Special Market Update Video Call

Alex: Hey everybody. Welcome to a special call, not a crisis call. I don't want to call it that, but it's going to be a weird one. I'm Alex Moschina in case you don't know me. I'm the associate publisher at Manward Press. We have obviously with us, Andy Snyder, the founder of all things Manward.

Andy: Hey, hi. It's fun to be doing this for my home. Welcome everybody to Manward's coronavirus HQ, I guess.

Alex: Yeah, we have a peak at the command center. Here it is. It's going to be a weird call. Sorry for the delays that are coming through, but it's weird times right now. We're doing this call because we obviously know that you have a lot of questions. We have a lot of questions about what's going on. We're getting everybody from both Codebreaker profits and Alpha Money Flow onto the same call so we can address some of those concerns, check in with readers. We had a couple emails that I want to highlight and really just gets to the core of where things are. It's been a weird week. We just got out of the fastest and sharpest decline in market history, followed by the biggest single day increase in value for the Dow. Who knows what's happening next? Andy, did you have anything else before I dig into the mailbag here?

Andy: No, just that we're recording this early on, it's early Wednesday morning and hopefully we'll get this to readers as soon as possible. Right now, I've been watching the Futures all morning. They were down and they were up and they were down. Now they're back up and we're just off the heels of the stimulus. I'm excited to see where today goes, we'll get into that for sure.

Alex: Sure. We have a couple of notes here I want to highlight. I'd like to highlight this first one. This comes from a reader, Dustin. Hey Dustin. Good to see you. Dustin was at our Manward retreat, actually, when was that? It feels like ten years ago now, but it was just last year. I'm just going to read this actually, because Dustin put this very eloquently. It says, man has survived pandemics for centuries without purposely destroying the economy. After several weeks of no or very little economic activity, we will have destroyed capitalism and made the majority of Americans dependent on Government handouts. There will be no restaurants, retail stores, transportation, et cetera. People are willing to give up their constitutional freedoms simply because they are scared. This is what concerns Dustin.

I mean, I don't know that it's fair to say that this represents every single person's watching this viewpoint, but I think it's a pretty good description of how a lot of people are feeling right now. People really do seem to just be saying, "Hey, I'm going to give up all of my Liberty if the Government will step in and take care of the situation for me."

Andy: Yeah. I mean, it's a growing debate and I think it's a healthy debate that we're having. We publish stuff from Joel Salatin, right? His farm is called Polyface Farm. The farm of many faces. I think this crisis has a lot of faces to it. We have obviously a humanitarian crisis across the world and it's no good. People are dying, people are sick, people are scared. That's no fun. That's very serious. It's growing. New York City is in big trouble, San Francisco, and they're saying it's going to spread across the country. That's absolutely no good and we need to do what we can to fight it.

The other side of it is our constitutional crisis. The Governments are telling us that we can't open our businesses. Factories are closed, schools are closed. What does this mean for kids that are out of school for four months? What does it mean when the Government can tell you that your business has to close, but mine can stay open because I have a better lawyer or I can fill out the waiver fast enough, that sort of thing. I give a great nod to Dustin. Like you said, you and I met him. He's a fantastic ... He's an American hero. The guy army officer, forgive me if I get it wrong, Dustin, but army officer, author of some cool stuff, has been a judge, gives back to the community. When he says, watching out for a Government that's growing, I take his word for it because he is the guy that has stood up and actually fought for our freedom. A tip of our hat to him.

On the economic side, what we're really here for, it's going to be a really interesting time to watch. We're making trade offs and deciding how important. It ties into the elections that are coming up. This is the great debate in America right now is what lengths does the Government go to save the economy, to prop up the economy, prop up certain groups, make sure wealth doesn't accumulate too much over here without going over there. We're seeing that day to day in the headlines right now. From that standpoint, I think it's absolutely fascinating what's happening and watching it trickle through the stock market as we've seen over the last few days, high highs, low lows and we still have a lot of ways to climb to get back to our ultimate high highs.

Alex: Yeah. I was actually talking to a friend virtually last night who works for a pretty big bank and we were just discussing what does money even mean when we're talking and these figures and when we're talking in terms of $2 trillion, right, a $2 trillion bail out and you know, interest rates are apparently meaningless so we can just cut them whatever we feel like it. At what point do we just all agree, money doesn't mean anything? There are no consequences and we can just fix any problem by just writing a blank check.

Andy: That's the scary thing. I've been writing about that a lot. Just yesterday, no, I guess it was Monday night, Nancy Pelosi put into the Democrat's stimulus bill, which I don't think had a ton of seriousness. It seemed a lot more political than anything. Yesterday, you and I were talking about it. I wrote about it. The fact that they're talking about a digital currency. Within the Democrat's stimulus bill, they talked about the fed going out to its member banks and creating digital wallets for a new form of digital currency. Talk about when money means nothing, when all of a sudden it's entirely digital. With the push of a button and a new computer program, we can add, we can move the decimal around, add zeros to bank accounts. With this, all the federal had to do is just hit a button. Everybody's account goes up by, by $2000 bucks. Inflation's too high, pull it down, $2000 bucks. Money, all of a sudden it means nothing. When I have stored in the safe behind us there, it would mean nothing.

Alex: Yeah, actually, I think that's a pretty perfect lead into our, our second note that we wanted to highlight here. This one came from reader Mark. He wrote in, it says Andy, I am not that worried about the Coronavirus from a health standpoint when I'm worried about is how and when you think the economy will recover. I think it will be a long time before we are back to normal. I do not think normal will even be the same as it was two months ago. Can you provide your insight on the topic? You already did a little bit, but do you want to expand on that?

Andy: Sure. I think the definition of normal right now is ... I remember after 9-11 right? We were all sitting watching our TV and I remember watching NBC and the commentators there were saying, "America's never going to be the same again. It's a new normal in America," and in many ways they were wrong. America is still strong. The traditional beliefs I think are still out there. People are still fighting for them. I think that's a positive light in all this Coronavirus stuff is our readers are definitely seeing it, are definitely celebrating it. We've published a lot on it is that folks are starting to see a lot of the wisdom in the things that we've talked about; self-sufficiency, reliance on yourself, reliance on your connections and the folks around you, not relying on the Government.

From that we're seeing some good things, but as far as the economy going back to normal, I hate to think what the next flu outbreak is going to look like. I was watching some old video from, I think it was 2017 of the flu outbreak and what they were talking about, and they were talking about how to fight us in some different ways, but our schools going to shut down now from it? Is the media going to hype it until we have to take, not snow days, but flu days from school now? Where's the new normal in the American psyche? That's what I worry about. Of course, economically, this is our second big stimulus in 12 years.

The second big stimulus in 12 years. We're getting pretty darn dependent on the government bailing us out, and backstopping, and putting that safety net in every time another crisis brews up. This one, fortunately, wasn't mechanically driven from a monetary standpoint. It was a big black swan. It doesn't have economic roots, but it sure could if we don't figure out the next steps and that's where Trump is trying to push the country to look past this and start getting back to work. If we don't get back to work, it could have some long tentacles where we start to see bankruptcies.

Think about the waitresses. So many people are not working. A lot of auto mechanics aren't working. Pennsylvania construction workers aren't allowed to go to work. That's going to really trickle out, and then they're not going to buy things. I'd hate to be a car salesman right now. Nobody's going to go out and buy a car until they think we're out of this.

The stimulus is isn't going to do anything about that. The stimulus is just going to keep people, as it should, keep people from going under. The idea of normal, it's going to be a while till we get... I just saw, I think it was somebody from JP Morgan this morning saying that stocks can be back at their highs by next spring. I don't know. Stocks jumped yesterday 10%, 11%. We're still down big. If you look at a chart, I'll show you that chart. I can do it now.

Alex: Yeah. Let's flip over to it. I know you had a couple of things pulled up.

Andy: Yeah. Let me share my screen here. See if I can break the video.

Alex: Yeah, hopefully. Yeah. Hopefully, I didn't break the video just now. It's funny that we're talking about everything with the relate to the corona crisis. While we're on the phone just now, I just got a call from Dr. Phil Roberts. Want to give him a call back after this, but I know he's got some strong feelings from the health side on what's being mismanaged and what we can do.

Andy: Yeah, I mean, he's got some really good thoughts. Our foray into the health world couldn't have better timing. I mean, this crisis has everything to do with money and health like nothing we've ever seen before. So that's really cool, sort of really cool. Really fun to look at and explore. We were talking about the stock market, so you can see my screen, right?

Alex: Yep. I've got it up here.

Andy: All right. Probably the last time we talked, we were up in here. All over the winter, we were talking, when we get on these calls, talking about bouncing off this line and how these were our buying opportunities. Man, how many triple digit gains did we get buying here and just watching it bounce off? Look at this. It's just a steep, steep, steep decline, and this bounce. Look at this bounce. It barely takes us back to where we were. You just have to remember, when we lose, I don't know, when we lose 50%, we kind of go up a whole lot more than even than 100% to get back up to where we were. There's some math in there. Really, these 10% days, we're not making up the gains that we lost when we went down 10%. The math is changing.

Andy: To the point of what we look at so often on these calls, I'm just going to get right into what I think... Everybody wants to know when to buy back into the market. When's the bottom? I don't know, nobody knows. But I have a really good clue. It's not unique to me. It comes from something we talk about a lot in Alpha Money Flow, money flow and taking money flow to be really specific. And so, let me show you, specifically, what I'm looking at on a daily basis, and what I think is the number one indicator to get back into stocks. If we look right here, I have the taking money flow. Typically, I look at it anywhere from 20 to 30 days back. It's just taking a historic, similar to the way a moving average looks back on the market. You have your [inaudible 00:13:20] 180 days. That's where things... Similar idea.

I use Stock Charts quite a lot, but you can see we're in the red. When I talk about going from the green to the red, obviously we're in the red. What's interesting is if we back this... You can see where I'm changing the parameters here. Let's just do 50 days. So, we'll update that. You can see that red starts to shrink a little. Still in the red. And then we go to, let's do 75 days. Now, we're looking back 75 days.

Alex: Oh, interesting.

Andy: Just barely in the red. But then look, we go into to a hundred days, and you can see we're still positive. So between that 70 a hundred day period, we're still positive.

Let me show you something really, really, interesting that I think, viewers, you're going to like this as to when to get back in. We're just changing-

Alex: Andy, can you explain just a little bit the qualifiers there for changing those dates? When you're changing the parameter of days from 50, to 75, to 100, what exactly is that looking at?

Andy: It's just looking at a larger sample of days, trading days. So the [inaudible 00:14:34] money flow basically goes back. And so, what I'm looking at 20 days, it's taking the last 20 days of volume, looking at the stocks, the highs and lows for the day, looking at the volume and saying, this day was a buying day, this is what day was a selling day, and really showing you who was in charge of the market that day. It's something that we can't really see just in these volume bars. When we add it to RSI here, it's really powerful. When I go from 20 to 100, all I'm doing is going back 100 days takes us closer to the start of the year. So, we're looking 100 days, we're back into here where you can see who's really strong. As time goes on, it gives us a larger breath, and we can see how much strength it's going to take us to get out of there.

I think that'll be a little bit clearer as we back out. Where are we at here? We're at 100 days. Let's go back to the 2008 crisis. Give me second to change that back 12 years, update that. We're fine. Kind of ignore some of the... This gets kind of tricky in here, but you can see, when we get into 100 days, you can see all of a sudden here, here we went from... Let me zoom in on that. Is that hard to see on your end?

Alex: Yeah, I think zooming in would help.

Andy: All right, give me two seconds.

Alex: Yeah. Stock Charts is very nice for visualizing and overlaying a lot of these indicators. I highly recommend. I enjoy using it too.

Andy: Yeah, so okay, here we have the 100 day again, and you can see well into the red and the markets were going down. And then, we get this crossover into the green, December, 2009. That was before the official market bottom, which is right here in March. But again, we turn green here. If investors would follow that hundred down, so we would have followed here. This is about where we are right now. That 100 day hasn't turned red. I'm not 100% sure, about 99% sure, we'll see it in the red here soon, just because the depth of that decline. It's a trailing indicator, so it won't show up right away. But we'll get that.

Once we do, that's when I'm really, really, going to start watching it for these crossovers. Because the news will still be bad. We'll still have this high volatility, but all of a sudden we'll start to get these buying days back and you can see a lot of red volume in here. Then, we get to this green, that's what's going to trip this. And then, that's a good buying indicator. It won't show us the exact bottom that came later, but you'll see it really starts to show more and more green, and that's going to be our indicator.

Watch when I turn it to... Let's just go to 200 days, and then it becomes a lot more clear. But then, we just have to wait a little bit longer before that 200 day CMF, the money flow indicator goes red right now. I think it's a little confused. Look at this. It just picks it out, picks the bottom almost perfectly. Again, it's a trailing indicator, but if we follow that 200 day, gets rid of all that noise. If you're looking for the almost a 100% sure fire way to know when to get back in, you're going to miss the bottom probably, but you're going to miss a lot.

... back in. You're going to miss the bottom probably, but you're going to miss a lot of that volatility. It's that 200 day, I mean, because look, it would hit mid April right here. And we all know what happened after the market bottom 2009, stocks just shot up. So that's why I'm excited to really watch this. You're going to see all sorts of headlines. I could go online right now and find just as many that say we've got a 30% decline ahead of us and others saying it's going to be a V shape recovery and we're on our way out. There's all sorts of evidence one way or the other, stimulus will affect it. I think the stimulus will add a lot of noise to these indicators, which makes it hard to predict. So that's why I go with something that we know works. I mean, we used this on the 20 day setting for the last two years to just score tons of triple digit gains. So now we're just going to back it out a little bit, times are much more wild. We're going to sit on it and watch that 200 day.

And of course in the meantime we can still use the 20 day, the 50 day to pick some good short terms rates. We already have. But-

Alex: Well, it's worth noting too that you're looking here at an index. So individual stocks are going to still be crossing over and are going to be showing bullish buying activity by just this, this macro view. And honestly it's actually somewhat reassuring because you can see the great recession obviously was a nightmare for a lot of people. But when you look at it these terms, you can see just kind of how short it really was, even though it didn't necessarily feel that way at the time.

Andy: Yeah. I mean, the headlines were... so the other day I went through my archives of all the stuff that I wrote from mid-2008 to 2009 and just, it was funny, we were talking about the swine flu, there was a lot of parallels there. The markets were hanging on stimulus, lots of what Obama was working on. Tim Geithner was all over the headlines. We were waiting for, like I said, stimulus, the bailouts for GM and now you can just replace GM with Boeing. Boeing was way up yesterday. It's indicating way up today and that's, I've got to bring that up here. That's something you and I talked about in, I think it was December 3rd we filmed a video on Boeing. And I think I broke it.

Alex: Yeah. So I can probably take that. Yeah. So we were talking about Boeing and what was ahead for it? Obviously Boeing had its own issues at that time. Everybody knows that Boeing's had a very public, basically not just a PR, but just a public scandal. People have literally died unfortunately as a result of issues with Boeing's signature plane. Andy, you're more the plane guy than I am. Which one was the one that was having the biggest issues?

Andy: 737.

Alex: Yeah, so very popular.

Andy: Yeah. And so they had a couple of crashes, had some back and forth with the FAA. They said they were going to get their plane out. I mean, it's been a perfect storm for the airline industry. But in December, we called this. So everybody was saying this is the bottom for Boeing. And we went on camera and said, no, they're there one headline away from big trouble. They just don't have, companies today don't have the cashflow, the savings to get through the crisis like they once did or if they ever did. But a lot of companies, right or wrong, are under heat right now for spending all their cash the last few years on buybacks and sending their price higher. Great move at that time. But where's that rainy day slush fund?

And that's what Congress is kind of debating with the stimulus. They're getting rid of buybacks. If you want Washington's money, you can't be using that money to buy back your share price. Right or wrong, I won't get into that. But I mean, this is another indicator here of where the Chaikin money flow or what we call the Liberty indicator really paid off. December 3rd is when we went on camera and said it could have problems. It's one headline away. Everybody else was saying it's the time to buy it. I'm not saying I knew the coronavirus was coming, but we knew that it could be another crash. It could be another battle with the FAA. It could have been anything and we got it. And now Boeing, I'm not going to use the bankruptcy word with Boeing. They're getting this bailout. I think Washington isn't going to try to go for an equity stake or anything like that right now. But I mean, look what happened here. So-

Alex: ... and bankruptcy. Yeah, I do want to talk bankruptcy in a second and I'll let you finish your thought. But we have had some interesting discussions about what kinds of companies could be declaring as a result of all this.

Andy: Yeah, one second. But Boeing, so we're going to watch the CMF there. Let's just switch it to 20 days so you get a good view of that. It's coming back up. Will it be a buy soon? I don't know. I think there's better buys out there, but boy, I mean this is a chance to get a huge company at a huge discount. And you go through 2008, 2009, some of the prices, I think Ford was, what? At a buck and it went up to 11 bucks. And so, it's cliche to say buy when there's blood in the streets, but this is a huge opportunity. So for the folks, I know a lot of subscribers have written me and said they're scared to get in at the top of the market.

And this was February, the end of last year. They think stocks were overpriced. Well, you got your gift. Stocks, on average, were back to where prices were when Trump was inaugurated. So and if you missed out on the big Trump boom, here you go. There's going to be some tremendous opportunities. And my last word on that is watch that 100 and 200 day Chaikin money flow, which I'll keep you updated on no matter whether you're in Codebreaker profits or Alpha money. Yeah. Alpha, can't even talk. I'll send it to you no matter what.

Alex: Yeah. So I mean the picture for Boeing is, yeah, we couldn't have been talking about that at a better time. And even when we were discussing it before the corona crash, it was already starting to dip. So I think there's a lot there. But speaking of another one, you and I have talked a little bit about the house of the mouse. People have been tossing around Disney. You emailed me about that. What are your thoughts on that? You think Mickey's going down?

Andy: If Mickey's ever going to go down, this is his chance. The poor guy, American icon and maybe it's fitting that the American icon is dying at the same time we're having some of these larger discussions about politics and the fate of America. But for Disney, I hate the word perfect storm, but, or the phrase perfect storm, but for Disney this is it. They're, the movies are in trouble, sports are in trouble, they own ESPN. The cruise lines, so there's a ton going against it. Probably the only thing it has going for it right now is Disney Plus, people streaming and that sort of thing. But I mean that's no sure fire winner by any stretch, and to keep that up. So Disney, we talk a lot about the Altman Z indicator. That it's going to be, I think it's really hot terms, it's going to be a hot term in my world right now is looking at that.

So I think if we took the, so real quick, the Altman Z is basically a mathematical formula that lets us get a number, put a number to a company's bankruptcy risk. Anything below 1.8 is considered high risk for bankruptcy. Anything above that, you can get all the way up to six and then I think it goes up to eight, is much stronger. And so going into this, the market, the S&P global was at like 6.8 I think. Pretty strong, 6.7 so very, very low risk of major bankruptcies. But if we start, and what the Altman Z looks at is a company's basically short term assets over its total assets, cashflow. I think it's five different indicators that go into this pretty simple formula and it spits out this, this number. So right now it's not really all that useful until we start getting some quarterly looks into the different books and seeing what this does to cashflow and profits and that sort of thing. But Altman Z is going to be a great way to look at a company.

... That sort of thing, but [inaudible 00:27:02] can be a great way to look at companies like Disney, like Boeing to see where they have. They just don't have the short term cashflow or cash stockpile they need. A company like Apple took a ton of heat for really building up its stockpile of cash because they didn't want to bring it back to the states and pay tax on it, but now they have that. And we hear Disney just went out and took a huge loan the other day just to keep up with its current need. That's critical. What's next? Somehow everybody's tapping out the revolving credit facilities, but what happens when they tap that out and have to go to the bank with their hat in hand saying, "Hey, we need more."?

Two months, six months out, that's when we're going to see some bigger problems. Bankruptcies in the short term, it's just like we saw in 2008. Right when things really started to go bad outside of the banks, we didn't hear a whole lot of bankruptcies, but then it started to trickle down and that's where it's going to come. Mom and Pop are unfortunately going to feel it first. The farmers are going to feel it first. You see those guys, they're closing shop. My wife and I have our flower farm. One of the biggest in Holland. They just threw out a ton of tulips right in the middle of the season, a big auction house, and just had to dump all this stuff because they had nowhere to take it. In California, one of the biggest rose growers, fortunately they came back and they said they were going to close for good, now it's an indefinite closure because they don't have the cashflow. They're not selling things day to day. They don't have the cash to keep up with their debt and everything that keeps the American business growing right now. Healthcare, everything.

So we're going to see those guys start to fail. Their employees are going to go out of business, and that's where ... or they'll go short on funding and it's going to snowball from there. So six months out, that's where we're going to see these big boys start to have problems. So watch Mom and Pop, you'll see it in the headlines, but bankruptcies are coming on a large scale. When I pull up that chart of the S&P 500, I don't think everything is going to be a bot. I've been using the mantra, when that indicator hits, buy like hell, but we can't buy everything. You go back to my notes from 2008, 2009, there were plenty of companies that could have made a fortune selling short and playing the downside on.

Alex: Yeah. It's going to be very interesting to see how long the quarantine or the, sorry, social distancing goes on and how, as it goes on, we have to redefine what constitutes an essential business. Right now most states have deemed that liquor and marijuana are essential business, which I guess is great news when you're stuck at home with nothing to do, but it's surely going to affect all of these different groups. I'm debating right now what's better for my family, whether I should just run and pop into the grocery store at an off time or place an Amazon delivery. You've got Amazon warehouses now have cases of coronavirus in them, so it's just a very interesting time to see how this is affecting business and what that's going to do. I think people are going to still order from Amazon without issue because what else are they going to do? But it is going to leave a mark on a lot of these companies in surprising and unexpected industries.

Andy: Yeah. I guess to kind of wrap it up, I think this is a great wake up call for America. We're learning that our rights are vulnerable, we're learning our food supplies are vulnerable, we're learning our markets are vulnerable, and take this as an opportunity to sure up all those things. If you didn't sure up your financial world during the big bull market, do it now, this is your chance. If you don't have a pantry full of food and three months, six months supply, don't do it now, but as soon as the toilet paper gets back in stock, go out and buy some canned foods and fill that pantry up. And think about your constitutional rights and everything involved with it. We wrote about it this morning. It's a huge, huge topic. This is going to be a big wake up call. I'm hesitant to say I'm excited about it, but I think it's good. People are talking to their neighbors again, they're realizing the value of community, they're starting to garden again. I've said it all. I think it could be good if we get through this quickly and businesses come back when the timing is right, when people are healthy, I think this could be good for America, but it's on all of us to make sure that it is.

Alex: Yeah. At any rate, I don't think we'll ever really be the same, just like we weren't the same after 9/11. There are just certain core fundamental Americanisms that are going to just be different going forward.

Andy: And it could be good. I don't think that's necessarily a bad thing. We have to evolve. As long as we stick with our traditional ... the things that make America great, not to get political, but stick with our freedoms and learn from this, I think things won't be the same and I think that's entirely positive. So I'm very sorry for the people that are having health issues and are dying, but we can take this as an opportunity to grow from it.

Alex: Absolutely. Well, that's about as positive a note as we can end on given the circumstances, so we can leave it there. For everybody who tuned in and checked this out, again I apologize if the audio was a little off or if we skipped at points. I think it seemed from this end to go well, but let us know. Shoot us an email. As always, you can reach us, Mailbag@ManwardPress.com. We would love to hear about your experience with everything and the additional questions you have, we're going to be checking in with you pretty constantly over the next few weeks with what the steps are and what we think is the right move to make.

Andy: Yeah. And I've got a list of trades, I've been writing about it. Tomorrow, Friday, I think we're going to jump into this and really start making some good trades. I think there's some huge opportunity out there, so buckle your seat belt and get ready. I'm excited about it. There's some good stuff. I'll keep my eye on that indicator and update you as things cross and evolve. Could be very good.

Alex: All right. Well, thank you very much. We'll look forward to reaching out to you and we will be in touch, but for everybody at Manward, we'll see you next time, stay safe.

Andy: Absolutely.