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: 27 APRIL 2020

The data is in — stop the panic and end the total isolation
  • Fact 1: The overwhelming majority of people do not have any significant risk of dying from COVID-19. The recent Stanford University antibody study now estimates that the fatality rate if infected is likely 0.1 to 0.2 percent, a risk far lower than previous World Health Organization estimates that were 20 to 30 times higher and that motivated isolation policies.  (…)
  • Fact 2: Protecting older, at-risk people eliminates hospital overcrowding.
  • Fact 3: Vital population immunity is prevented by total isolation policies, prolonging the problem.
  • Fact 4: People are dying because other medical care is not getting done due to hypothetical projections.
  • Fact 5: We have a clearly defined population at risk who can be protected with targeted measures.

The appropriate policy, based on fundamental biology and the evidence already in hand, is to institute a more focused strategy like some outlined in the first place: Strictly protect the known vulnerable, self-isolate the mildly sick and open most workplaces and small businesses with some prudent large-group precautions. This would allow the essential socializing to generate immunity among those with minimal risk of serious consequence, while saving lives, preventing overcrowding of hospitals and limiting the enormous harms compounded by continued total isolation. Let’s stop underemphasizing empirical evidence while instead doubling down on hypothetical models.

High five “The data is in”! And it is seemingly serious data from Stanford’s medical school based on more than 3000 people. But, Wired notes a few caveats:

(…) First, the results: The Stanford researchers calculated that between 2.5 percent and 4.2 percent of the county’s residents were infected as of early April. That sounds like a reasonably small number, but if true, it would mean Covid-19 is drastically more widespread than local swab testing suggests: 50- to 85-fold, the researchers calculated. The math that follows from there is even more significant. Assuming a higher infection rate consequently lowers the disease’s estimated fatality rate, driving it from around 1 percent to just 0.12 to 0.2 percent. For the record, the death rate from the flu is about 0.1 percent.

“The comparison with the flu can be polarizing. I hope that’s not the headline,” Eran Bendavid, an infectious disease professor at Stanford and a coleader of the study, said at a press conference Friday, where he stressed that the seriousness of the pandemic shouldn’t be understated. Of course, for many—especially those who think the pandemic is overblown—that was the headline. (…)

In New York City, where more than 10,000 people, or about 0.1 percent of the population, have already died from Covid-19, this estimated fatality rate would mean nearly everyone in the city has already been infected. (…)

The firm that makes the [Stanford] test, Hangzhou Biotest Biotech, was previously identified by NBC as among those recently banned from exporting Covid-19 tests because its product hasn’t been vetted by China’s equivalent of the FDA. (…)

The WHO, quoted by The Guardian:

(…) “Early data suggests that a relatively small percentage of the populations may have been infected,” Tedros said. “Not more than 2%-3%.”

Dr Maria Van Kerkhove, an American infectious diseases expert who is the WHO’s technical lead on Covid-19, said they had thought the number of people infected would be higher, but she stressed it was still too early to be sure. “Initially, we see a lower proportion of people with antibodies than we were expecting,” she said. (…)

Van Kerkhove said they needed to look carefully at the way the studies were being carried out. “A number of studies we are aware of in pre-print have suggested that small proportions of the population [have antibodies],” she said. These were “in single digits, up to 14% in Germany and France”. “It is really important to understand how the studies were done.” (…) “Right now, we have no evidence that the use of a serological test can show that an individual has immunity or is protected from reinfection.”

The MIT Technology Review:

The municipality of Gangelt, near the border with the Netherlands, was hard hit by covid-19 after a February carnival celebration drew thousands to the town, turning it into an accidental petri dish.

Now, after searching blood from 500 residents for antibodies to the virus, scientists at a nearby university say they have determined that one in seven have been infected and are therefore “immune.” Some of those people would have had no symptoms at all. (…)

“To me it looks like we don’t yet have a large fraction of the population exposed,” says Nicholas Christakis, a doctor and social science researcher at Yale University. “They had carnivals and festivals, but only 14% are positive. That means there is a lot more to go even in a hard-hit part of Germany.”

We are in pick-your-own-data time. Hopefully, the month of May will bring some much needed objective light on this enemy that has already killed more than 205,000 people in just a few months. These charts are from John Hopkins U.. In the lower set of charts, the dot on the upper right corner is the U.S.:

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Global coronavirus death toll could be 60% higher than reported Mortality statistics show 122,000 deaths in excess of normal levels across 14 countries analysed by the FT

About herd immunity:

WHO Says You May Catch Coronavirus More Than Once Catching Covid-19 once may not protect you from getting it again

“There is currently no evidence that people who have recovered from Covid-19 and have antibodies are protected from a second infection,” the United Nations agency said in an April 24 statement.

The WHO guidance came after some governments suggested that people who have antibodies to the coronavirus could be issued an “immunity passport” or “risk-free certificate” that would allow them to travel or return to work, based on the assumption that they were safe from re-infection, according to the statement. People issued such a certificate could ignore public-health guidance, increasing the risk of the disease spreading further.

We still don’t seem to know much about this enemy:

Last week, the WaPo wrote about A mysterious blood-clotting complication is killing coronavirus patients. Now this:

(…) As Oxley, an interventional neurologist, began the procedure to remove the clot, he observed something he had never seen before. On the monitors, the brain typically shows up as a tangle of black squiggles — “like a can of spaghetti,” he said — that provide a map of blood vessels. A clot shows up as a blank spot. As he used a needlelike device to pull out the clot, he saw new clots forming in real-time around it.

“This is crazy,” he remembers telling his boss.

Reports of strokes in the young and middle-aged — not just at Mount Sinai, but also in many other hospitals in communities hit hard by the novel coronavirus — are the latest twist in our evolving understanding of the disease it causes. The numbers of those affected are small but nonetheless remarkable because they challenge how doctors understand the virus. (…)

Once thought to be a pathogen that primarily attacks the lungs, it has turned out to be a much more formidable foe — impacting nearly every major organ system in the body. (…)

There was one report out of Wuhan, China, that showed that some hospitalized patients had experienced strokes, with many being seriously ill and elderly. But the linkage was considered more of “a clinical hunch by a lot of really smart people,” said Sherry H-Y Chou, a University of Pittsburgh Medical Center neurologist and critical care doctor.

Now for the first time, three large U.S. medical centers are preparing to publish data on the stroke phenomenon. There are only a few dozen cases per location, but they provide new insights into what the virus does to our bodies. (…)

The analyses suggest coronavirus patients are mostly experiencing the deadliest type of stroke. (…)

Many doctors expressed worry that as the New York City Fire Department was picking up four times as many people who died at home as normal during the peak of infection that some of the dead had suffered sudden strokes. The truth may never be known because few autopsies were conducted. (…)

Jabbour and his co-author Eytan Raz, an assistant professor of neuroradiology at NYU Langone, said that strokes in covid-19 patients challenge conventional thinking. “We are used to thinking of 60 as a young patient when it comes to large vessel occlusions,” Raz said of the deadliest strokes. “We have never seen so many in their 50s, 40s and late 30s.” (…)

Jabbour said many cases he has treated have unusual characteristics. Brain clots usually appear in the arteries, which carry blood away from the heart. But in covid-19 patients, he is also seeing them in the veins, which carry blood in the opposite direction and are trickier to treat. Some patients are also developing more than one large clot in their heads, which is highly unusual. (…)

At Mount Sinai, the largest medical system in New York City, physician-researcher J Mocco said the number of patients coming in with large blood blockages in their brains doubled during the three weeks of the covid-19 surge to more than 32, even as the number of other emergencies fell. More than half of were covid-19 positive. (…)

On average, the covid-19 stroke patients were 15 years younger than stroke patients without the virus. “These are people among the least likely statistically to have a stroke,” Mocco said.

Mocco, who has spent his career studying strokes and how to treat them, said he was “completely shocked” by the analysis. He noted the link between covid-19 and stroke “is one of the clearest and most profound correlations I’ve come across.”

“This is much too powerful of a signal to be chance or happenstance,” he said. (…)

Some States Ease Lockdowns as Virus Cases Near 3 Million A handful of U.S. states are reopening but some residents and business owners are skeptical that it is safe to return to stores as U.S. infections near 1 million.

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PANDENOMICS
Coronavirus Projected to Trigger Worst Downturn Since 1940s As a proportion of gross domestic product, the deficit will end the fiscal year at almost 18%, up from 4.6% in 2019, the Congressional Budget Office says.

The economy is likely to shrink 12% in the second quarter—a 40% drop if it were to persist for a year—and the jobless rate will average 14%, the nonpartisan research service said Friday. Job losses will come to 27 million in the second and third quarters.

The federal budget deficit is expected to reach $3.7 trillion by the end of the fiscal year on Sept. 30, the CBO said, up from about $1 trillion in the 12 months through March.

As a proportion of gross domestic product, the deficit will end the fiscal year at almost 18%, its highest level since the year after World War II ended and up from 4.6% in 2019, the CBO said.

Federal debt held by the public is projected to hit 101% of gross domestic product by the end of the fiscal year, up from 79% at the end of fiscal 2019, the CBO said. (…)

The updated forecasts, published in a blog post by CBO Director Phillip Swagel, rest on assumptions that are “subject to enormous uncertainty.” These include the extent to which the coronavirus is brought under control in the coming months and the possibility of a subsequent re-emergence.

Some degree of social distancing is expected to continue through the first half of 2021, the CBO said. But those measures are projected to diminish by roughly 75% in the second half of this year relative to the April-June quarter and continue easing into 2021.

As a result, economic activity is projected to recover from its current nadir, but only gradually. GDP is expected to contract 5.6% in 2020 from last year and to grow 2.8% in 2021.

The unemployment rate is seen topping out at 16% in the third quarter and declining to 9.5% by the end of 2021. But the CBO cautioned that those numbers understate the extent of damage because they only count people who are actively looking for a job.

China’s Second-Quarter Rebound Already Losing Steam, Data Show

The aggregate index combining eight indicators tracked by Bloomberg was therefore broadly unchanged this month. While the fact that it didn’t deteriorate signals a possible bottoming-out of the economy as the nation re-opens factories and encourages the public to return to shopping and dining out, the overall picture is still downbeat.

Small business confidence rose slightly after March’s strong rebound, but the pace of increase slowed, and a gauge of expectations dropped after gaining the previous month. (…)

U.S.: Funds Authorized by Congress

Pressure Builds on Europe’s Fragile Banking System Worries are mounting about the ability of Europe’s financial system, in particular its fragile banks, to make it through the coronavirus crisis unscathed.

(…) European lenders entered the crisis in worse shape than U.S. rivals after years spent trying to cope with low interest rates, weak economic conditions and stiff regulation. (…)

On Thursday, S&P Global Inc. downgraded Germany’s second-largest commercial bank, Commerzbank AG , to BBB+ from A-, and revised Deutsche Bank’s outlook to negative from stable. Its rating is currently BBB+, or three notches above junk. Credit-rating firms are particularly sour on Italy and Spain, where the virus outbreak has been the highest, freezing business activity. (…)

Germany’s banking system is seen as particularly fragile because it is overcrowded with more than 1,500 lenders, and Germans have little appetite for investments and big borrowings, which means most leave their money sitting in their bank accounts.

For banks in Southern Europe, which are also struggling to make money in a low-interest-rate environment, there is the added stress of being based in countries that are seeing their own sovereign risk rise. Higher sovereign risk increases risk for banks and companies, making their funding more expensive. (…)

“As such, the ECB will become a dominant financier of the eurozone banking sector for the next few years,” Mr. Kinmonth said.

Millions of Credit-Card Customers Skip Their Payments Credit-card debt kept many consumers afloat. Now that the bubble is bursting, lenders and borrowers alike are preparing for pain.
U.S. Is Reeling Toward Meat Shortages and the World May Be Next

Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away. Brazil, the world’s No. 1 shipper of chicken and beef, saw its first major closure with the halt of a poultry plant owned by JBS SA, the world’s biggest meat company. Key operations are also down in Canada.

While hundreds of plants in the Americas are still running, the staggering acceleration for supply disruptions is now raising questions over global shortfalls.

Taken together, the U.S., Brazil and Canada account for about 65% of the world’s meat trade. (…)

To be sure, some plants have come back on line after testing workers and improving safety conditions, and most Brazilian facilities are still operating. Another point to consider: There haven’t yet been big shutdowns in Europe. The European Union accounts for about a fifth of global meat exports, U.S. government data show.

The Scramble for Delivery Robots Is On and Startups Can Barely Keep Up Adoption of robots and drones carrying goods speeds up as a frightened world craves safe delivery of everything from medical supplies to food.

Saudis Begin Curbing Oil Output Ahead of OPEC+ Start Date

Saudi Aramco began reducing oil production earlier this week ahead of the May 1 start date for OPEC+ output cuts, according to a Saudi industry official familiar with the matter.

Aramco has begun to curtail production from about 12 million barrels a day to achieve the agreed level of 8.5 million barrels a day, the person said, asking not to be named discussing private information. The country joins fellow OPEC members Kuwait, Algeria and Nigeria in kicking off cuts early. (…)

  • Last Tuesday, OPIS released its preliminary report for U.S. fuel volumes for the week ending April 18. National fuel volumes were down 44% YoY, from down 49%, 48%, 47% y/y during the previous 3 weeks respectively. The April 18 preliminary report indicated fuel volumes are up 8% WoW.
TECHNICALS WATCH
Goldman Says Narrow Breadth in S&P 500 a Bad Sign for Stocks

The U.S. benchmark is around 17% below its February record, but the median stock trades 28% from its peak, Goldman strategists including David Kostin wrote in a note Friday. Meanwhile, the five largest companies make up 20% of the gauge’s market capitalization, exceeding the 18% level the measure reached in March 2000 and raising investor concerns about narrow market breadth, they said.

“Sharp declines in market breadth in the past have often signaled large market drawdowns,” the strategists wrote. “Narrow breadth can last for extended periods, but past episodes have signaled below-average market returns and eventual momentum reversals.”

relates to Goldman Says Narrow Breadth in S&P 500 a Bad Sign for Stocks

Lowry’s Research seems to want to look at a glass half full. “While breadth trended higher from the March 23 low, it has been less-than-ideal. (…) Further examination reveals underperformance of small- and mid-caps as the proximate cause of the divergence. However, a few strong breadth days could quickly erase this negative divergence and its implications. (…)

The Percent of OCO Stocks Within 2%, 5% and 10% of 52- Week Highs which typically move with prices, have improved since April 9. On the other end of the spectrum, Lowry’s Percent of OCO Stocks 30% or More Below 52-Week Highs has risen over the same timeframe. These trends likely underscore the short-term selectivity, where the most favored stocks continued to attract buyers, while the least favored attracted more sellers. (…) the weight
of evidence is shifting positively once again.”

  • Deutsche Bank Says Results Will Beat Expectations, Eases Capital Targets to Face Coronavirus. German bank is taking a €500 million charge for credit losses resulting from the coronavirus outbreak
  • Adidas Net Profit Drops 95% Over Pandemic and it warned of an even bigger hit in the second quarter of the year.
  • Bayer’s Sales and Earnings Push Higher. The company said it couldn’t predict how the pandemic would affect its business, positively or negatively, over the rest of the year.

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