Thursday, March 26, 2020

This Tells Me All One Needs To Know About Analysts' Understanding Of Human Behavior -- March 26, 2020

Breaking news: my daughter in on the freeway on way to work -- she texts me -- most seen trucks: Tom Thumb (major grocer in Texas), Kroger (grocer), and Amazon Prime (everyone knows).

We are going to see a retail push/surge like we've never seen before.
  • folks are hoarding everything they can; instead of two-day supply of everything, Americans working towards three-week supply of non-perishables; maybe more; every home/apartment unit becomes a mini-storage site; 
  • "social distancing" -- we all know; next: "Mormon pantries"
  • I think I read somewhere upwards of 60% of American meals are consumed outside the home (probably on a dollar basis) -- now, instead of trucks delivering to restaurants, delivering to grocery stores
  • two weeks from now, we should start seeing grocery stores very, very well-stocked
  • if so: this would not have happened under a socialist, centrally-run, government-run economy; capitalism -- this is a once-in-a lifetime opportunity for some grocery story managers; suppliers;
US weekly jobs report (first time unemployment claims), link here:
  • prior: 281K (huge jump; far exceeded consensus)
  • consensus: one million; 
  • actual: 3.283 million

This number is staggering. I'm not watching the television at all (except TCM) so I have no idea how talking heads are taking this. I would think the market would plummet on this news.

So, what does this mean? Some ideas to throw out, explore, story lines::
  • expectations/forecast/consensus:the analysts were completely wrong on this one? how could they be so far off; do they not have "good" data bases for numbers employed by airline industry? In-restaurant dining? Travel (hotels)? Malls.
    • hey, Wall Street: everything except grocery, pharmacy, gasoline service stations, and parks are shut down; did someone miss that? Didn't GM shut down? Or at least stop major assembly lines;
  • this is truly a pandemic panic
  • this number is huge; going back before 1970 to compare is meaningless; since 1970, we've never seen anything like this
  • next year federal tax receipts: drop off a cliff
  • $2 trillion stimulus/bailout/New Green Deal won't do much (maybe $500 billion is actually stimulus); rest is bailout (attempt to keep heads above water); New Green Deal (huge, huge waste);
  • Medicare funding will take a huge, huge hit;
  • IRA funding will take a huge, huge hit; 
  • the number is staggering: 750,000 historically is a staggering number; a million would have been staggering; few saw two million coming; and, the number did not stop at three million;
  • we'll see one, maybe two, more weeks of numbers like this; then the number will drop precipitously -- these are "first time" claims -- "front-loaded" -- but overall unemployment will remain high for quite some time;
  • suicides, depression, child abuse, drug use, alcohol, jobs lost forever
  • tectonic change in the way Americans work, shop, school; prepare
    • on-line books; publishing industry;
      • Apple has released new iPad Pro; Tim Cook needs to do some live marketing ... and quick; 
    • on-line shopping; 
    • Mormon pantries for everyone;
    • gasoline demand
  • tethered vehicles
    • is Tesla dead? Or how fast can it recover
    • how long will gasoline prices remain this low?
  • China's future?
  • Saudi Arabia's future? they no longer control pricing; it's no longer a supply problem; it's a demand problem (of course that's a problem for all oil producers, but Saudi's entire economy is petroleum-based); 
    • Canada, not far behind? Mexico?
On-line economy: this is really, really not well understood. No one was prepared for this. Example: my daughter in health profession; psychiatric nurse practitioner; directed to do "tele-health" whenever possible -- turns out the "company" did not have video capability; audio capability (speakers); up-to-date computers; overnight they got some of this stuff but not well planned out. There will be a second wave of buying "tele-work equipment" across the country as more and more go to on-line retail.

Tethered vehicles: will Americans be in the mood to buy tethered vehicles in 2020? Automobile manufacturers put a lot of CAPEX into EVs this year. In hindsight, will be seen as huge, huge mistake. Some of it was not predictable (coronavirus) but anyone following oil production knew that there was a good chance that oil prices would be "depressed" for a long time.

My hunch: we're going to be in this lockdown a lot longer than folks realize now that the CDC is control, along with the media, and the public health tail is wagging the economy dog.

But other than the investor class, and 75% of Americans barely making ends meet month-to-month who's really hurting? I bet a lot of seniors are doing just fine. Their lifestyle probably hasn't changed a whole lot.

I'm hoping once we get the testing and quarantining down to a routine, states like North Dakota, South Dakota, Montana, and Wyoming can go back to normal, to the extent that local citizens want to go back to normal. There will always be risk involved.

Public health departments should be ramping up staff to do testing, monitoring targeting quarantining.


  1. I spend about $2,000/mo on my credit card, bills, insurance, projects, gas, etc, and pay it off every month, I get miles that I can't use now. We don't eat out much and often split a takeout meal. This month even with more groceries is $600 less than normal. I just got a pay raise. We are living more like we did 40 years ago when first married and poor, it's a good reminder of a simpler life.

  2. That's interesting. My monthly expenses very, very similar. I am spending more but that's because I can't take it with me where I'm going next. LOL. We are in way better shape today than we were forty years ago.