airplane just went down significantly :/

[enjoythemusic]

Originally Posted by bearxj86

Perhaps our view gets colored by our personal experience and jobs. I work in Corporate Finance (MBA/CPA/CFA) and our earnings for 2020 are forecasted to be down almost 80% for the year followed by a 1 year recessionary tail in our best case scenario.

We are laying off a very large number of people and scaling DOWN production to meet that recessionary tail. We sure as hell aren't collecting money from our customers today that they owe and and we sure as hell aren't paying our suppliers unless absolutely necessary. Executives like me and others do not take our responsibilities lightly, we would not doing this if we do not have strong conviction that this positions us in the best possible way given the current environment. To be honest, managing a personal portfolio of stocks is pretty light compared to the crap we have to deal with. I personally have worked every waking hour for the past 3 weeks figuring out scenarios.

So let me ask you a question - how is the Fed going to help my Fortune 1000 company or the thousands of employees that are let go today when the 4 month of stimulus ends? We sure as hell aren't hiring them back -even in a V shape recovery maybe 25%. How is that Fed going to help the Chinese/APAC/LATAM suppliers when the US companies don't buy their goods?

All public S&P 500 companies are playing coy and have suspended or withdrawn guidance. I would say without disclosing my company that we are well capitalized and do not have a large debt. Yet the impact to 2020 earnings are -80% in a return to work in May/June scenario. Any finance person will tell you that even if you project back to normal by the end of the year, the impact of lower earnings and cash flow on the debt you will incur in 3-4 months can hamstring or bankrupt even the best companies and yes, its worth 20% less on the stock price (at least).

The psychology regarding depressions and recessions is interesting. It is almost the expectation of lower demand itself that causes the lower demand. I believe a recession is inevitable because the damage is already done but the question is how long will it last. Hopefully just through 2021. Folks here would say "don't bet against the fed". People in Corporate jobs don't bet, they have tens of finance people breaking down EVERY scenario and then they do a Monte Carlo or bi-nominal (probability weighted distribution) to come up with the most likely scenario. We don't bet, we make risk adjusted decisions.

Think about it, if you own a company of any size, and faced with this threat. Would you plan for a V shaped recovery? Or do you plan for a U or L and right-size first? You can always hire people back - yes it may cripple your long-term growth but the risk and downside of being wrong (if you plan the V) is the life of your company versus living to fight another day. Try making this decision when you're shut down hemorrhaging cash. Trust me, the Fed ain't there folks (at least not for us)... I'll be even darker. If you plan the V and you are right - you are a hero. However what if you are wrong? You are really really screwed. If you plan the U or L and it's a V, trust me you come out ok.

Anyway sorry to be a downer. The stock market could very well ignore this, but when actual guidance and Q2 earnings in July come out, there will be no room left to hide. Cannot play coy any longer Mr. Fortune 500 CEO/CFO.

Thx for posting, and agree a few months from now the true reality will really accelerate. Dominos will fall....

[cornerstore]

Originally Posted by bearxj86

The issue is that with the rolling shutdowns and no planes, there is no demand for the stuff. Once the shutdown eases, demand will retain but then you would have had 2-3 months of excess unused capacity to bleed down. Worst of all worlds.

The Saudis and Russia could take advantage of the situation and buy the small shale players. Right now it’s all about who gets control going forward. So yes demand and prices should come back. But worst of all worlds as you say.

[77T]

May delivery is negative because nobody can store it - the traders will pay you $30+ to accept delivery.




Sent from my iPhone using Tapatalk Pro

[YYZed]

Don't worry, California drivers will pay yah $67.80 for it. 20 gallons of gas per one barrel of crude x $3.48 or so a gallon.

[cornerstore]

https://www.cnn.com/2020/04/20/busin...tcy/index.html

[EEpro]

Originally Posted by BroncoOne

A big desk got stuck with a huge oil contracts position in a terrible market and its trying to minimize a big loss. Not that oil demand or storage capacity in increasing any time soon.

I wonder who it was?

Mom and pop.