Spekulatius

How did they end up owning 9% of this POS (Cattolica, Italian insurer)? https://www.insurancejournal.com/news/international/2020/06/26/573658.htm

Isn’t the fact that the chinese keep this under wraps consistent with trying to prevent escalation. If they wanted to escalate,the first hing to do is getting your population screaming for revenge by parading the dead soldiers as hero’s. Also owning a harbor is akin to owning a commercial license to operate a harbor. It does not mean they can use them as a staging ground for the military, which als most certainly would get them into trouble with the host country. Now the Chinese build these infrastructure projects not just as an investment, and a way to recycle their trading surplus, but also to buy influence, but I doubt it buys enough to allow them to use those countries as a staging ground for their military.

At least the Virus has a V-shaped recovery in the US. It sounds like in Houston, hospital are essentially full, which means that another shutdown is very likely. Hospital utilization will drive shutdowns. I am surprised they let it rise to 97%, but maybe they are not counting overflow capacity. https://www.khou.com/article/news/health/coronavirus/gov-abbott-texas-facing-massive-outbreak-as-coronavirus-cases-continue-to-soar/285-8671a837-d723-4e06-a438-8bbc19e1c86b

The risk seems to be non-linear with age, so the absence of <20 year olds would cause less skew than the absence of >60 year olds. But the health comment is a fair point. Also, 3 deaths is not enough to draw meaningful conclusions. When you look at updates from the Ohio prison outbreak from late May, you will find that more prisoners and even 2 wards have died from COVID-19. They also didn’t didn’t everyone despite stating so earlier.

Spekulatius, Great pick ! Northrop is the best of the bunch, however beware that for GBDS there is reason why Boeing dropped out and the reason was not it being preoccupied with the MAX' woes. I believe the model that Pentagon is going with for GBDS is one that it will own the underlying technical baseline of the GBDS program as oppose to the contractor owning it. Meaning that the best part of the contract which is the 50+ year aftermarket can be re-distributed by the Pentagon to other parties (which may or may not include Northrop). On the other hand, Boeing went hard for the TX fighter trainer, (and got it) because it knew that it could sell what is develops through taxpayer money through international markets. i.e. (the F-16 model with Lockheed). For GBDS, Northrop has no international market for these Doomsday weapons and if it cannot own the technical baseline (thus not owning the Aftermarket), it remains to be seen how profitable that "captive" program will be even if it is the sole bidder. The +$50 billion value for GBDS its huge, but most of it is not front-loaded. But i very much like Northrop, anyways. I think a combination of Northrop, Lockheed, General Dynamics and Raytheon Technologies gets one covered on the nuclear triad and then some. The last two are perhaps cheaper due to their exposure to business and commercial aviations. Xerxes, thanks for the commentary on the GBDS program, I wasn’t aware of this. Nevertheless, I think NOC is doing a good move here, as they stated in a CC that they want to get into the missile business and don’t mind spending Capex to do so. That makes sense to me. I remember when Grumman and Northrop merged and both were considered dogs then, but they have done quite well. Generally, I found that mergers in defense often work out well, which also leads me to LHX (merger product of Harris and L3). I kind of know them in Lynch sort of way since during my carrier , I often work to supply defense companies and those are well known to me. L3 itself was a rollup, but they did quite well concentrating on sensors and electronics and I think the merger with Harris is a winner too. So I bought some shares in today’s weak price action. LHX is not a prime contractor, but they supply critical components and subsystems and do so with great margins. I know that Mr Market is concerned about a democratic victory here but quite frankly, I think the outlook for US defense contractor is quite OK here. Both Russia and China are reducing manpower of their marked forces, but vastly increase their offensive capabilities and I expect the US will have to counter this, no matter who is in charge. i expect the military of the future to be vastly smaller (at least in terms of boots on the ground), but getting increasingly more technical and sophisticated and I think it will shift the defense budget from salaries to R$D and Capex, which is good for defense contractors. About the worst thing they can happen for defense contractors is a low tech war against terrorist like we had from 2001 to 2014 that sucks up the budget from salaries , contractor work and bribes in hostile countries and negate the wear and tear in existing equipment (which is low margin work), instead of working on new toys.

Various Defense stocks : Adds: BAESY, NOC New: LHX Also GMED add to MSGS and a few shares of PKE.

I'd be surprised if Liberty has it just because it's a chart from a third-party. That said, it's pretty easy to visualize because the EU has about the population of the USA, plus a third. So, keep the same line from the EU, and move the USA line up a third. That said, I agree with your underlying point--the chart is a bit deceptive because, compared to the EU, USA has actually done even worse than you'd think just by looking at the chart. https://ourworldindata.org/grapher/daily-deaths-covid-19?time=2020-03-02..&country=USA~European%20Union You can edit the chart to select the start-end dates, etc. It's not a seven day rolling average though AFAIK. The rising positive test % rate is puzzling and unusual. It raises the possibility that some areas are behind the ball. It may represent delayed community spread, higher testing capacity, higher testing in the younger population as well as targeted contact tracing. In many states, this appears to be mostly noise but, in some states, there is signal in the data suggesting that the uncoordinated response will "succeed" in preventing the slope of deaths from going down. After a deeper look, it seems that Texas, for example, may be one of the worst examples of this. The State is showing higher positive tests, higher positive rate %, higher hospitalizations and ICU occupation, younger age profile in the hospitalized group and Texas is scored low in its capacity to test and trace. In this case, rising positive test % shows an inability to contain the virus. It's also interesting to note that hospitals in general have "reopened" for elective cases which means that "excess" capacity is now much lower than it was a few weeks ago. In Texas, i hear that a pediatric hospital is making modifications to now accept young CV+ adults.. It is ironic that some may eventually express the "no-brainer" opinion that the eventual rise in poor outcomes will have been caused by the senseless (relative) re-lockdowns to be announced which, in fact, will have resulted from the lack of respect for the margin of safety concept. The increasing number of % positive tests while the rate of testing is increasing and the increasing number of hospitalizations is a sure indication of the virus circulating more in the population. We see this unholy trinity of data Trends in TX, AR, NC, FL and worst of all AZ: https://public.tableau.com/profile/peter.james.walker#!/vizhome/COVID-19SeeYourState/YourStateKeys In AZ for example,, the percentage of positive texted has increased from ~6.5- to ~24% while the test rate has increased. The only this can happen, if there are a whole lot more infected around. it should be noted that all the states with issues above were states that did didn’t really get hit early on in March and April. Some red states that did get hit early on like Georgia and Colorado don’t really show the same issue right now, Despite opening up too, likely because people are more careful there. What we haven’t seen a rapid increase in the number of death. This is probably because the newly infected seem to skew young (as some Gouverneurs have stated) , death are a lagging indicator and treatment has improved since March. I do think that with so much VIRUS circulating , we soon see more infection of older people as well. People >64 year old are ~13% of the population, that’s a lot to protect. And that doesn’t even include the younger folks with one or several or existing conditions that may be vulnerable as well.

I recently (and today) added to NOC. They are sort of the sole bidder on two huge contracts coming up - the B-21 stealth bomber and the GBDS (intercontinental nuclear missiles). The US ground based nuclear missiles are dated and probably need to be replaced (unless the US is shelving this which is unlikely) since it pre Cold War and was out in place in the 1970’s. Twos programs are $60-70B in Size which is substantial for ~$36B company like NOC. Other stocks in my watchlist are $LHX (strong in sensors and electronics ), Shipbuilder HII (cheap, but somewhat of a low tech metal fabricator ) and $LMT.

Navarro - China deal was off and then on again 10 minutes later. Great insider trading opportunity?

The sports teams are the best part of the former MSGS. Short term issues, but no long term impairment (I hope). I don’t care about MSGE, especially the LV Sphere.

Given our existing dataset, we should know within a week or so if deaths inflect upwards if we expect the same lag time as in late March to hold. Nationally, cases really started inflecting up about 1 week ago, so it may be too soon to celebrate falling mortality numbers....Precautionary principle tells me better to worry than to blow it off and start celebrating, but that’s just me. Additionally, anyone looking at the daily data should see an obvious 7 day periodicity to the bars—rising during weekdays and falling on weekends with lowest counts on Sundays. This probably relates to testing/labs/reporting/etc falling during weekend as the virus doesn’t take weekends off, but some staff do. I would not celebrate too soon by looking at Sunday’s numbers of mortality (which is a lagging indicator itself). Saturday/Sunday’s case number continues to rise despite the weekend effect though which suggests even further rise in cases this week... Death have gone from ~1000/day a few weeks ago to ~300 day, despite a larger number of positive testS and in many states even a larger percentage of positive tests, indicating more Virus circulating around. As mentioned in some news outlets, the likely cause is that one the infected skew you get, which has a large impact on IFR rates. It is also likely that better medical treatment had contributed some to the decline, but I think the biggest issue is age distribution of the infected.

Starter in MSGS.

I find that surprising since the CDC recommends getting the flu vaccine by the end of October each year. Then the number of flu cases rise afterwards. Outdoors temperatures also tend to go up after people turn on their air conditioning. Anybody noticed this? It happens every year like clockwork.

How do you know the Chinese were the aggressors? It always takes two parties to get a bar fight and finding out who started it is usually an exercise in futility.

We also had low interest from 2010-2016 and lower valuation multiples than we have now. The important question for stock valuation is not where interest rates are 2 years from now, it is where interest rates will be 10 or 20 years from now. Stocks are like bonds with infinite duration that way and most of the value is decades out.

Regarding confederate flags and shades of grey, this classic comes to my mind: God is not on our side, because he hates idiots !

So a couple of overeager soldiers had a really bad bar prowl about a worthless piece of land and this results in a large scale conflict and nuclear war. I guess that could happen too on 2020. I don’t think it’s very likely though.

Very interesting analysis. Thanks for sharing. I had two thoughts when I saw the graph of deaths vs mobility. 1. A common sense explanation which makes me think there is causation here: you can tell people all you want that they should stay home and apart, but they only listen when the bodies pile up. 2. The r-square is ~50%. This is wonderful billionaire territory for financial market predictions and rubbish noise in laws of physics. Not sure where in the spectrum between rubbish and wonderful such an r-square is in “epidiomology”. R^2 =0.483 is pretty much rubbish in any field. Anyways, this is a multivariate problem. No single factor can explain everything.

I am not sure what you are trying to prove. The deaths are going down much more sharper than new cases. That shows CFR is going down. And Arizona deaths/million is 180. NY is 1598. I believe you are correct that CFR rate is going down. The reason are two fold in my opinion: 1) in NYC, the health care capacity was exceeded which meant that only the most serious cases got admission. Since disease progression is hard to predict with COVID some patients got admitted to the hospital too late. 2) Treatment has vastly improved since March, Doctored understand much better how to prevent severe diseases progression and how to deal with clotting, inflammation etc. This all helps bringing down CFR rate and progress is ongoing.

I kind of like Portney. He is just like James Cramer, but far more entertaining. There I said it.

The COVI-19 infection numbers are pretty bad today with 3k+ infections in CA, TC, FL and 2.5k in AZ. AZ is about the same size than MA and we hit a limit with 3k hospitalizations. I think AZ is at 1.7k now, but rapidly rising. If this keeps up they will reach 3k in a week and then they do need to shut down, or risk of running out of hospital capacity. Or perhaps they take it more serious now and avoid all that trouble.

I think the study presents current standard of care already. Administering steroids has been done for quite some time already (based on what I am hearing from my wife) as well as administering blood thinners (Heparin) and drugs to break up blood clots as well as some other things. This likely has reduced the IFR rate already compared to March. We likely will see more progress as our understanding of the disease improves.

I think the burn rate on stimulus is currently $1T every 5 weeks or so. A $1T infrastructure bill that takes years to work off is in monthly terms so much less that it hardly makes up for CARES. It’s still a good idea, but it will hardly make a dent except in certain industries.

OT? I am afraid that our expectations in both of these cases are too high. In fact, I am afraid that our expectations of human behavior in general are too high. Whether applied to young people in their 20s, or people in general, or "highly rational" investment professionals frequenting certain investment forums, or even people at the highest levels of business or politics. Yeah, that makes me a misanthrope. :-\ Also see my signature. This is nonsense....I’ve seen children (first hand) in third world countries have more responsibility and act more “adult like” than your average millennial. Notice the more laws we create to coddle individuals, the softer society becomes and the more coddling it needs. If you have low expectations of society and individuals (and let them know it), you’re pretty much guaranteed to get poor results. I’m a firm believer in the saying “Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.” If I had to pick a point as to where modern society is, I would say somewhere in the bottom of the “good” inning. And when this doesn’t work, something evolution does the work. I a, not quite sure what to think of this. Is it Robinhood’s fault, or the parents or the individual himself. Is there anything that could not have happened if he had opened the account with Schwab or Fidelity or Interactive brokers? Anecdotally, my 14 year old son has friend from high school and one of them is in the “silver trade”. I am not sure what this teenagager is trading and perhaps it is harmless, but it seems to me that the parents should probably look at this closely. My son got interested too, so I let him open a virtual trading account at Investopedia. So far, his trades have been losses as far as I can tell. FWIW, I bought my first stock when I was 16.

Bill is a friend of mine. But thanks for making it clear who's the real one here. Bill Brewster is not a friend of mine, but I follow him on Twitter and also follow Tobias Carlisle podcast. He wanted to bring the whole tragedy out in the open to shine a light on what’s happening here. Others stated that it will end in tears, but this is worse than tears. Bill B seems. genuine too me and I am baffled why anyone thinks he is deuche.