Friends, I am posting this note here based on my research
and compiling various news items into this document… we
are heading into mid May when USA reopens… we have
many unknowns and don’t have all answers… please make
sure your strategy and investments are safe… any bad news
may have a significant chaotic impact on the market.
When market is low, we have hope to go high and make
money due to mini rallies… but when the market is high,
there is also a chance to lose money thru sharp declines.
Quoting Mr. Buffett “Be fearful when others are greedy and
greedy when others are fearful.”

What is positive News as of today May 5th, 2020

1. Massive relief efforts by the governments.
2. Some companies are resilient and have demonstrated great business performance (HiTechs).
3. COVID19 offered peak showtime for Healthcare and BioTechs (leading better than HiTechs).
4. This earnings season is a “look through” quarter providing important insights. This pandemic has clearly separated winners vs. losers. There is a great gap between them esp. Digital vs. Physical companies. CxOs are busy in beefing up operational resilience and cutting costs.
5. Active FEDS ready to buy Corporate and Junk BONDs; Govt Loans available to companies.
6. Death rate reduced overall except few spikes here n there
7. Phased out openings of states is happening. Opening is overall BIG news and BIG HOPE (it will drive few rallies)
8. Oil n Gas  jumping because of foreseeable demand and consumption
9. Hope that few sectors like Airlines will recover very very slowly…
10. Eventually Market in USA will be on track again!! Nobody knows when but quantitatively when indexes are again close to Jan 2020 levels

i.e. DOW 29,000, Nasdaq is 9800 and SP500 is 3300.

What’s not normal or unknowns in the market and news all around us:

1. Highly contagious pathogen (human to human transfer; asymptotic patients)
2. No authoritative treatment or vaccine for Coronavirus. Antibody tests unreliable.
3. No solid or proven data that Coronavirus is not coming back again.
4. Huge cash flow issue with lots of companies. Virus disrupting operations and also posing an existential threat to balance sheets. Liquidity n solvency issues.
5. Serious Debt and companies leveraging to MAX via bonds, loans or credit lines. Sluggish demand and supply at a time of greater debt for companies, governments and households.
6. Warren Buffet did not invest yet (holding $137B cash and waiting). Amazon’s suggestion to shareholders “take a seat”. Also read Buffetts comments on FED’s intervention and its rescue approach.
7. Record 30 million+ unemployed people. In the month of April 2020, unemployment is double of entire Great Recession period!! More layoffs during Q2/post-Q2. This week we saw layoffs from Lyft, Uber… while states are opening…
8. Consumers not ready to get engaged too quickly. New consumer patterns, behaviors n priorities. Social interactions are now a concern.
9. No big summer vacations by people in 2020
10. Hotels/Resorts/Malls/Theaters/Retailers continue to suffer for months to come
11. Non essential travel cuts; global travel pummeled already, borders closed and travel restrictions in place. COVID security is a hot potato for TSA! Business travels also not going to happen much. Travel demand is essentially 0-5%.
12. Companies to focus on survival first before focus on growth. Plus paydebt vs. dividends
13. Suspended or eliminated Dividends all over the stock market. Recently DISNEY
14. Q2 earnings uncertainties. Visibility over future profits is being obscured. Many companies have suspended guidance for the entire year 2020.
15. China USA political tussle and trade/tariff issues due to COVID
16. Supply chain log jam/cancelled orders/unsold inventories (example Boeing to Macy’s, its everywhere)
17. Healthcare and HighTech almost 92% level of 52 weeks high… some are genuine and some based on locked down situation. Many new 52 peaks!!
18. Few analysts messed up the estimates and lowered expected revenue and EPS too much after several rounds of adjustments/ trimmings/consensus. It’s unreliable. Companies are able to beat these numbers…
19. Huge cost cutting by companies as well as consumers; More bankruptcies esp. by CruiseLines, many brick n mortar stores, restaurants, auto sellers, small oil n gas production companies etc. J Crew, NCL, HTZ (Neiman Marcus next????)
20. Unclear plan/strategy what if coronavirus comes back?? Back to square one? Or let people die like road accidents (13 die per 100K)?? Or live with Coronavirus (like Flu).
21. What happens if people get coronavirus in GE factory/Tesla Factory/ Tyson Plant or Amazon warehouse?? Or CA, NY, NJ or WA??? Office workers or IT? Public transportation in east coast? GE wind factory on May 4th in North Dakota found 110 workers with Coronavirus. Governor immediately shut down the factory again!
22. Medical supplies and personal protection equipment??? Testing kitsenough??? Are hospitals ready for more patients? 1st response workers are concerned about hospital conditions… 10 nurses suspended recently in Santa Monica, CA who refused to work without N95 masks!
23. Vaccine  timeline… as of now earliest is September 2020 or Jan2021! Nobody can guarantee the date (Dr. Fauci hinted that even President Trump can’t). Trump said, Americans are warrior with or without vaccine.
24. What if virus  is mutated??? Vaccines will not be effective… referto Los Alamos National Laboratory report for 33 pages
25. Prediction by many pundits (e.g. Mohamed A. El-Erian) COVID19 translating into a big recession??? Bigger GDP contraction? There are many doomsayers and gloomsters!! Pay heed to Warren Buffett’s advise, be prepared for anything. Nobody knows. Unprecedented situation. Be ready for a long long haul!!
26. On May 2nd, WHO reported 3000 deaths in USA (is it due to opening???) USA said that data is provisional. A chart doing rounds on Twitter by Washington Post based on John Hopkins data. It is the highest per day count compare to any peak in the recent past. Next day, Trump warned on May 5th that opening will cause more deaths. If people stay at home, they will die due to drugs overdose or depression or no jobs!
27. Simon Properties (49 malls in USA) not sure if buyers will come for months… Simon offering FREE masks and sanitizers free!!
28. Hospitals losing millions of dollars per day due to Coronavirus and all non emergency procedures are delayed.
29. Manufacturing and jobs will not bounce back quickly! Congress talking about new 4th stimulus bills.
30. Bleak global economy (GDP growth forecast under revisions) and

complexly tangled financials including Govt, Private Equities and Private Creditors! Banks are in better shape than 2008 crisis, due to regulated/supervised capital and liquidity levels. But the main issue is loans and credit lines as concentrated risks!!

Conclusion:

Overall, we need good signals, proof (data/facts) and actionable info as investors!! Don’t bet on V shape recovery. It may be V, W U or Nike like symbol . Nobody knows including timeline! The crisis may last longer. Stock markets are never one round game unlike poker “ALL IN”. Take a seat; reassess and approach with extreme caution…as America opens!! Consider the merits of greater portfolio differentiation and risk evaluation. NEVER BORROW MONEY!! Don’t lose money!!

Happy Safe Investing!!