🏡 "Flatten the curve" = containment

Tuesday, March 17, 2020 by Robinhood Snacks | Disclosures

The 3 stages of social distancing

Dow Jones
20,189 (-12.93%)
S&P 500
2,386 (-11.98%)
Nasdaq
6,905 (-12.32%)
Bitcoin
$4,962 (-9.00%)
10-Yr US Treasury
0.734%

Hey Snackers,

The shutdowns continue. The SF Bay Area ordered 7M residents to stay home (except for essentials like grocery shopping & doc appointments) until April 7. NYC, LA, Washington, and Illinois shut bars/restaurants, while schools and offices continue to close across the nation.

The 3 major stock indexes fell around 12% each Monday on the growing economic shutdown — That includes the Dow's largest point drop in history. Meanwhile, shares of Clorox hit a 52-week high. Sign of the times...

Protect
1. The FTC Economy (“Flatten The Curve”) is led by private biz in a big way

"FTC" is becoming a solidarity slogan... Before mandated government shutdowns, American companies and citizens independently took initiatives to "flatten the curve" of the COVID-19 outbreak — aka, reduce the number of infections so that our healthcare capacity can handle them. Most countries are taking the FTC approach:

  • Pros: Social distancing and closures mean fewer infections, fewer deaths, and healthcare systems not overwhelmed by a dramatic spike in cases.
  • Cons: The economy is devastated by biz slowdowns, the peak of the outbreak happens later (and dies down later), and could repeat if widespread immunity isn't developed.
  • Bottom Line: The opposite approach is "herd immunity" — allowing for a large part of the population to be infected — which risks disastrous consequences for the elderly and people with compromised health. So...

The grassroots spirit takes hold... “The health of a democratic society may be measured by the quality of functions performed by private citizens” — Tocqueville said it, and American individuals/companies are still practicing it, decidedly acting to make flattening the curve possible:

  • Social Distancing: WFH has become the norm and social media is rife with self-imposed "stay home" content — risk being "social shamed" for posting a story at a bar.
  • Corporate Closures: Nike, Lululemon, Apple, Vail Resorts, and other companies closed their businesses from the public before the government mandated them to do so — and Starbucks went takeout-only nationwide before NYC required it.
THE TAKEAWAY

FTC has us walking a very fine line... Small/medium sized businesses and hourly wage workers are majorly hurt in this FTC economy — no foot traffic = no sales = no work for hourly workers. Private companies have implemented ways to soften the blow and provide relief for those who can't afford to stay home when they don't feel well or when their bosses tell them to:

  • Grubhub waived commission fees (which can be as much as 30%) for many mom & pop restaurants that are suffering right now.
  • Darden Restaurants is providing paid sick leave for all its hourly workers who weren't covered.
  • Starbucks announced a financial support solution for any US baristas who may have been exposed to the virus — Lyft is also doing this for drivers.
Cut

Like a slasher film... But with interest rates. The Fed's yanked out all the stops in its financial medicine arsenal. On March 3, the nation's central bank doled out the first emergency rate cut since the '08 financial crisis. On Sunday, it cut interest rates to near 0% and announced it's dropping $700B on long-term bonds. Here's what the Fed wants:

  • Interest rates to fall: So that you'll spend on stocks/stuff and take out loans rather than hoarding your money in an interest-bearing savings account, bonds, or under mattresses.... So it lowered rates to almost 0%.
  • More money to flow: So that banks have enough to give/lend to you (so that you can spend).... So it's dropping $700B to buy Treasury and mortgage-backed securities, which flushes the financial system with more freshly printed cash for banks.
  • More cash = less demand for cash = lower interest rates to borrow cash = more loans. That last one could save struggling companies and help kickstart an economic recovery.

But the Fed is fighting a different beast... The COVID-19 pandemic. It's trying to prevent the virus from causing a financial crisis — but investors are looking for medical solutions, not monetary ones.

THE TAKEAWAY

There's only so much the Fed can do... And it's already done it. With all these drastic measures, the Fed has run out of rockets in its economic bazooka. Now it's up to Congress and the White House to help with changes in taxes and spending to help the consumers and small businesses seriously squeezed by the econ shutdown. This might include government bailouts for struggling industries (reportedly, airlines could be first).

Track

Wait, he said what?... Alphabet's reaction to Friday's press conference when President Trump talked up Project Baseline, Google's initiative to point people who are COVID-19-worried in the right direction. With the President's public support and the Google parent's huge tech and financial resources, Project Baseline could be big for diagnosing COVID-19:

  • The company: Verily is Alphabet's life sciences "Other Bet." It was created in Google's X Lab as a moonshot/save-the-world project. Now, it gets its big moment.
  • The goal: Screen people for COVID-19 by asking about symptoms, then pointing them in the right direction. If one user says "I have a belly ache," Project Baseline says it's not COVID-19. If another says "I have a fever and cough," it might suggest a local testing facility.
  • The catch: You need to login with a Google account and agree to share your data.
  • BTW: This only launched for the Bay Area yesterday — they'll need to increase capacity before expanding (not taking more appointments for now).

In South Korea and China, the authorities have apps tracking infected people... Verily isn't proposing that, but it insists on being able to share your data with authorities. Claaaassic Privacy vs. Security tradeoff. Giving Google your health data may seem scary, but letting COVID-19 spread is scarier.

THE TAKEAWAY

This could be Google's opportunity to get into healthcare... America's personal health data literally sits in paper files in filing cabinets. That's painful for Google to see after indexing the entire internet. Project Baseline is Google's moment to capture health records on millions of Americans. And it's made other major health-data moves lately:

  • Google acquired Fitbit for $2.1B to get your pulse while you're running.
  • And Google invested in One Medical, the tech-forward healthcare chain that looks more like an Equinox gym than a doctor's office.
What else we’re Snackin’
  • Sanitize: Louis Vuitton's luxury parent LVMH will start using its cosmetics/perfume facilities to whip up free sanitizers instead during the global Purell shortage
  • Help: US airlines seek over $50B in government aid as coronavirus evaporates flight demand — would be the first airline bailout since 9/11
  • Open: The NYSE president says both the stock market and the NYSE will remain open for business (Nasdaq and the SEC agree)
  • Vax: The 1st trial of a potential coronavirus vaccine, developed by Moderna, launches in Washington state
  • Power Up: Amazon will hire 100K workers to help with delivery for the coronavirus demand spike
  • Binge: Since movie theaters closed, Universal is letting in-theater movies get rented for $19.99 and Disney is releasing Frozen 2 to Disney+ early, this weekend
Snacks Daily Podcast

Yep, we're working from home too. On our Snacks Daily podcast, we're trying to turn a quarantine situation into an opportunity to learn/fix/appreciate something — post your WFH resolution to @RobinhoodSnacks on Instagram or Twitter.

Tuesday

Disclosure: Authors of this Snacks own shares of Alphabet, Apple, Lululemon, Starbucks, Disney, and Amazon

ID: 1121474

Subscribe to Robinhood Snacks

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2020 Robinhood. All rights reserved.