Coronavirus

[minten]

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

 

not just severity is a question, but also the length. i mean, china will have taken a large hit, but considering they seem to be coming back on track (and assuming the virus won't just hit them again) the effects seem rather limited.  obviously, if things take longer to play out over here, the damage gets increasingly worse.  anyway, might be contradictory, but i really believe locking things down now (as appears to be happening) will save a lot of damage to the economy in the long run.

[Dalal.Holdings]

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

 

not just severity is a question, but also the length. i mean, china will have taken a large hit, but considering they seem to be coming back on track (and assuming the virus won't just hit them again) the effects seem rather limited.  obviously, if things take longer to play out over here, the damage gets increasingly worse.  anyway, might be contradictory, but i really believe locking things down now (as appears to be happening) will save a lot of damage to the economy in the long run.

 

This is where the economic costs of precautionary principle come into effect. China/S Korea/Singapore etc took some upfront costs to mitigate spread early in the disease course. As a result, they are seeing the light at the end of the tunnel. The countries unwilling to bear that initial cost may see protracted crises that will prove much much more expensive over the whole crisis than if they took that initial ounce of prevention.

 

It's like wearing a seatbelt--the initial cost low, the cost of injuries sustained without wearing one much greater and can lead to a lifetime of pain/suffering/debilitation.

[Castanza]

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

 

not just severity is a question, but also the length. i mean, china will have taken a large hit, but considering they seem to be coming back on track (and assuming the virus won't just hit them again) the effects seem rather limited.  obviously, if things take longer to play out over here, the damage gets increasingly worse.  anyway, might be contradictory, but i really believe locking things down now (as appears to be happening) will save a lot of damage to the economy in the long run.

 

This is where the economic costs of precautionary principle come into effect. China/S Korea/Singapore etc took some upfront costs to mitigate spread early in the disease course. As a result, they are seeing the light at the end of the tunnel. The countries unwilling to bear that initial cost may see protracted crises that will prove much much more expensive over the whole crisis than if they took that initial ounce of prevention.

 

It's like wearing a seatbelt--the initial cost low, the cost of injuries sustained without wearing one much greater and can lead to a lifetime of pain/suffering/debilitation.

 

Wearing a seatbelt is not just about yourself. It keeps you from flying around the vehicle and killing everyone else.

 

So if you want to apply this to current conditions, you have a few countries wearing seatbelts and the rest of the world without them. Unfortunately it doesn’t matter because it’s a global economy. Is Singapore somehow going to weather this global economic shit storm when the US, UK, and other major powers are running on E?

 

If Australia managed to keep every case of covid19 out of their country they are still going to be taken to the woodshed economically because they are almost entirely reliant upon China.

[John Hjorth]

In this topic, now seatbelts. Why not? What's next?

[minten]

China/S Korea/Singapore etc took some upfront costs to mitigate spread early in the disease course. As a result, they are seeing the light at the end of the tunnel. The countries unwilling to bear that initial cost may see protracted crises that will prove much much more expensive over the whole crisis than if they took that initial ounce of prevention.

 

It's like wearing a seatbelt--the initial cost low, the cost of injuries sustained without wearing one much greater and can lead to a lifetime of pain/suffering/debilitation.

 

I might argue the rest of the world is in a similar early stage and is now also taking those costs. In almost every country the fear of this virus is based on how big it might get, not how big it is now. The TOTAL number of corona deaths in the whole world including china is about the number of deaths in an average flu season in my country (a middle sized European country). You read horrific anecdotes on twitter etc, but going by the cold numbers it's still really, really small. Hospitals are getting overwhelmed here and there, as they also tend to get overwhelmed in bad flu years (but without the media coverage and the heartwrenching flu anectdotes, as they don't get a zillion likes so never end up in your timeline).

 

This isn't the flu because it has a potential to grow much bigger in a population with less resistance to it, not because it's bigger than the flu * right now *. Yet, almost every country is taking serious action now. With a virus that (like the flu) really isn't that contagious in the first place, I'm actually kind of hopeful the numbers will start to drop in 10-12 days when measures start having effect and it turns out we can all copy the China-model (if their numbers are actually accurate of course). But maybe I'm just being overly optimistic.

 

[Liberty]

[Dalal.Holdings]

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

 

not just severity is a question, but also the length. i mean, china will have taken a large hit, but considering they seem to be coming back on track (and assuming the virus won't just hit them again) the effects seem rather limited.  obviously, if things take longer to play out over here, the damage gets increasingly worse.  anyway, might be contradictory, but i really believe locking things down now (as appears to be happening) will save a lot of damage to the economy in the long run.

 

This is where the economic costs of precautionary principle come into effect. China/S Korea/Singapore etc took some upfront costs to mitigate spread early in the disease course. As a result, they are seeing the light at the end of the tunnel. The countries unwilling to bear that initial cost may see protracted crises that will prove much much more expensive over the whole crisis than if they took that initial ounce of prevention.

 

It's like wearing a seatbelt--the initial cost low, the cost of injuries sustained without wearing one much greater and can lead to a lifetime of pain/suffering/debilitation.

 

Wearing a seatbelt is not just about yourself. It keeps you from flying around the vehicle and killing everyone else.

 

So if you want to apply this to current conditions, you have a few countries wearing seatbelts and the rest of the world without them. Unfortunately it doesn’t matter because it’s a global economy. Is Singapore somehow going to weather this global economic shit storm when the US, UK, and other major powers are running on E?

 

If Australia managed to keep every case of covid19 out of their country they are still going to be taken to the woodshed economically because they are almost entirely reliant upon China.

 

This is new information. I always thought in most crashes people hit the dashboard and a seatbelt stops this, not that they are human projectiles ready to hit other humans in the vehicle. Please show me studies on this thanks. ...Also, most cars are occupied by 1-2 individuals on avg. There goes the human projectile theory.

 

At least people will be walking around eating out, doing retail shopping, traveling around within the country for work/personal/tourism reasons in S Korea/Taiwan/Singapore. In places where disease spread continues, this will not be happening.

 

Australia is reliant on China. China is seeing the end of this crisis, so there goes your point about that.

 

 

[Dalal.Holdings]

Who you test matters. In S Korea, they are testing anyone and everyone. In Italy, it's just symptomatic/"high risk" people (see also U.S.).

 

This image shows there are a whole lot of people younger out there tested in S Korea who are likely asymptomatic/mild symptoms (hence not tested in Italy). These young people are likely unknowingly spreading disease to older/more vulnerable folks in Italy because they are never offered a test. In S Korea, they are actually aware they have COVID and therefore more likely to be careful (self quarantine, avoid parents/grandparents) and less likely to spread to others/more vulnerable people (less probability of further spread). This is one major benefit of widespread testing.

 

[Liberty]

Thread:

 

Another:

[Castanza]

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

 

not just severity is a question, but also the length. i mean, china will have taken a large hit, but considering they seem to be coming back on track (and assuming the virus won't just hit them again) the effects seem rather limited.  obviously, if things take longer to play out over here, the damage gets increasingly worse.  anyway, might be contradictory, but i really believe locking things down now (as appears to be happening) will save a lot of damage to the economy in the long run.

 

This is where the economic costs of precautionary principle come into effect. China/S Korea/Singapore etc took some upfront costs to mitigate spread early in the disease course. As a result, they are seeing the light at the end of the tunnel. The countries unwilling to bear that initial cost may see protracted crises that will prove much much more expensive over the whole crisis than if they took that initial ounce of prevention.

 

It's like wearing a seatbelt--the initial cost low, the cost of injuries sustained without wearing one much greater and can lead to a lifetime of pain/suffering/debilitation.

 

Wearing a seatbelt is not just about yourself. It keeps you from flying around the vehicle and killing everyone else.

 

So if you want to apply this to current conditions, you have a few countries wearing seatbelts and the rest of the world without them. Unfortunately it doesn’t matter because it’s a global economy. Is Singapore somehow going to weather this global economic shit storm when the US, UK, and other major powers are running on E?

 

If Australia managed to keep every case of covid19 out of their country they are still going to be taken to the woodshed economically because they are almost entirely reliant upon China.

 

This is new information. I always thought in most crashes people hit the dashboard and a seatbelt stops this, not that they are human projectiles ready to hit other humans in the vehicle. Please show me studies on this thanks. ...Also, most cars are occupied by 1-2 individuals on avg. There goes the human projectile theory.

 

At least people will be walking around eating out, doing retail shopping, traveling around within the country for work/personal/tourism reasons in S Korea/Taiwan/Singapore. In places where disease spread continues, this will not be happening.

 

Australia is reliant on China. China is seeing the end of this crisis, so there goes your point about that.

 

Don’t be mad because I poked a hole in your metaphor lol if you don’t believe me go get yourself a cinder block, put it in your back seat, and then slam your brakes. Where do you think that cinderblock will end up? Anywayssss

 

My point was....in this global economy, you’re only as protected from the fallout as much as the next guy. A better metaphors would be a row of townhomes. If I have a sprinkler system and my neighbor doesn’t it isn’t going to help me if they have a house fire. Chances are I’m going to sustain massive fire damage as well. It could buy you a little time, sure. But the fire will run its course and you’ll probably be left with a total loss either way.

 

On China:

 

We don’t trust China in the beginning saying they weren’t being honest with numbers. But now because those numbers are “good” they are to be trusted?  ::)

 

My final opinion on this is that covid19 will run its course. I’m not confident that any type of containment is going to slow it enough to buy time for a treatment. Spain, France, Germany, UK, US, etc. The UK is right about herd immunity. The countries that locked down will probably just see new clusters form once they open back up. Unless somehow there is a treatment in place. But so far that estimate is months past the estimated peak of spread.

 

[Viking]

Who you test matters. In S Korea, they are testing anyone and everyone. In Italy, it's just symptomatic/"high risk" people (see also U.S.).

 

This image shows there are a whole lot of people younger out there tested in S Korea who are likely asymptomatic/mild symptoms (hence not tested in Italy). These young people are likely unknowingly spreading disease to older/more vulnerable folks in Italy because they are never offered a test. In S Korea, they are actually aware they have COVID and therefore more likely to be careful (self quarantine, avoid parents/grandparents) and less likely to spread to others/more vulnerable people (less probability of further spread). This is one major benefit of widespread testing.

 

The risk for the US is if more clusters are allowed to happen. Washington State will be the real time example of what do likely want to avoid at all costs.

 

Testing is the only way to find the clusters (after which you can take aggressive measures to slow the spread). South Korea looks like it is playing a game of whack a mole (find the cluster) and it look to be working for now.

 

The US looks like it is taking the UK approach of letting it infect the herd (with minimal testing)... we do not have any models where this has been successful. It might be. Or not. Much to learn in the next week.

[Liberty]

They put Jared in charge? Has corruption and nepotism no limit?

 

https://www.washingtonpost.com/politics/infighting-missteps-and-a-son-in-law-hungry-for-action-inside-the-trump-administrations-troubled-coronavirus-response/2020/03/14/530c28b4-6559-11ea-b3fc-7841686c5c57_story.html

[Viking]

Castanza, i think you are going to have two goups coming out of this crisis: the have and the have nots.

 

The ‘have’ countries that manage the crisis well will rebound quicker.

The ‘have not’ countries will stagnate.

 

Perhaps like after the great financial crisis. It did not hit all countries the same (it barely impacted Canada).

[Castanza]

Castanza, i think you are going to have two goups coming out of this crisis: the have and the have nots.

 

The ‘have’ countries that manage the crisis well will rebound quicker.

The ‘have not’ countries will stagnate.

 

Perhaps like after the great financial crisis. It did not hit all countries the same (it barely impacted Canada).

 

Is this really comparable to 08? Seems more like a supply chain shock than anything. And I’m genuinely asking.

[no_free_lunch]

Viking, Canada did do okay in the GFC but the stock market has gone nowhere. The US did horrible but they have actually provided a return to investors.

 

Despite all these leftist arguments, I don't see many stock recommendations outside of the US.  Maybe BAM, maybe.  There is a huge disconnect where all I hear is trump caused the virus, the US can't handle it, socialism will win in the end.  On and on, all garbage. In the end the US is where you are putting your money and when the left manages to crack that country too, it is all over.

 

I am not worried about coronavirus, we will work through that. I am most worried about the left.

 

If you think I'm full of it, go look at the performance of Europe or Canada since pre GFC.  These countries have all the answers and yet their economies are a complete mess.  If socialism is the answer, then show me some evidence of where its paid off.

[elliott]

I might argue the rest of the world is in a similar early stage and is now also taking those costs. In almost every country the fear of this virus is based on how big it might get, not how big it is now. The TOTAL number of corona deaths in the whole world including china is about the number of deaths in an average flu season in my country (a middle sized European country). You read horrific anecdotes on twitter etc, but going by the cold numbers it's still really, really small. Hospitals are getting overwhelmed here and there, as they also tend to get overwhelmed in bad flu years (but without the media coverage and the heartwrenching flu anectdotes, as they don't get a zillion likes so never end up in your timeline).

 

I agree with you that the "cold numbers" might not reflect the apocalypse reported in social media. I am also in a European country right now, however, and  I dont know about the "cold numbers" but I can tell you I have been to a couple of hospitals and the image is ugly. Very ugly. Not to mention that a lot of people who had health issues they needed dealt with are asked to remain at home, and manage however they can. And the health system is not the only one not working properly. Police/security is deficient too. I have been in the need to report some trouble to the police (I apologize for not being more specific), and I didnt even manage to get to file a report at the police station because there were so many people, and due to the risk of infection only one person at a time (one and only one) could enter the police stattion. Even if I had been able to file the report, I am not sure they would be able to do anything to help me.

This may be anecdotal, as you say, and for those healthy, or withou any troubles, virtually invisible, but for the rest...

 

ps I am going to have a look at the jokes thread. I need my mind to forget about it all even if for a short time.

[Guest Schwab711]

Castanza, i think you are going to have two goups coming out of this crisis: the have and the have nots.

 

The ‘have’ countries that manage the crisis well will rebound quicker.

The ‘have not’ countries will stagnate.

 

Perhaps like after the great financial crisis. It did not hit all countries the same (it barely impacted Canada).

 

Is this really comparable to 08? Seems more like a supply chain shock than anything. And I’m genuinely asking.

 

The world is going to shut down over the next 6-8 weeks. This is a temporary fix until people understand the seriousness. Then we get a few summer months to prepare for what will be a very bad winter. Then we may need to do similar things all over again. The vaccine won't be available until this is all over.

 

Doctors are saying this is more like hypoxia then the normal flu. The death rate is 20x - 200x worse. Why are people still playing devil's advocate with everything with absolutely no data to support it? What will it take for you to believe this is a big deal?

 

 

For a bunch of finance folks, how are folks not understanding the compounding here.

 

It's harder to compound large amounts of money as opposed to small amounts.

 

It is easier to compound COVID-19 with a large amount infected as opposed to a small amount. The compounding rate of infected is expected to be 12% per day (currently running 26%-41% per day based on reported cases). The nature of the disease (infected have no symptoms in first few days but are still contagious. Become more contagious as first symptoms show) is almost certain to overwhelm the healthcare industry. The only chance is to slow the disease so we get a few summer months to prepare for what will be a very bad winter as well.

 

 

Many young folks are ending up in the ICU. This can become an unnecessarily deadly disease if we do nothing. The amount of money it would take to support a fairly broad containment is trivial relative to the number of lives you can save.

 

 

 

I'm not saying panic but it would be nice if folks took this seriously. This isn't about politics. I've seen almost nothing criticizing Trump lately despite how frustrating his lack of response has been. If anything, people have cheered the limited responses he has provided because they are desperate for any response.

[Viking]

Castanza, i think you are going to have two goups coming out of this crisis: the have and the have nots.

 

The ‘have’ countries that manage the crisis well will rebound quicker.

The ‘have not’ countries will stagnate.

 

Perhaps like after the great financial crisis. It did not hit all countries the same (it barely impacted Canada).

 

Is this really comparable to 08? Seems more like a supply chain shock than anything. And I’m genuinely asking.

 

When the virus hit China it was largely a supply chain shock in China with a 1-3 month lag (factories closing in China take time to impact North America). And there was also a simultaneous demand shock.

 

This is now rolling though the world. Europe is not making or buying anything. It is coming to North America in a week or so.

 

The ‘event’ by itself is severe, but perhaps manageable. The key moving forward will be the second order effects. And we still do not have much visibility on when and how fast things get better. And what better even looks like.

 

What happens to all the small businesses that go bankrupt? What happens to the hospitality industry? Airlines, cruise ship, hotels, restaurants, event planning etc? We are a service economy.

 

We also have an unprecedented simultaneous demand and supply shock in the oil industry. There is going to be carnage here as long as the Saudi’s keep producing. Oil/energy was a very big part of economic growth in the US.

 

What happens to all the companies that have way too much debt and their cash flow turns negative and they can’t refinance their debt? Lots of smart people have been saying for years the shadow banking system might blow up... and this was before the current crisis came along.

 

I am very confident we will not see a repeat of 2008. I am becoming more confident a recession is coming and if some of the second order effects kick in it could be worse.

 

 

[Viking]

Viking, Canada did do okay in the GFC but the stock market has gone nowhere. The US did horrible but they have actually provided a return to investors.

 

Despite all these leftist arguments, I don't see many stock recommendations outside of the US.  Maybe BAM, maybe.  There is a huge disconnect where all I hear is trump caused the virus, the US can't handle it, socialism will win in the end.  On and on, all garbage. In the end the US is where you are putting your money and when the left manages to crack that country too, it is all over.

 

I am not worried about coronavirus, we will work through that. I am most worried about the left.

 

If you think I'm full of it, go look at the performance of Europe or Canada since pre GFC.  These countries have all the answers and yet their economies are a complete mess.  If socialism is the answer, then show me some evidence of where its paid off.

 

I agree with you:

- Socialism is bad

- US stock are much better than Canadian stocks (who wants to own an oil stock right now?)

- Trump did not cause the virus

[Guest Schwab711]

Viking, Canada did do okay in the GFC but the stock market has gone nowhere. The US did horrible but they have actually provided a return to investors.

 

Despite all these leftist arguments, I don't see many stock recommendations outside of the US.  Maybe BAM, maybe.  There is a huge disconnect where all I hear is trump caused the virus, the US can't handle it, socialism will win in the end.  On and on, all garbage. In the end the US is where you are putting your money and when the left manages to crack that country too, it is all over.

 

I am not worried about coronavirus, we will work through that. I am most worried about the left.

 

If you think I'm full of it, go look at the performance of Europe or Canada since pre GFC.  These countries have all the answers and yet their economies are a complete mess.  If socialism is the answer, then show me some evidence of where its paid off.

 

 

Respectfully, shut up about socialism and Trump. No one is talking about it. Turn off cable TV and read the news for yourself. You don't seem to get the importance of working together right now.

[minten]

The death rate is 20x - 200x worse. Why are people still playing devil's advocate with everything with absolutely no data to support it?

 

The flu death rate is pretty well documented as somewhere around 0.1%.  20x seems like it could be correct, but potentially up to 200x worse than that??  I could counter your "Where's your data to support that", because that's way over the highest estimate made by anyone ever.

 

What will it take for you to believe this is a big deal?

 

1. Flu is also a big deal, which just isn't properly covered by the media. So, when you read xxx people have died in a country from the corona virus, you think: that's a lot and start to panic; when xxx people die because of the flu, you will never know.

2. Corona virus is an ever bigger deal than the flu, because it can potentially in the future become much bigger as nobody got immunity (yet). When flu season hits, we do nothing except vaccinate some elder people with a vaccine that doesn't really work that well to begin with. This hits, and we shut down entire countries. I'd say that response from countries we are seeing over the last three days is proportional to this being a big deal.

 

This can become an unnecessarily deadly disease if we do nothing.

 

I agree.  Fortunately, Europe has been taking action these last few days, lots of it in fact. I was under the impression the US wasn't far behind, but perhaps I'm mistaken.

 

[Dalal.Holdings]

My final opinion on this is that covid19 will run its course. I’m not confident that any type of containment is going to slow it enough to buy time for a treatment. Spain, France, Germany, UK, US, etc. The UK is right about herd immunity. The countries that locked down will probably just see new clusters form once they open back up. Unless somehow there is a treatment in place. But so far that estimate is months past the estimated peak of spread.

 

No, the UK is very wrong about it (questioned by WHO and medical experts/epidemiologists). Furthermore, the NHS is unlikely to handle the strain from achieving herd immunity and the inevitable large number of patients who will require ICU beds/vents, but clearly you continue to ignore the very real notion of healthcare system strain from sudden surge of cases and the situation in Italy. Delaying cases out to the future confers many advantages, not just merely waiting for eventual treatment.

 

Your guess about "probably just see new clusters" is just a guess. Like saying "if I get in a major crash I am screwed anyway so I do not need a seatbelt". Furthermore, even if there are clusters later, the risk of healthcare strain much lower as the old patients would be out of the hospital by that point and now immune.

[John Hjorth]

Dalal.Holdings,

 

By all means, please keep your posts coming here on CoBF.

[Dalal.Holdings]

Dalal.Holdings,

 

By all means, please keep your posts coming here on CoBF.

 

Will do. Can't believe we have people still saying there is no advantage to acting early when we see countries coming out of this who acted early. And then going on guessing that there will be future outbreaks again and mutations/etc so why bother doing anything (absurd). There was also earlier the "they're old people who were going to die anyway" shocking mentality.

 

The "we're all screwed anyway" mentality makes absolutely no sense (and some of these people were initially saying "no big deal, just the flu".

 

And calling this a supply shock when it is clearly a demand shock...

 

Absurd. Almost as absurd as comparing a passenger in your backseat to a cinder block and saying human bodies become projectiles in car crashes and that's why we have seat belts, but oh well--the absurdities keep coming.

[Guest Schwab711]

The death rate is 20x - 200x worse. Why are people still playing devil's advocate with everything with absolutely no data to support it?

 

The flu death rate is pretty well documented as somewhere around 0.1%.  20x seems like it could be correct, but potentially up to 200x worse than that??  I could counter your "Where's your data to support that", because that's way over the highest estimate made by anyone ever.

 

What will it take for you to believe this is a big deal?

 

1. Flu is also a big deal, which just isn't properly covered by the media. So, when you read xxx people have died in a country from the corona virus, you think: that's a lot and start to panic; when xxx people die because of the flu, you will never know.

2. Corona virus is an ever bigger deal than the flu, because it can potentially in the future become much bigger as nobody got immunity (yet). When flu season hits, we do nothing except vaccinate some elder people with a vaccine that doesn't really work that well to begin with. This hits, and we shut down entire countries. I'd say that response from countries we are seeing over the last three days is proportional to this being a big deal.

 

This can become an unnecessarily deadly disease if we do nothing.

 

I agree.  Fortunately, Europe has been taking action these last few days, lots of it in fact. I was under the impression the US wasn't far behind, but perhaps I'm mistaken.

 

On 3/6/20 WHO CV situation report stated that the common flu has a death rate well below 0.1%.

 

Here they show the CFR of ~0.055% for 65+ year olds in the Americas:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6815659/

 

Here are the numbers for China:

https://twitter.com/YoloCapMgmt/status/1238954857949585408

 

The 200x comes from Italy. The 20x - 200x is a summary of jumps across the age spectrum, with comparisons of common cold studies and WHO data for COVID-19. It's not exact. I'm just making a point it's very bad.

 

Below 65 folks have ~0.002% CFR from common cold. Again, roughly 100x jump. Don't be a fool right now.