Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

THE DAILY EDGE: 25 MARCH 2020

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Same chart with log scale, trying to find hope wherever it might be:

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  • More than 40,000 Spaniards have tested positive for the virus and 3,000 have died.
  • Governor Cuomo said that with cases doubling every three days in New York City alone, as many as 140,000 people might need urgent care in the next few weeks.
  • A 17-year-old California boy whose death was linked to the coronavirus on Tuesday may be one of the youngest victims of the outbreak in the United States. Gov. Gavin Newsom of California said that half of the 2,102 people who had tested positive for the virus in his state were aged 18 to 49.
  • In Georgia, a 12-year-old girl who has Covid-19 was placed on a ventilator this week. And in Kentucky, a person who went to a “coronavirus party” Confused smile attended by young adults has tested positive, Gov. Andy Beshear said.
  • In a small example from the US, eight NBA teams have tested all their players, with ten of those players testing positive. That is an 8% infection rate across that small population. Almost all have been reported as being asymptomatic. If you extrapolate that across US as a whole, it is consistent with 27 million infected Americans. There are lots of reasons to think that NBA players would be more susceptible (they travel extensively and come into contact with a very high number of people). Nonetheless, it suggests the total number of cases is likely to be much higher than official figures suggest. By the same token, this would imply that the mortality rate is much lower than official figures suggest.
  • The fatality rate per head of population in Italy far exceeds that in any other country so far, although Spain is on a similar trajectory, as is the UK (though it is still early days in the UK). Iran and France are also picking up, but Germany, Japan and the US remain at or below the trajectories of China and South Korea, to date.

THE WEST TAKES WRONG LESSONS FROM WUHAN

The cordon sanitaire that began around Wuhan and two nearby cities on Jan. 23 helped slow the virus’s transmission to other parts of China, but didn’t really stop it in Wuhan itself, these experts say. Instead, the virus kept spreading among family members in homes, in large part because hospitals were too overwhelmed to handle all the patients, according to doctors and patients there.

What really turned the tide in Wuhan was a shift after Feb. 2 to a more aggressive and systematic quarantine regime whereby suspected or mild cases—and even healthy close contacts of confirmed cases—were sent to makeshift hospitals and temporary quarantine centers. (…)

The steps went beyond what’s envisioned in many hard-hit Western cities. As a result, many doctors and experts say the recent lockdowns in the U.S. and Europe may slow the rise in new infections—if properly enforced—but still won’t be enough to stop it or prevent many hospitals from being overwhelmed, as they were initially in Wuhan.

“A lot of the lessons have been lost,” said Devi Sridhar, professor of global public health at the University of Edinburgh. “A lockdown helps buy time: The only way it will work is if you actually backtrack and start figuring out who has the virus.” (…)

Zhang Jinnong, head of the emergency department at Wuhan’s Xiehe Hospital, said the most important thing was to separate the infected from the healthy, and recommended hotels as quarantine centers where people could be isolated in separate rooms.

“You just need to turn off the central air conditioning,” he said.

He also said that in recent days he saw a handful of patients who had developed antibodies to the virus without knowingly being infected. That suggested to him that Wuhan might have already developed a level of “herd immunity.”

(…) the more systematic quarantine and testing regime in Wuhan after Feb. 2 is similar to measures that also appear to have been effective in South Korea and Singapore, according to many experts. (…)

Pointing up An Antibodies Test: A Vital Weapon in the Fight Against COVID-19.

While the US continues to struggle without enough diagnostic tests for COVID-19, the quest continues for a different holy grail, a test to tell us who has already been exposed to the virus and now has some immunity.

The exciting news on the serologic testing front this past week is not a test that will come in a package to be shipped around the world, though those are in development. It is an assay developed by a team at the Mount Sinai Health System Translational Science Hub – a procedure that can be replicated in any lab, using a blood sample. (…)

One of the authors of the March 19 paper published on medRxiv, Florian Krammer of the Krammer Lab of the Icahn School of Medicine at Mount Sinai, explained on Twitter how the results of the new blood test can be utilized: “(A) With this assay we can figure out who was infected and who wasn’t. That means we can determine the true infection rate and infection fatality rate. (B) We can use the assay to screen for people who seroconverted and are now immune, and they can donate their serum, and it can [be] used to treat patients. (C) We can test healthcare workers and ask the ones who are already immune to work with infectious patients. In that way, the virus is not easily spread to colleagues or other patients. And (D) we can now use this assay to better study how our immune response reacts to the virus.”

Beyond those vital uses noted by Dr. Krammer, a serologic can test tell us who, given a measure of immunity, is in the best position to go back to work, to keep society moving and vital services functioning, and to begin to revive the economy after its COVID-19 swoon. (…)

Europe faces coronavirus choice: to close economy or not Countries grapple with a trade-off between public health and long-term hit to growth
California Governor Sees Easter Too Soon to Emerge From Shutdown. Newsom said that the state is likely looking at a period of eight to 12 weeks of shutdown, based on conversations with experts.
Premature Return to Normal Would Risk Disaster for Markets The coronavirus doesn’t observe Easter. Let’s just sit tight. (John Authers)

(…) It is uncertainty that roils markets. (…)

Chinese stocks, whether in Shanghai, Hong Kong, or New York, began to recover in early February, as signs came from Wuhan that the virus was coming under control, and that it wasn’t proliferating as badly as feared in the rest of the country. By the final week of February, when the situation had plainly stabilized, indexes were back level for the year. They then started to fall again as the problem spread outside China. Yet, remarkably, Chinese indexes have done comfortably better this year than the rest of the world. (…)

What mattered to investors was to gain some confidence that the virus was under control. Then the return to work could begin. (…)

relates to Premature Return to Normal Would Risk Disaster for Markets

MacroPolicy Perspectives president Julia Coronado:

  • “If we go back to work and the disease continues to spread not only will people die and the 20% of our economy dedicated to health care be overwhelmed, but people won’t have the confidence to resume normal activity.”

  • “They won’t go on airplanes or travel or hold conferences or events because they won’t be able to trust the public health response has been adequate to protect them.” (Axios)
Deal Reached on $2 Trillion Coronavirus Stimulus Bill

(…) Mr. McConnell said the Senate would move to vote on the massive bill later on Wednesday, setting up a rapid approval of legislation that dwarfs the annual discretionary budget Congress spends much of the year crafting and approving. House Speaker Nancy Pelosi (D., Calif.) said Tuesday she hoped to quickly approve the eventual Senate agreement, though objections from lawmakers could slow the process in that chamber.

Treasury Secretary Steven Mnuchin said that he had spoken to President Trump about the agreement and that Mr. Trump would “absolutely” sign it as it is written today. (…)

While the final terms of the bill remained under wraps early Wednesday, lawmakers had been eyeing sending one-time checks worth $1,200 to many Americans, with $500 available to children, with the assistance capped above certain income levels.

Those payments would be in addition to a broad expansion in unemployment benefits, which would be extended to nontraditional employees, including gig workers and freelancers, according to a Democratic aide familiar with the negotiations. The agreement is also set to increase current unemployment assistance by $600 a week for four months.

The Senate is also poised to approve $350 billion in loans to small businesses in an effort to keep Americans on payrolls as economic activity across the country comes to a standstill.

A major challenge in the negotiations was roughly $500 billion in corporate aid, much of which will go toward backstopping Federal Reserve loans. The Treasury Secretary will have the authority to directly lend a slice of those funds, and Democrats had sought to place controls on the money. The agreement will create a new inspector general and oversight board to oversee the aid.

Mr. Schumer wrote in a letter to Senate Democrats Wednesday morning that the legislation will also invest $150 billion in the health care system, already straining to respond to the quickly expanding number of infections across the country, and send $150 billion to state and local governments saddled with costs related to the virus. Those funding increases are among several lawmakers had intended to include in the package.

In the same letter, Mr. Schumer said the legislation included a ban on stock buybacks for any company receiving a government loan from the stimulus package. The ban lasts the term of the government assistance plus 1 year. (…)

Eurozone: Finance ministers show solidarity but prefer separate accounts

(…) According to Eurogroup president Centeno, Eurozone member states have on average adopted fiscal stimulus measures of some 2% of GDP and guarantee schemes of some 13% of GDP. (…) While all the national fiscal measures are impressive and significant and are a kind of implicit coordinated action, a real Eurozone-level counterpart to the ECB’s 750bn euro asset buying programme is still missing.

(…) the reluctance to agree on corona bonds or other forms of clear burden sharing, at least for now, means that a euro debt crisis could return in the aftermath of the current crisis, no matter when this will be. On Thursday, we will know whether European government leaders follow the advice of their finance ministers.

Steep drop in oil price fueled by COVID-19 and oversupply

Twenty-five days into the COVID-19 crisis (March 23rd), oil prices have declined 58 percent to about 21.96$ per barrel. In contrast, the Lehman crisis reached this low point after 59 days, and the 2014 oil price collapse reached it in 139 days. An agreement between oil-producing nations to curb production could prevent a further fall in prices, though weak global demand will keep prices bearish for longer.

  • Coronavirus Complicates Kremlin Plan To Boost Oil Output The deepening coronavirus crisis is upending the Kremlin’s plan to ramp up oil production in its price war with Saudi Arabia—and prompting a backlash among the leaders of some of Russia’s largest energy companies, people familiar with the matter said.

(…) At a Monday meeting of top domestic oil companies convened by energy minister Alexander Novak, most participants argued against a production increase starting in April, the people said.

Some companies also favor returning to the negotiating table with Saudi Arabia. Present at the meeting were top executives from PJCS Rosneft, PJCS Lukoil and PJCS Tatneft, among others. (…)

Igor Sechin, head of Russia’s largest oil producer, state-controlled giant Rosneft, continues to support a production boost. Widely considered a staunch nationalist in President Vladimir Putin’s inner circle, Mr. Sechin was a key driver of Moscow’s exit from the OPEC pact. He argued that Russia’s yearslong cooperation with the Organization of the Petroleum Exporting Countries to limit production allowed U.S. drillers to gain market share. (…)

Mr. Sechin said last week that Russia and Saudi Arabia need to maintain contact. “These two are the largest oil producers, and of course, we need to cooperate, to exchange information,” he said, quoted by state newswire RIA Novosti.

But he reiterated that Russia needs to protect its market. “If you give up your market share, you will never get it back,” he said. “You look at what happened during these three years of our participation in the [OPEC] agreement. The U.S. oil industry grew at a rapid pace and came out on top in the world in oil production.”

Leonid Fedun, vice president of Lukoil, predicted last week that oil prices could fall to as low as $15 a barrel. He called the Saudi-Russian battle “a war of attrition, which the U.S. will win.” Moscow and Riyadh must resume negotiations, he said.

PANDENOMICS

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DOW’S BEST DAY IN 87 YEARS

We keep besting most records…

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Lowry’s Research yesterday night: “the criteria for aggressive investors to begin a staged buy program have not yet been met.”

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Mug Martini glass A friend sent me this note yesterday:

I am giving up drinking for a month.
Sorry ,bad punctuation:
I am giving up ! Drinking for a month.

THE DAILY EDGE: 24 MARCH 2020

VIRUS UPDATE

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The U.S. seems to be on the same slope as most of Europe, with much less testing (NYT)…

…but not really…This a.m., the U.S. count is 46,450.image

Evolution of confirmed COVID-19 cases (NBF)image

As Economic Toll Mounts, Nation Ponders Trade-Offs The White House is discussing easing social-distancing guidelines as early as next week amid a broader debate over how much economic loss the country can bear to save an unknowable number of lives threatened by the coronavirus pandemic

President Trump has told people that he wants to reopen the economy as soon as possible but his interest runs counter to the advice of public health experts, including in the administration, who have warned that the guidelines remain necessary. (…)

“America will again and soon be open for business,” he pledged. “It won’t be that long.” (…) An administration official said the White House is discussing targeting the restrictions at vulnerable groups, such as requiring the elderly and those with underlying medical conditions to take greater precautions than younger, healthy people. Such a shift may not happen immediately after the 15-day period ends, the official said, adding that the White House is operating with a “high degree of caution.” (…)

Private-sector economists project the toll of the crisis will include 5 million lost jobs and $1.5 trillion in lost economic output. (…) At the same time, a widely cited study by Imperial College London warns the U.S. faces 2.2 million deaths from the virus if it does nothing to stop its spread. (…)

Easing the guidelines would run counter to public health experts who have said sustained social distancing is needed until the U.S. develops a vigorous testing regime to identify and isolate cases. The virus can be spread when people are asymptomatic. (…)

Dr. Jerome Adams, the U.S. surgeon general, said on Monday the federal guidelines were working, but that “the problem is that we really need more people to take this seriously.” (…)

In the U.S., health experts have urged continued shutdowns until the country builds the ability for massive testing to identify and quarantine infected individuals. But the country is so far behind in its testing ability, with shortages of critical chemicals and supplies looming, that it remains unclear whether it could take months or even a year to implement the testing strategies that enabled Singapore and South Korea to contain cases while keeping major swaths of their economies running. (…)

Nerd smile The 5 million jobs lost and the lost economic output will come back after the lockdowns, unlike the potential 2.2 million deaths. Trump’s math and “reasoning”:

Trump drew parallels to the flu season, which he said was on pace to be responsible for the deaths of some 50,000 Americans, as well as to car crashes — comparisons that Fauci and other experts have dismissed as examples of false equivalency.

“You look at automobile accidents, which are far greater than any numbers we’re talking about,” Trump said. “That doesn’t mean we’re going to tell everybody no more driving of cars.”

To be precise, influenza, the common flu, has infected as many as 45 million Americans since October and killed as many as 46,000, according to estimates from the Centers for Disease Control and Prevention. My math says that 0.1% of infected people will die from the flu.

The mortality rate for Covid-19: 16,700 deaths on 387,000 known infected: 4.3%. Yes, we do not know the full number of infected people, but we also do not know the final number of deaths. People do not die as soon as they get infected. In early March, the death rate was 3.0%. Since then: 4.8%. BTW, the death rate in Italy is 9.5%, Spain: 6.6%, France 4.3%. Japan: 3.7%. South Korea which has been testing extensively and implementing strict confinement rules early: 1.3%. Let’s hope for this latest number, still a lot more than 0.1%.

Dr. Deborah L. Birx, the White House coronavirus response coordinator, said the “attack rate” — the percentage of the population infected with the virus — was nearly one in 1,000 in the New York area, five times higher than in other parts of the country.

China’s Hubei Province to Ease Coronavirus Lockdown Authorities are planning to lift the mass quarantine on the central province where the coronavirus pandemic first emerged, excluding Wuhan, on Wednesday. The city will follow next month

(…) Even so, only people deemed free from contagion risk will be allowed to leave. Those leaving Hubei must possess a “green code” issued by provincial authorities to certify their health status, the notice said.

Wuhan, a city of 11 million people, will end its controls on outbound traffic starting April 8, according to the notice, and those departing must also possess the green code attesting to their health. (…)

China has reported several days without new domestic infections in the past week. It continues to report new cases among travelers from abroad, and more than 4,000 people in the country are still sick from the virus, mostly in Wuhan. A third of those are in intensive care.

Health authorities reported 74 cases imported from abroad Monday,along with four local infections and seven deaths.

U.S. Strategic Stockpile of Medical Supplies Is Outmatched by Coronavirus Hospitals call for White House to direct private business to produce protective medical gear; states say requests for emergency supplies are only partially filled
  • Opinion piece from Walter Russell Mead in the WSJ:

(…) So far, however, the coronavirus does not seem to be promoting cooperation among world leaders or respect for global institutions. The pandemic has widened the gap between the U.S. and China. While the EU has moved quickly to remove limits on eurozone members’ fiscal deficits, Europe’s national governments so far have focused almost entirely on addressing their problems without much consultation. Steps like excluding Taiwan from emergency meetings and praising China’s response to the virus have made the World Health Organization look like a mouthpiece for Beijing. Neither the Group of Seven nor the Group of 20 has played a conspicuous role, and the IMF and World Bank haven’t been at the forefront of the world’s response. National governments, not international agencies and institutions, have primarily shaped the response. (…)

  • We need a global plan

Excerpted from an FT free-to-read piece: Yuval Noah Harari: the world after coronavirus

(…) Both the epidemic itself and the resulting economic crisis are global  problems. They can be solved effectively only by global co-operation.

First and foremost, in order to defeat the virus we need to share information globally.  That’s the big advantage of humans over viruses. A coronavirus in China and a coronavirus in the US cannot swap tips about how to infect humans. But China can  teach the US many valuable lessons about coronavirus and how to deal with it. What an Italian doctor discovers in Milan in the early morning might well save lives in Tehran by  evening. When the UK government hesitates between several policies, it can get advice  from the Koreans who have already faced a similar dilemma a month ago. But for this to happen, we need a spirit of global co-operation and trust.

Countries should be willing to share  information openly and humbly seek advice,  and should be able to trust the data and the insights they receive. We also need a global effort to produce and distribute medical equipment, most notably testing kits and respiratory machines. Instead of every country trying to do it locally and hoarding whatever equipment it can get, a co-ordinated global effort could greatly accelerate production and make sure life-saving equipment is distributed more fairly. (…)

Global co-operation is vitally needed on the economic front too. Given the global nature of the economy and of supply chains, if each government does its own thing in complete disregard of the others, the result will be chaos and a deepening crisis. We need a global plan of action, and we need it fast.

Another requirement is reaching a global agreement on travel. Suspending all international travel for months will cause tremendous hardships, and hamper the war against coronavirus. Countries need to co-operate in order to allow at least a trickle of essential travellers to continue crossing borders: scientists, doctors, journalists, politicians, businesspeople. This can be done by reaching a global agreement on the prescreening of travellers by their home country. If you know that only carefully screened travellers were allowed on a plane, you would be more willing to accept them into your country.

Unfortunately, at present countries hardly do any of these things. A collective paralysis has gripped the international community. There seem to be no adults in the room. One would have expected to see already weeks ago an emergency meeting of global leaders to come up with a common plan of action. The G7 leaders managed to organise a videoconference only this week, and it did not result in any such plan.

In previous global crises — such as the 2008 financial crisis and the 2014 Ebola epidemic — the US assumed the role of global leader. But the current US administration has abdicated the job of leader. It has made it very clear that it cares about the greatness of America far more than about the future of humanity.

This administration has abandoned even its closest allies. When it banned all travel from the EU, it didn’t bother to give the EU so much as an advance notice — let alone consult with the EU about that drastic measure. It has scandalised Germany by allegedly offering $1bn to a German pharmaceutical company to buy monopoly rights to a new Covid-19 vaccine. Even if the current administration eventually changes tack and comes up with a global plan of action, few would follow a leader who never takes responsibility, who never admits mistakes, and who routinely takes all the credit for himself while leaving all the blame to others.

If the void left by the US isn’t filled by other countries, not only will it be much harder to stop the current epidemic, but its legacy will continue to poison international relations for years to come. Yet every crisis is also an opportunity. We must hope that the current epidemic will help humankind realise the acute danger posed by global disunity.

Humanity needs to make a choice. Will we travel down the route of disunity, or will we adopt the path of global solidarity? If we choose disunity, this will not only prolong the crisis, but will probably result in even worse catastrophes in the future. If we choose global solidarity, it will be a victory not only against the coronavirus, but against all future epidemics and crises that might assail humankind in the 21st century.

From cover-up to global donor: China’s soft power play With its economy showing signs of life, Beijing aims to restore a reputation damaged by coronavirus

(…) “The whole human race should join efforts to combat the virus,” Xinhua quoted Xi as saying. (…)

(…) “It’s very important that we totally protect our Asian-American community in the United States and all around the world,” Trump said at a White House briefing.

“They’re amazing people and the spreading of the virus is not their fault in any way shape or form,” he said. “They’re working closely with us to get rid of it. We will prevail together. It’s very important.” (…)

The shift in tone was abrupt, and characterised what was the least combative briefing Trump has had with the media since he began leading them earlier this month.

Just three days ago, for example, Trump said: “The world is paying a very big price for what [China] did … If people would have known about it … it could have been stopped right where it came from: China.”

Trump’s new tone came after a week of his and several senior officials’ insistence on prefacing the disease with “Chinese”, leading to widespread condemnation from both within the US – including lawmakers, Asian-American advocacy groups and the wider public – and abroad. (…)

Is something good and sensible really happening?

Halt in U.S. Air Traffic Weighed to Aid Industry Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S. as the nation’s air-traffic control system is ravaged by the coronavirus contagion.
PANDENOMICS
FLASH PMIs

There is no need/time to go through all the details. Here are the key charts and the links to the pdfs:

IHS Markit Flash U.S. Composite PMI

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IHS Markit Flash Eurozone PMI

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au Jibun Bank Flash Japan Composite PMI

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Coronavirus Sparks Hiring Spree for Nearly 500,000 Jobs at Big Retailers Walmart, Amazon.com and CVS are among about a dozen large companies looking to hire nearly 500,000 Americans in coming weeks, a spree that would mark a major shift of the U.S. workforce from smaller businesses that have cut staff to survive the coronavirus.

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