Spekulatius

The problem with the Swedish approach is that it still takes a long time to get the herd immunity. Stockholm was at only 7-8% (if Remember correctly) with the rest of the country far behind. They also have no the problem they the rest of Europe or at least the part who have contained the Virus to very low levels may not allow free border movement from states like Sweden or the UK out of concern of importing cases. They probably need to way of testing everyone coming in. I posted already upstream that the Swedish economy is not doing any better than the rest of Europe anyways. I do think there is a large benefit fit of keeping the schools open and we have to find a way to do this too. Anyways, the Swedish way is sort of a success because they avoided total disaster like Italy, NYC or Spain and their citizens followed the guidelines from the government voluntarily. Their approach seems to be supported by their citizens, so who are we to judge. However, their path Forward seems to be as murky as anyone else’s with a huge economic tolls to pay.

The idea to reuse rockets For cost savings is very old, at least early 70’s. In a way, the Challenger was build around this concept. However it’s not easy to make it happen. For me, the most amazing part is to bring the booster rockets back on their feet on a drone ship.

The relative speed between the ISS and the dragon module decreases, as the dragon comes closer to the ISS Orbit. That’s why it takes the dragon so long to get to the ISS station.

A small step for mankind, a large step for capitalism.

Cigar but, interesting that you bring up that kids (and probably young people) are not very good spreaders of COVID-19. I’d have looked a fair amount and couldn’t come up with an example where a kid (through school or otherwise) was identified as a superspreader. In Germany, the schools have reopened again a couple of weeks ago, but the superspreader events that did occur were in churches and restaurants involving older people. The absence of evidence is not proof ,but somewhat telling. In any case, the main risk with opening schools is not that the kids get infected, it’s them serving as a vector for transmission to more vulnerable people (teachers, parents ). If that risk is low, than opening the schools starting with smaller kids (who likely have younger parents and teachers ! ) should be strongly considered now. I am likely biased as well, since I have a teenage son at home and we noticed ( despite seemingly taking the quarantine well) a noticeable degradation in academic performance as well as some psychological issues at home. Not sure what to make of it sample size =1), but our small School district is now trying to hire “emotional coordinator” and based on some hints from other parents, they have similar issues as well. In any case,I believe they if we close the schools for another semester and try to continue online only, we are likely creating a disaster here for the kids. As a parent, I would rather take my (fairly good) chances with the Virus, based on what I know.

First time I hear the term infodemic but it rings very true. Jut went though a pretty good article (in German) about Sweden. Some folks in twitter seem to believe that Sweden is the model for how to deal with en epidemic and it is true - Sweden so far has avoided shutdowns and hasn’t really descended into a disaster like Italy or NYC. However, looking at what actually is happening there, it is obvious that the Swedes did show restraint that is on par what happened in other countries in Europe simply based on recommendation from the government. While this is great, it is not clear to me that the same would have worked anywhere else in Europe, much less on the US. Second, economy (Based on forecasts) is actually not doing better than in other countries in Europe. Actually, if you accept the above, then it’s not really a surprise either. Below charts show two different graphics - GDP forecast for 2020 and google cell data for presence at work. Basically the data for both for Swedes is middle of the pack, which means that the Swedes have done what others European countries did just based on their government recommendations. https://www.spiegel.de/politik/ausland/corona-krise-schwedens-sonderweg-eine-zwischenbilanz-in-zahlen-a-c7b3cea2-63be-4072-8df9-afdb765afb54 As to whether the same nudging has a chance of working in the US, we can draw our own conclusion.

Pretty good summary of COVID-19 from a medical POV. https://www.bbc.com/news/52760992

This is an interesting problem for clothing retailers, or anyone else that sells seasonal goods. How far in advance does the typical clothing retailer acquire inventory, e.g., by mid-march I assume most winter clothing is already gone. Is the mid-march inventory primarily spring or summer clothes? Either way, it seems like there is going to be alot of out-of-season clothing around. Would off-price discounters benefit from that? Also, someone's going to have to eat most of that. Will brands take some of it back? Maybe off-price can buy tons of stuff cheap, but who wants Easter stuff after the holiday? How many people just don't need new swimsuits at any price if they are cancelling their trip to Hawaii? Plus, we were at all time high consumer sentiment in February....how's consumer sentiment now? All of my friends are delaying or cancelling vehicle/house purchases, and sticking to the necessities, even if they have money. Who is going "shopping" even if stores re-open? And to what extent was BURL's target market (women with incomes $25k-100k) affected financially? Well, they showed a huge loss as predicted, but BURL stock is up ~20% since this post. It’s strange, the balance sheet is in much worse shape, but yet the stock and in particular the EV is higher now than pre-COVID, despite far worse fundamentals. I know they mentioned higher sales in the stores they are open, but still, that’s a lot to pay for some green shoots in a scorched yard, imo.

Yes, thanks for taking the time to explain the Repo issue (again). This does make sense. It seems sort of surprising that Dimon doesn’t exactly know the red line in terms of reserves. One would think that the rule for clearing payments and the reserves are crystal clear, if that is the most important function of the Fed. Perhaps the Fed bureaucracy likes to keep things a bit muddies to keep everyone on their toes and make sure the Branka never cut ti too close. Seems to have backfired in that incidence. FWIW, we see the correlation of private sector saving and public deficit in this quarter when We saw the headline that the Private savings Rate went to 33%. I guess that happens when you throw of bundles of helicopter money to masses with many of them having no opportunity to spent it. And of course we have the public deficit to match the private savings.

^ Interesting. The repo issue also caused a mini hiccup in the equity markets in Sept 2019 that quickly reversed after the Fed stepped in. It seems like following what the Fed does is key to market movements rather than look at fundamentals (valuations ) or even macro economic indicators. The stock market performance during this crisis has shown this more than anything else. The problem seems to be that we need more and more of these sugar rushes to prevent meltdowns. Seems like treating a toddler prone to meltdowns with candy and Ice cream each time when a tantrum is due. I am not an economist, but I know that at least with kids, this method doesn’t really work in the long run and I think many have tried.

It’s cool to watch, but I watched Apollo launches as a small kid in front of a black and white TV. I really thought that at this point almost 50 years later, we would be cruising with ion drive powered space ships around Jupiter. Some where along the way, we dropped the ball on space exploration.

That’s going to show China. Soon they will be running the outfit. The US saves $550M or roughly $1.3 per head. Nature abhors a vacuum. That's what we learned the last time we tried isolationism. It doesn't seem to be going very well this time either. Isolation doesn’t real work with pandemics. It is one thing where an ounce of prevention saves you a pound of cure quite literally. The WHO and China needs to be held accountable and China’s influence on this organization needs to be diminished, such that we can minimize the risk of a repeat. The WHO has done great work and helped contain Ebola and SARS and perhaps other diseases. Saving $550M while we are spending 5 Trillion right now to help cope with the existing situation makes no sense if you think about risk rewards ratios.

That’s going to show China. Soon they will be running the outfit. The US saves $550M or roughly $1.3 per head.

Defense spending as a % of GDP has slowly been going down over time, however it also has become more high tech. So less boots on the ground (salaries to pay) and more expensive toys. The last few years have been great for defense Companies. I expect that Russia and China which both are modernizing their military are keeping us on our toes. You can’t really keep a reserve currency without projecting power, imo. It’s a necessity for us to remain the strongest and most capable military power.

Sure I like to live within an hour drive of a city (I'm about an hour drive from Boston), but do you go to the theater or the hospital everyday? Cities are nice places to visit, but I wouldn't want to live (or work) there. MF had a pretty good podcast about 18 hour cities and suburbs as an investment thesis for real estate. This was pre COVID. Makes a lot of sense to me, you live in an area where you get most stuff and drive to a city when you want to do something special. This makes even more sense if you can get equivalent pay without a commute or paying an arm and a leg for a shoebox Appartement. But then there are folks who just can’t live without the hustle of a large city. So each it’s own.

I bow to your knowledge. I love Asterix - has been a long time but my in a couple of years my son will be the right age and I can't wait to revisit. What an underutilized franchise Asterix is. It’s very hard to get the spirit of the comic books right in films and none of the films I have seen quite gets it. Imagine to create a theme park more geared towards adults. There is one in France, but it’s just another one of the rollercoaster parks. You could do a real thing going back in time and drink the “Zaubertrank” and beat each other up in mock fights etc. Endless possibilities. The comic books are a great way to teach some Latin. For many, the phrases in the book there are all that stuck.

Probably shouldn’t trust a source that doesn’t know what “data” means. 0.4% is lower than the estimates I have seen (~0.75%), but it still would mean 800k death if we go all the way to herd immunity and get 200M Americans infected Ted. This would mean that we are about 1/8 through with this epidemic. Just saying. The numbers from Quebec vs. other Canadian provinces looks interesting, due to the huge difference in outcome compared to other provinces. It’s clear that relatively small differences in starting points lead to vastly different results in outcome. Perhaps not so surprising, considering the math behind epidemics and the nature of logistics function.

We talk about thr VOVID-19 in the US a lot, but what is going on in Canada? It seems they the quebecois have a high affinity to the virus or is this a NE thing? https://www.statista.com/statistics/1107066/covid19-confirmed-cases-by-province-territory-canada/

Why have cities always been desired? When travel and communication was more difficult and time consuming cities brought people and ideas together in one spot. Population density was a necessity for ideas to spread and serendipitous meetings to take place. Also it allowed an economy of scale for businesses. All of that still happens in cities, but, I don't know if that is still entirely necessary. People now meet and talk online just as easily as off, and with modern shipping the whole country is your marketplace. Very well said. Still impossible to replicate human interaction, but virtual is good enough for much of day-to-day life, and when compared against cost and livability of cities, will be very interesting to see future trends. Cities may become virtual cities. We know have online community where members can have strong bonds . That wasn’t possible historically.

Correlation does not mean causation. I do agree they in the long run, lower interest rates than the current low level is probably going to hurt growth more than it helps. The point about increasing future liabilities (retirement, pension ) is true as well leading to more saving. The deflationary aspect comes from companies offering services at it below cost. They can do this as long as market forces supply them with almost unlimited funding. Uber/Lyft Are examples of this, but also Amazon in a way.

Put option on the market (SP500) or short the market (SPY) is how it would do it if I worry about market risking stock specific risk. It is not a Perfect Hedge, but should work OK in a market meltdown scenario and is liquid. Since put options are still pricy ( high VIX) I would just short the market right now most likely.

What? Finance and law are probably some that for practical reasons are very hard to do remotely. For those that think it's easy, let me paint this scenario for you. Meet John. John is bight law associate working for Skadden Arps. John works from home under Skadden's new "Fuck the landlord" policy. John jumps on a zoom meeting for a live deal he's working on. 10 ft away in their 600 sqft NYC apartment is his roommate Andrew. Andrew is an ambitious 2nd year M&A associate at Morgan Stanley. He's working from home under MS's new "why should we pay rent policy". John and Andrew don't want to move to Toledo where they can each afford their own place cause in Toledo the chicks are fat and in NYC the chicks are keeping it tight. With a NYC salary in Toledo, John and Andrew each buy a new house and have their pick of the top 5% of chicks there. They don’t care that 80% of the chicks in Toledo are fat. Anyways, jokes aside, I think any shift might be more driven by the companies than the employees. If the companies get the idea they only need some trophy RE to show off and scuttle 60% of their footprint after their digitized and virtualized their company, they might go head and just do that. While they are st it, why not benefit from a much larger labor pool, much of it in low cost areas and get people to work for less, adjusting for the lower cost of living. And once there, why not hire employees from another country for much cheaper doing the same thing. All this could’ve done before, but once most business process are virtual, and location truly doesn’t matter, it’s a logical next step. Seems pretty bearish for white collar salaries to me. Some enterprising remote workers pay it back by having two remote jobs at once and their bosses never find out.

Here is another interesting paper. It’s basically showing evidence that COVID-19 progresses from an respiratory to a cardio disease in its severe case. this manifests itself in blood vessel inflammation and clogging up small blood vessels causing oxygen deprivation. Ventilators don’t help much in this case any more this is a cardiovascular diseases at this point sind I know docs are treating this differently now (blood Thinners like Heparin etc.). Hopefully this will lead to better outcomes. https://www.nejm.org/doi/full/10.1056/NEJMoa2015432 Now back to bashing Trump.

It can’t replicate by itself, it needs a host to replicate. On a different matter, outbreak in Church in Germany - 107 cases all at once! Ouch. All churches in the area have been closed again. https://www.spiegel.de/panorama/coronavirus-in-frankfurt-am-main-mehr-als-hundert-glaeubige-in-kirche-infiziert-a-a94cf16c-f765-4549-b49f-704f33568b00 (There is an escalation Rule in place that allows only 50 cases within 7 days /100k population that if exceeded lights to a re-tightening of distancing rules in the affected county area. This rule was triggered here in even more than one county) In another article it was mentioned that one of the main reason why mean processing plant workers are so susceptible to COVID-19 is because they are operating in relative crowded conditions, but also because the air temperature is typically low (4-7 Deg C) making the folks that stand there a long time more susceptible to respiratory infections. Dalal mentioned this - it applies to common cold, but COVID-19 likely as well. This might be one reason why southern states do relatively better but it also might mean a second wave isomorphic likely in fall/ early winter just like the Flu.

It can’t replicate by itself, it needs a host to replicate. On a different matter, outbreak in Church in Germany - 107 cases all at once! Ouch. All churches in the area have been closed again. https://www.spiegel.de/panorama/coronavirus-in-frankfurt-am-main-mehr-als-hundert-glaeubige-in-kirche-infiziert-a-a94cf16c-f765-4549-b49f-704f33568b00 (There is an escalation Rule in place that allows only 50 cases within 7 days /100k population that if exceeded lights to a re-tightening of distancing rules in the affected county area. This rule was triggered here in even more than one county)