From the article: “Policymakers have repeatedly called the battle against the novel coronavirus a war. As in wartime, federal expenditures are rising sharply while tax revenues are being hit by the lockdown. Both World War I and World War II—and, indeed, the Vietnam War—were followed by nasty bouts of inflation. If that happens again, policymakers today being cheered for their swift, decisive action will instead have to answer for their grave lack of foresight.”
Full disclosure: I bought Levi Strauss stock recently.
Here’s why (From Seeking Alpha):
Shares in Levi Strauss now trade 43% cheaper than their opening March 2019 IPO price of $22.22 putting the company’s valuation at only 13.0x TTM P/E.
Levi Strauss’s strong brand have allowed the company to achieve average return on equity (ROE) and return on invested capital (ROIC) of 34.3% and 17.6%, respectively, since 2017.
Over the past 3 years, Levi Strauss has achieved average revenue and EPS growth of 8.2% and 9.4%, respectively, which brings PEG ratios well below the 2x rule of thumb.
The company has good liquidity to survive the COVID-19 pandemic with enough cash and finances to support operating expenses and interest payments for around 10 months.
Alan B. Lancz sees the next 45 days as crucial to the stock market as the economy tries to reopen. Most likely the rougher it is, the worst for the market.
The man who saw the 1987 and 2008 crash coming is predicting a U-shaped recovery that is going to slow and long . We’re in all new territory here, and we could be looking at a changed America that could soon be a lesser global power.
This is going to be tough all around. Without a vaccine, we are still at risk of getting COVID-19. And a vaccine looks at least a year off.
Another good article I read today was from Nigam Arora. The author makes a good point that our time horizon makes all the difference. Sure, today Zoom, Slack and Teledoc are super hot right now. But what about in five or ten years? There are a lot of great companies having a rough time right now that will be fine in the long term.
He argues that Slack faces stiff competition from Microsoft, Zoom will start facing more competition from Alphabet, Cisco, and Google. Amazon is hitting new highs, however, Walmart is a strong competitor that will get stronger when the economy opens up.
JPMorgan CEO Jamie Dimon, last week, said that he sees a “bad recession” coming in 2020. However, the CEO also assured that the largest U.S. bank would stay strong even in the worst-case scenario. Credit Suisse applied a similar worst-case scenario to other large U.S. banks to know whether or not their capital adequacy is enough to survive the coronavirus induced financial crisis.
Mark Hubert wrote a recent article at Market Watch, predicting that the market will crash in August. Is he right?
He believes that the market is technically back in a bull market. However, this is based on hope rather than cold hard facts. He points to the Great Depression which saw six bull markets between the 1929 stock market crash and 1939. Not too many people talk about those bull markets.
He also points to sentiment, which points to another low in the U.S. market. The usual pattern in a bear market brings about much pessimism and despair. And were not seeing that. Actually we’re seeing just the opposite right now.
So, when the bear market does finally hit its low, you’re probably going to be looking at putting your money into anything but equities altogether. Maybe you’ll see the market as nothing but a bear trap.
Mark compared sentiment and the market timers he monitors were more scared at the lows of those prior bear markets than they have been of late.