"Between Meals" - April 10, 2020

[DBMiller]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

Crusts, but heard of heels. Wife is Canadian and calls them croûtes, which translates to crusts.

[Bob cruise director]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

I've always called them heels. Do you have another name for them?

That is a very upstate New York term. My mother used it.

[juliet]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

I've always called them heels. Do you have another name for them?

That is a very upstate New York term. My mother used it.

We called them heels--mom was from New Jersey, but her parents came from northern Pennsylvania/southern New York. As children, we also called them crusts. On a loaf of Dave's Killer Bread, they are the best slices for toast.

I grew up in the Puget Sound area where carbonated beverages were called "pop," but learned to use the word "soda" when living in Manhattan (otherwise I was laughed at).

[oldjudge]

And for Dow Jones or any other brilliant person, can you explain to me why the market is going up when unemployment is skyrocketing and multiple industries (airlines, restaurants, motels, energy, vacations) are on the ropes.

Valuations are calculated by discounting future cash flows. So the market is forward looking. (The Dow Jones is not the most accurate way to explain but it is the simplest to do so at a high level). The DJ declined from around 30k to 19k and has now rebounded back up to ~23k. So it is still down ~20% from the highs.

To get to valuation you have to look at the numerator (future cash flows) / and the denominator (the discount rate). So two things have happened the Fed has slashed the Fed Funds rates and money has flocked into treasuries - that means bond yields are low and are likely to stay ow for the foreseeable future - thus the denominator has gone down.

Also, expectations of future cash flows have like improved from the "doomsday" scenario many people were predicting two weeks ago.

So predictions for the numerator have likely gone up and predictions for the denominator have gone down - thus valuations look more attractive and people buy stocks. But valuations are only as good as the assumptions used to create them - so could the market turn around and crash another 20% - sure if there was a catalyst that results in a reduction of estimates for future cash flows. But for right now many people think a 20% decline from the highs in a zero interest rate environment with tons of liquidity represents a buying opportunity.

Hope that helps.

But the future cash flows for most of the companies is negative as they have no bookings or sales for the next six months or more. No one is buying anything or planning anything for a variety or reasons (no job, fear of travel, fear of getting sick or losing their job so they are putting off real estate purchase or car purchase). and many of these companies took on debt as the interest rates are low and the have payments coming due and no cash to pay them. Although the doomsday scenario is less, consumer confidence is extremely low right now.

Bob-Future cash flows are meant to encompass at least the next ten years. The cash flows you are pointing to are for the next several quarters (hopefully). Everyone should also remember that in the short term market prices are heavily influenced by emotion. In the long run, fundamentals rule. As Benjamin Graham said, and Warren Buffett parroted:

“In the Short-Run, the Market Is a Voting Machine, But in the Long-Run, the Market Is a Weighing Machine”

[boharr]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

I've always called them heels. Do you have another name for them?

That is a very upstate New York term. My mother used it.

Not so very upstate. I grew up 30 miles from Manhattan and we always called them heels.

[Thurman8er]

This was a tougher fill than usual for me, but a really fun puzzle. Ashore me hearties!

[boharr]

Bob-Future cash flows are meant to encompass at least the next ten years. The cash flows you are pointing to are for the next several quarters (hopefully). Everyone should also remember that in the short term market prices are heavily influenced by emotion. In the long run, fundamentals rule. As Benjamin Graham said, and Warren Buffett parroted:

“In the Short-Run, the Market Is a Voting Machine, But in the Long-Run, the Market Is a Weighing Machine”

And as Keynes said, "In the long run, we are all dead."

[Eric Porter]

I'm finally on shore, but I had a much harder time with this one than last week. It's a fair puzzle, but I just wasn't getting it.

And for Dow Jones or any other brilliant person, can you explain to me why the market is going up when unemployment is skyrocketing and multiple industries (airlines, restaurants, motels, energy, vacations) are on the ropes. My financial advisor does not understand it but I am sure a brilliant muggle can explain it.

Stocks are going up for 2 main reasons in my opinion. People think the worst is over. The government and the Federal Reserve are spending trillions of dollars.
I also don't think stocks should be rising when we're already in a recession or worse, but I know a bit about how investors think. I work in the financial industry, but nothing to do with equity markets. Don't take this as investment advice.

[mheberlingx100]

On shore only because of huge hint from my sister-in-law. Don't deserve a Guinness this week, I'll be drinking Miller Lite.

[diplomatt]

On the beach!

[Ann]

Ashore! I thought that the grid was tougher than usual.

[Joe Ross]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

Crusts, but heard of heels. Wife is Canadian and calls them croûtes, which translates to crusts.

Heels, ends, & crusts I've heard & used. Croûtes is new to me and makes perfect sense.

Do not ask me the etymology, but our family called them heels, mostly, but also "cokies". Yes, with one "o", which is a long vowel in this word.

[boharr]

On shore. But it took a couple of trips.

[BrianMac]

Speaking of sandwiches, another interesting discussion is what you call the ends of a loaf of bread

Crusts, but heard of heels. Wife is Canadian and calls them croûtes, which translates to crusts.

My wife turned me onto the Yiddish term "krycek" (not sure of the spelling; pronounced "cry-check"), which I have adopted. It struck me as funny because there was an X-Files character with that name and he was a bit of a "heel." I've always wondered if that was the inspiration for his name, but have never been able to confirm it.

[Natalie]

Got it, after a brief rabbit hole experience. At least I am learning how to discard an unyielding approach and find a new one. Old habits die hard, but I'm not giving up on all old habits -- Monkey-and-tonic, please, with a wee slice of orange. Good weekend to all! Stay safe and healthy, and remember -- there's no social distancing at a virtual tiki-bar.

[LaPetiteFlora]

Ashore! Managed to sneak it in between Friday meetings (easier now that we’re all working from home).

[MajordomoTom]

tax law is the crazy place these days, particularly with the 880 page CARES Act and the changes it threw at us, plus three (really, more than three) IRS Notices about the tax deadline.

If you want to know more about 2019 taxes, google "IRS Notice 2020-23". It was issued at approximately 5 pm Central today, making even more changes to the 4/15 deadline (hint - it's pretty much all due 7/15 now).

Regards,
Tom
(CPA & Attorney, head of a trust company tax dept here in STL)

Does that mean that the June estimates are no longer due before the April estimates?
My wife is an estate planning/estate tax attorney, and had to go in to the office last week as estate tax deadlines were not changed, and the IRS does not accept them electronically. I understand it all fit in one box.

correct - it's 7/15. Q1 estimates, Q2 estimates, and estate tax returns. Crazy.

[Bob cruise director]

Congratulations to our newest muggles. We now have 600 of us in the clan.

Our newest muggles are
Big Mac
Frenchy
Dow Jones
ladybyrd

[SuzeF]

On shore this week! Bob, I used to log in and track as Susan F but I had to get "rid of her" and re-register as SuzeF. Not a new muggle, but want you to be aware of my change. I was having technical troubles and couldn't post for a long time - so I went with the easy solution. Thanks for your great tracking efforts - Susan

[DrTom]

Done.

And with time on my hand, I devote myself to that most sublime of all literary sub-genres. I give you ... Spam haiku

stomach rumbles now
eat cans of pink greasy Spam
bowels grumble later

I'm sure most everyone has seen this, but it cracked me up:
SPAM.jpg

There is rumored to be some fruitcake around, as well!
Cheers!!

A piece of Spam between two slices of fruitcake - YUM!!! Let's see Mike work that into the grid!