This new revelation that the SEC has granted a 45 day disclosure...

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    This new revelation that the SEC has granted a 45 day disclosure extension is a noteworthy news- the extension means that Wall St may be still kept in the dark about the true state of financial affairs of companies until much later and certain not in a timely manner. It is likely that Q2 results will see the full impact of the crisis after companies do mass layoffs.

    This may fit in with timeline of end of April as the first bottoming aligned with a possible COVID peak we may get as best case [ peak does not mean end] with a relief recovery in May but as full disclosure of impacts start to come out in late May/June, we may well see the relief rally fizzling out again. However, the relief recovery in May may or may not return us back to where we're at now from a lower bottom to be made this month- so we could register a lower high and lower lows.  

    The extension provided by the SEC and therefore the expected delays in the timeliness in reporting of the COVID impact could well blindside investors who may be seeing a less adverse instead of the true picture of the financial state of affairs of their companies.
    WARNING: Earnings Reports Are Not Going to Reflect the Virus’s Full Impact

    Mar 31st, 2020 | By Shah Gilani

    Last week, the Securities and Exchange Committee (SEC) announced an order providing “public companies a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1 and July 1, 2020.”

    To be clear, that means earnings reports covering the first quarter, which ends today, may not have to be filed on time, and material impacts of the coronavirus hitting companies throughout the second quarter, which ends June 30, 2020, don’t have to be disclosed in a timely fashion.

    Given COVID-19’s impact on company workers, including executives, managers and accountants, in-house and external auditors, granting an extension on filing certain disclosure reports looks considerate, but in reality, it’s a recipe for disaster.

    mce-anchorNow’s not the time to delay earnings reports or material disclosures.

    It is more important now than ever that companies report earnings on time, and even more important they disclose material impacts the coronavirus is having on sales, revenues, profits, and losses as they are made aware of those impacts internally.
    Companies do not have a free pass to not disclose material information, nor do they have a free pass to not report earnings. What they do have is some cover to delay disclosing critical information investors need to make decisions about companies’ prospects, including their viability.

    Watching the market rally off last Monday’s lows makes me queasy.

    If investors don’t know and aren’t going to know for some time how bad earnings are already and are going to be and what kind of impact economic and human conditions are already having and going to have on profits and losses, they may be buying into stocks that are going to crash when the truth about financial conditions at a lot of companies eventually comes out.

    Maybe the market’s looking past the first quarter and maybe it’s looking past the second quarter, but “the market,” constituting investors and traders who rely on material disclosures to price securities, no matter what it’s looking past, probably isn’t seeing what’s really happening to companies’ bottom lines.

    You’ve been warned.

    Sincerely,

    Shah
 
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