Viking

For those who think I have been taking Coronavirus thing too seriously... First, I should say that I do not entirely believe that this video is real (even as a drill). The rational part of my brain is telling me that it is a fake (why would you do a drill like this?). It looks like a Monty Python skit. You can make up your own mind. If it is real I am starting to understand the effort China is making to control the outbreak. And scroll down and read a few of the comments... 'gallows humour' at its best. -

You are expecting Fairfax to suddenly play fair? Don't hold your breath. I'm not a big fan of the short-and-distort crowd that made the short attack on FFH in '03 and '04, but they were actually right about one thing. When FFH holdco was cashflow challenged, Prem engineered an ingenious move whereby FFH bought a slug of ORH shares from an institutional holder by issuing convertible notes to that holder that convertible back into the ORH shares. Effectively, Prem "borrowed" the ORH shares from the institutional holder to enable FFH's holding to pop above 80%. At that point ORH was consolidated into FFH's financial statements for income tax purposes. This allowed FFH to use hundreds of millions of dollars of tax loss carry-forwards from TIG and C&F that would otherwise fall off the table. ORH made the tax payments to FFH, and then FFH offset them against the loss-carryforwards, which gave the holdco an enormous shot of cash. Was it legal? The IRS said it was legal. Was it ethical to pretend that you owned 80% of ORH when the reality was that the shares were borrowed? Well, I'll leave that one for you to decide. The moral of all of these stories is that Prem is very clever and very self-interested. SJ Stubble, thanks for the trip down memory lane... great summary of many things i had long forgotten (although i do still remember the day the ORH deal was announced... it was my biggest one day gain ever :-)

This will be fascinating to watch. It's relatively easy for a despotic country like China to impose travel limitations and quarantines. Italy seems to be on the cusp of announcing a large scale quarantine. But what about the culture? Is it even possible to control 10 or 15 million Italians? Heavens, go to an airport, subway or any other place where order is required and watch the behaviour of southern Europeans. While Canadians and Americans will politely queue up in an airport or virtually anywhere else, southern Europe is a different world! They seem to hold the view that rules are made to be broken! Even in Canada or the US, I am unconvinced that a large scale quarantine could even be enforced. At least in Canada there's the advantage of distance and limited transportation routes between some communities. But, I could quite well imagine people telling the government F-U, and just driving around any road blocks (it's hard to seal off every road). I guess time will tell how well this will work in a modern liberal democracy.... SJ My wife is Italian heritage; parents are from northern Italy. She Has been in touch with family there and has been told it is an ‘overreaction’ on the part of the government (this was a couple of days ago). :-)

What can we learn from other parts of the world where a serious outbreak hit (like what we are seeing in Washington State)? Wuhan, China is one example. Another, example is northern Italy. Please note, their outbreak is 2 weeks old. Here is a question. If the US had to resort to the measures below would it affect the current valuation of the stock market? Perhaps the virus that is in the US is different. Or perhaps the US will manage the outbreak better than other regions of the world and not have to resort to such drastic measures. Or perhaps not. So far i think we can all agree what is going on in Washington State is not what one would call best practice (testing is usually a core part of what would be considered a good response). Please note, i am not trying to be critical of the health care providers etc. They are in a gun fight and they have been handed a plastic knife by leadership. Here is an update from Italy: Italy is considering drastic new steps to lock down northern area at center of outbreak - https://www.washingtonpost.com/world/2020/03/07/coronavirus-live-updates/#link-B6OGGHNBUNDVPGZ3TACWB7AXW4 ROME — The draft of a new government decree, reviewed by several Italian media outlets, suggests Italy is on the verge of dramatically expanding its no-entry zone to include a broad northern area that includes all of the Lombardy region. The changes, which could be adopted as early as Saturday night, according to the newspapers, would mark the most serious step taken anywhere outside of China to contain the coronavirus outbreak. The measures would at least temporarily transform the nation, locking off much of the northern part of the country, with people allowed to exit or enter Lombardy and 11 northern provinces only for emergency reasons, according to the decree. Such changes would cut off the daily high-speed rail connections between Milan and Rome; bring an absolute halt to tourism in Venice; and essentially bring Italy’s economic heartland to a standstill. In the two weeks since the coronavirus crisis erupted in Italy, 11 small towns have been so far put under lockdown — restrictions that have stopped the movement of 50,000 people. If the government approves the new decree, those restrictions would apply to roughly 15 million people. Italy’s government has been racing to combat the crisis as it has accelerated in recent days. The number of active cases in the country has soared beyond 5,000, with 1,000 new cases confirmed on Saturday alone. Of those cases, more than 2,700 are in the Lombardy region, which includes Milan. According to the Corriere della Sera newspaper, the restrictions would remain in place until at least April 3. Schools would remain closed during that time, and public events would be halted.

It is very hard to understand this specific virus as it has not been seen before. But because it started in China in late December and spread from there to Asia and Europe we are very somewhat fortunate here in North America because we can see how this virus progresses with a couple of weeks lag. The extra couple of weeks are critical to slow it down. Now that it has hit Kirkland, Washington we have more information. Here is a link to the website of one of the local Seattle TV stations (Komo). The article is from today and if you read through it you will be able to learn about and better understand the complexity of the issues that communities will be facing (especially if it goes undetected). Washington State is about 10 days into its response; things are moving very quickly. - https://komonews.com/news/coronavirus/washington-reports-16-deaths-from-covid-19-as-officials-scramble-to-contain

I agree with everything you have said, except I would like to add that I believe there are many wild cards. Agreed :-) in the current situation it is much easier to identify the possible negative outcomes than the possible positive. This is what makes investing (and life) so difficult to predict.

Politicians will do what they have to do. As the pot gets closer to boiling the unthinkable will likely quickly become what is being done. I am sure no one in the Chinese government was thinking they would lock down Wuhan even a week before the decision was made. Look at what Washington State is already doing and they are at the end of week 1 of actually dealing with this issue.

There is enough information out there on this virus for rational people to understand what is going on and where this outbreak is likely to go. Lots of other countries are a few weeks ahead of North America and each have handled it in very different ways (some very good and some very bad) and are seeing very different results for populations and economies. What are the learnings? A different and interesting way to look at this outbreak is is to look at this thread in week snapshots. Go back 7 days and look at what the posting was. That is not very long ago. Go back 7 more days (14 from today) and look at the discussion. Go back 7 more days (21 from today) and so on. What are the learnings? Now think forward. What will the discussion on this site be like in 7 days? And in 14 days? I have learned managing people over the years very few people can actually do this exercise very well. My view is most people in the population in North America (perhaps not on this site) are still in the Disney phase (lots of people living in Kirkland, Washington would be one exception). And that is because reported cases in the US are still very low. As of today (12:33PM PST March 7), the US is at 401 confirmed cases. No big deal. That is what everyone is focussed on. Classic rear view mirror but on steroids (because we know current cases are way underreported in the US due to lack of testing). The President and his leadership group say the virus is ‘not a problem’ and that the problem is ‘contained’; for the average citizen the virus continues to be a big nothingburger. Reported cases also looks to be how the Federal Government is ratcheting up its response; they can’t move quicker because of Trump (their departments response can’t be off message from the President who deals ruthlessly with trouble makers who are off message). What will case count be in 7 more days? People can’t do the math. And when they read estimates from people who can do the match they discount it or do not believe it (trust of science and media reporting is at an all time low). People want preciseness and because that is not possible With future numbers they default to reported numbers to inform their analysis. And just like the case count the news flow will also start to ramp up and get progressively worse. My view is investors are in the slow boil phase right now. Similar to the general population, they are waiting for the economic impact to get announced on the nightly news or by press releases (from companies) before deciding what to do with their portfolio. They are not rationally looking at the current situation and most importantly projecting forward 1 month, 6 month and 1 year. This requires an open, learning, analytical mind, independent decision making and conviction (ability to act). Not able to calculate a precise future number they wait to be informed by what gets announced by governments and companies today. Please note. I am not suggesting people sell their stocks. Buy and hold is a solid strategy and as Buffett says stocks will likely be up lots in the next 10 and 20 years as US GDP grows. He also says long term investors should be prepared for a 30 or 40 or 50% decline. Again, i am not suggesting we will see even a 20% decline. I have no idea. Everyone simply needs to execute an investment strategy that fits their intellect and emotional make up. Lots of people get the intellectual part right and the emotional part wrong and that is unfortunate. What we do know is in 7 days time we WILL know more. And in about 2 or 3 more weeks the pot will be boiling. Good luck :-) PS: the wild card is if a treatment for the virus is discovered. This obviously would change the game.

I work in healthcare. The only advances that we have come up with in that time that are effective against this are 1) hand washing, 2) contact isolation, 3) mechanical ventilation (but by this point it is already way too late). Also, we severely lack # of ICU beds and resources which will become apparent soon. It is already apparent we lack resources if you look at how testing for this has rolled out. Can someone help me reconcile dalal's (and some others' I've read, including healthcare professionals) view that we haven't really made advances in fighting this stuff and this headline today from Gilead / Seeking alpha. how should one handicap this? Gilead up 3% ahead of expected COVID-19 drug data readout Mar. 6, 2020 1:56 PM ET|About: Gilead Sciences, Inc. (GILD)|By: Douglas W. House, SA News Editor Evercore ISI's Umer Raffat says that preliminary data from a China-based study of Gilead Sciences' (GILD +3.4%) remdesivir for the potential treatment of COVID-19 could be available this month, ahead of the expected release in April. The study began in early February at Wuhan's Jinyintan Hospital, in the epicenter of the outbreak. Health experts believe that the antiviral will show sufficient efficacy to warrant widespread deployment in an effort to corral the outbreak. A little over a month ago, the first confirmed case in the U.S., a man in Seattle, responded well to treatment. All symptoms, except his cough, resolved within a week. Remdesivir (GS-5734), a nucleotide prodrug that blocks a key enzyme needed for viral replication, is also being developed for Ebola virus infection. This, of course, would be a game changer (and stocks will rock if it provides a cure and can be deployed quickly). I have no idea how accurate it is but we can only hope. The potential for this was also briefly mentioned in Liberty’s recent sensationalism post.

Here is some more sensationalism reporting: - The 10 year bond has fallen from 1.88% (Jan 1) to 0.72% (today). - oil is at $41.59 (down 9.4% on the day) - credit spreads are starting to widen Nothing to see here. Move along :-)

I agree. Hard to pull the trigger on airlines right now. An airport (BIAL)? Need more information.

My view, with respect to a virus, is it constitutes all the available resources of a country that can be harnessed to ensure it is managed as well as possible: you do whatever it takes as a nation to avoid the red coloured curve in Liberty’s chart. King County is now buying motels to house the surge of people who need to be quarantined. That motel is now part of the health care system. Creative solutions will be found.

+1; a picture is worth a thousand words. Now we just need to get this picture out to the politicians.

I continue to believe that people are way underestimating the economic impact of this virus. I have no idea scientifically accurate the article below is; my take away is we are starting to get calls for more radical solutions to try and slow the virus. My guess is some will be implemented in the coming week. Listening to the business experts on TV many are quoting flu stats (saying this virus is similar so financial markets are overeacting) and predicting a v-shape recovery. We will see. Travel restrictions merely delayed spread of coronavirus, new study finds https://www.washingtonpost.com/world/2020/03/06/coronavirus-live-updates/#link-AC43S5WUW5E7HEMHNUMXXADAV4 A new study released Friday in the journal Science finds that the travel restrictions China implemented domestically, once the scope of the outbreak of a novel coronavirus in Wuhan became apparent, likely only delayed the spread of the illness by three to five days. In addition, the international travel restrictions, including ones the Trump administration imposed starting in late January and continues to tout as its most effective policies to combat the virus, significantly delayed, but did not prevent, the spread of the virus abroad. The study, which simulated the spread of the disease using travel data and epidemic modeling, found that the combination of an extended, stringent set of travel restrictions with policies to cut transmission of the disease within the United States will be needed to gain control of this outbreak. “Moving forward we expect that travel restrictions to COVID-19 affected areas will have modest effects,” the study states. “And that transmission-reduction interventions will provide the greatest benefit to mitigate the epidemic.” https://science.sciencemag.org/content/early/2020/03/05/science.aba9757

For people who think this virus is just a bad flu read news article below. I am not posting to sensationalize the issue. Or to bash any politician. But to educate. If the virus is not aggressively controlled this same situation could play out again and again. There is a reason China handled the outbreak the way they did. https://komonews.com/news/coronavirus/the-disease-is-running-rampant-families-at-center-of-virus-scare-share-their-despair Thursday March 5: KIRKLAND, Wash. - Confusion, misinformation, apathetic officials, fear, panic, death ... Those are just some of the many hardships faced by families of residents at Life Care Center in Kirkland - the epicenter of the coronavirus outbreak in the Puget Sound - as the disease sickens and kills off greater numbers of their loved ones each day. Meanwhile, the families say they wait for answers that never come, help that never arrives. "We have no options, except to sit and wait for a phone call," said one family member, Kevin Connley, whose father is a Life Care resident. "The response by our government is laughable. ... We want our loved ones moved to a safer place immediately." At a hastily called news Thursday conference, relatives of residents at the facility met with reporters and described overworked Life Care staff who are receiving little or no help from the Centers for Disease Control or local health departments as they deal with an impossible situation.

So much as we will complain about the US handling, what is Canada doing? We refuse to close our borders because we don't want to make knee-jerk reactions? So fine, we test and that should be done, but shouldn't we be stopping traffic from infected areas? Or for those who are so upset about US handling, how do you rationalize what Canada is doing. We will continue to let people in and spread the infection but it's all okay because we are testing once people become sick. So at least we will be able to watch more in real-time as this infection spreads through the country. You make great points. As i have been saying for the past week there is so much we do not know. We will find out in 6 months or a year how well individual countries have handled the outbreak. There will be lots of lessons. Personally, i would like to see Canada do everything it can do to slow the virus down and give the health care system a chance. Do i trust Trudeau? A little; but i find he can be naive and craves popularity too much. We will see.

John, my understanding is the virus started in China late December so it has been with us for about 9 weeks. It quickly spread in 3 weeks forcing China to lock down Wuhan on January 23. I think it is safe to say that all governments around the world at that time knew a serious problem had happened. Serious planning should have started then. WHO information would further inform country plans. My key complaint about the US response is with regards to testing. It has been completely botched. And with a virus that is this contagious (and large numbers of severe cases) if it is not tested for it can very quickly overwhelm your medical system. Now it might be that the spread of this virus cannot be slowed and that every country will soon see a spike in cases. But i think the WHO is saying the opposite; that this virus can be slowed and managed IF governments act quickly and decisively.

To be clear, I whine only about the particular criticism of Trump/Pence. I don't believe governments are capable of responding much better, no matter the leadership. I believe it is poor planning to rely on governments, no matter how enlightened, to protect us. Leadership: https://www.cnn.com/2020/03/02/politics/trump-coronavirus-response-rallies/index.html "These were set up a long time ago," the President said in the Oval Office when asked if it was a good idea to proceed with his planned rally on Monday evening in North Carolina. Here is the key point that people are still missing. If you let a cluster happen this virus will quickly become a disaster. So what you do is test like hell in the early stages and do everything humanly possible to stop a cluster. Then this virus can be managed more like the flu; where your health care system does not become paralyzed. Look at Taiwan (just a random example) and their location, the size of their population and the number of cases they have. It is the governments of each country that are managing this virus and some governments appear to be managing the outbreak exceptionally well and others not so much. A cluster has been allowed to happen in Kirkland Washington. It was allowed to happen because: 1.) testing was set much, much too restrictive in the beginning 2.) limited test kits were available, due to CDC deciding to not use WHO kit. The kit the CDC developed was faulty. Enough testing kits are only now being made available. The US is still not able to test everyone who needs to be tested. Read that last sentence again. This is a highly contagious virus and it takes only a couple of weeks of inactivity (from health care/government) for a cluster to form. Once a cluster forms you are screwed. We are 9 weeks into this crisis and people in the US who need to be tested are not being tested. Some governments have handled this health crisis well and some governments have completely screwed up. In the coming weeks we will be supplied with lots more data to see ‘who has been swimming naked’.

This is the first time i have heard someone from the Trump administration say that the US response is behind the curve. The narrative is starting to shift. My guess is the administration is starting to realize the US is in the first inning of this outbreak and woefully unprepared. Each day the news is going to get worse. Look at other regions where a cluster happened (like Kirkland) like Italy, South Korea and Iran; A relentless flow of bad news. ———————————— Pompeo accuses China of holding back U.S. response (Washington Post) Secretary of State Mike Pompeo accused China on Friday of holding back the U.S. response to the coronavirus outbreak by being “incredibly frustrating” to work with. Pompeo said that China’s reluctance to provide the United States with data, which “will ultimately be the solution to both getting the vaccine and attacking this risk,” is complicating U.S. efforts. “The information that we got at the front end of this thing wasn’t perfect and has led us now to a place where much of the challenge we face today has put us behind the curve,” Pompeo said during a morning interview with CNBC.

Here is an update from earlier today from Washington State which is the hardest hit state. Here is what the Governor had to say during the Q&A part (starting about 26:30 min). Just the facts... - - We need to accept medical reality. This disease, this virus is going to spread across county lines. We’re gonna do everything humanly possible to slow that. All of us have some role in that. But as this virus spreads we have to recognize that is a reality and should not cause us run panicking in the streets. It should cause us to re-double our efforts to slow the transmission of this virus. - Question: “are you ready to order large gatherings to be cancelled” - Answer: Not at this moment. It is within our authority to do so and we will make that decision when we decide that the benefits to the state of reducing that social contact merit the dislocation and economic dislocation and personal freedom of people. We have not made that decision to date. One of the things we’ve learned is that before one makes a legally binding decision like that it is better to depend on voluntary decisions so people buy into this community decision. We are at this stage of this challenge where we’re encouraging people to be internally thinking about the right decision. … But there could come a time where we make a decision that makes that legally blind and that is an authority that is granted to the governors office. … If we make that decision it will be based on a very thorough evaluation of the science and epidemiology. I’ve been involved personally in this review for days now looking at the medical literature from around the world. …We’re really looking at a deep dive into what we think would be most effective in reducing the transmission rates that has the minimum impact of peoples lives. - For those who think that delaying or pausing some of this activity is premature or an undo thing to think about we just need to look at Wuhan and what it eventually meant for their society where they had to come to full stop. - So acting even before we see mass casualties may be the most effective thing to do and we can all be leaders in that regard. So we’re asking people to look ahead a few weeks and not want to be in the position of Wuhan China. - Question: Can China be used as an example and are quarantines an option? (my paraphrase) - The world health organization commission the study of what was done in China and I’ve read the summary of that study. I hope to be talking to the person who actually wrote that summary… so yes we are looking at what effectively worked in China and other places as well. Now why this is a difficult decision, if I just share my burden with you, …the science can’t inform you that if you do “X” you’ll get a “Y” percentage in the rate of transmission. There really isn’t the science that is that acute. What we know is that when you reduce social interactions within 6 feet you reduce the risk in any social interaction of the transition of the disease. That we do know. - So things that reduce those numbers of interactions do reduce the rate of transmission. That we know. But the difficult thing is to decide which part of our society or our economy it makes sense to put on pause. we don’t have algorithm to tell us that. So we had to make the best judgement we can and that’s were doing.

Thanks. We are doing great and not losing any sleep. Just staying informed exercising reasonable caution. +1

A new low from Trump. This is not leadership. So you don’t test (which causes more pain and suffering and more deaths of Americans) and then use the low confirmed cases as proof that you are doing a great job. This is disgusting. But it is totally predictable. His strategy is to go at his biggest failings and flip the script. I am surprised there is any testing going on in the US... Trump credits his own efforts, questions WHO stats President Donald Trump tweeted a pat on the back to his own administration for efforts to combat the coronavirus: "With approximately 100,000 CoronaVirus cases worldwide, and 3,280 deaths, the United States, because of quick action on closing our borders, has, as of now, only 129 cases (40 Americans brought in) and 11 deaths. We are working very hard to keep these numbers as low as possible!" - https://www.usatoday.com/story/news/health/2020/03/05/coronavirus-live-updates-us-death-toll-schools-amtrak/4953471002/

Viking, Please read my "rat lab" analysis of that particular situation about that cruise ship in Japan here. The realized "confirmed cases" [infection] rate ended up at ~ 19 percent, the death rate ended up at ~ 0.16 percent. I think that today, everyone then on board has left the ship. John, thanks for the clarity. I will be more careful/clear when quoting numbers :-) I was talking about infected people (696) so the death rate right now is a little under 1%, with 35 serious and 478 still active. Bottom line, a cruise ship is the last place you want to be when a virus breaks out.

For the people who believe this virus is not a big deal, imagine if you or a loved one was on this cruise ship? We know that a cruise ship is the perfect breeding ground for the virus. The death rate for those who were infected on the cruise ship in Japan was 10% (i think). I am sure the 2,500 people on this cruise ship are going through hell right now. Coronovirus is a global health emergency; the sooner people figure it out the better it will be managed. U.S. official warns there isn’t capacity to quarantine all passengers from marooned cruise ship Ken Cuccinelli, the acting deputy secretary of homeland security, said Thursday that there is inadequate capacity at health-care facilities in the United States to accommodate bringing large numbers of cruise ship passengers ashore for quarantine, leading lawmakers to question whether authorities would again seek to quarantine coronavirus cases on a ship held offshore. The Grand Princess, which carries about 2,500 passengers, is marooned off California after a previous passenger died of coronavirus and workers aboard displayed symptoms. - https://www.washingtonpost.com/world/2020/03/05/coronavirus-live-updates/

+1