Coronavirus

[cubsfan]

Hopefully after this, people realize the importance of having domestic manufacturing capacity so we don’t have the whole world trying to source stuff from China.

 

From May 2019:

 

https://www.foxnews.com/us/america-dependent-china-medicines

 

"Imagine if China turned off that spigot," said Rosemary Gibson, author of "China RX: The Risks of America's Dependence on China for Medicine." "China's aim is to become the global pharmacy to the world -- it says that. It wants to disrupt, to dominate, and displace American and other Western companies."

 

"I have no doubt that they would consider weaponizing their dominance of the pharmaceuticals market if they felt that that would give them an advantage over us strategically," retired Brig. Gen. John Adams

 

"In five to 10 years, when China has a complete chokehold over the United States and its supply of medicine, it's gonna be telling us how much to pay for our medicine," Gibson told Fox News. "We will lose control over how much we pay. We will be the price taker, not the price setter. And that's devastating."

 

In 2015, China unveiled "Made in China 2025," a national plan to make it the world's leader in 10 high-tech manufacturing sectors, including bio-medicine, by 2025.

[Spekulatius]

Hopefully after this, people realize the importance of having domestic manufacturing capacity so we don’t have the whole world trying to source stuff from China.

 

You are correct....

 

https://saraacarter.com/coronavirus-china-has-us-by-the-throat-majority-of-u-s-drugs-manufactured-off-shore/

 

"Dr. Oskoui, a cardiologist affiliated with Sibley Memorial Hospital, said because 95 percent of all antibiotics are manufactured in China and this poses a very real national security threat to the United States, particularly when dealing with the global pandemic COVID-19"

 

"He said that the pandemic has spurred important discussions on the failure of the United States pharmaceutical companies to manufacture the much needed and critical medicines, including medical equipment inside the country. Dr. Oskoui warned that outsourcing the manufacturing of much needed medicine leaves Americans extremely vulnerable and dependent on China."

 

“It’s unacceptable that the Chinese have us by the throat and make 95 percent of our antibiotics. And that’s the critical thing that’s got to change soon…actually make it a priority.”

 

“The United States of America should never be in that position,” he said. “I think we need to turn to people we know that worked for Pfizer, worked for Merck, work for Amgen, work for Gilead, worked for Bristol-Myers Squibb the U.S. drug companies and say ‘you know we understand that you have few share obligations to your shareholders but you also have an obligation to your fellow Americans, as American citizens as an American drug companies’ you need to start making it here just because you can make huge profits abroad we shouldn’t be vulnerable to economic and political blackmail and vulnerable to the medical downside of these drugs being manufactured off our shores.”

 

It’s the generics that are manufactured in China and India and those companies have nothing to do with this. The generic companies are internationals like TEVA and it’s a low margin business now.

 

I do agree that this is something that concerns nation security unlike steel for example which the current administration considered as such. The way to do that would be to require production in the US and pay a bit more for generics and also to deregulate Pharma/FDA a bit because believe it or not Europe is less regulated in this area than the US and it shows in prices.

[TwoCitiesCapital]

Maybe the most reasonable comparison isn't 2015/2018, but 1929 and 2008 with 50-60% decline being base case because we weren't @ 21x earnings in 2008.

 

Just remember that the March 2009 bottom was very brief. The "buyable" bottom was -45%. If you were a couple weeks early or a couple weeks late, you'd be buying at 40-45% discount. Everybody counts the rally from March 9, but almost nobody bought then. I was buying in April 2009 at much higher prices.

 

This seems most like 1929, but remember the FDIC, employment insurance, monetary policy, stimulus make this scenario unlikely.

 

Absolutely - I'm not banking on a 90% correction, but I think 30% is a bit shallow with those comparables - particularly given how expensive we started and how this could potentially develop.

 

Not trying to fear monger but anyone buying now should know this probably gets worse before it gets better so don't blow the load all at once.

[Spekulatius]

Totally unrelated to recent messages has anyone else noticed a run on ATM‘s? My wife ventured out today and noticed long lines at drive through ATM‘s. Is this now a toilet paper 2.0 hoarding run?

[cubsfan]

Forest Trump started the trade war with a salvo Canada targeting  Canadian steel imports  for national security reasons. Canada is a country that supported the US in every war for the last 29” years starting with WW1. It is a time tested tactic in any war to shoot at the allies first.

 

The issue is a recalibration of our relationship with China, not Canada. So Trump is an idiot for screwing with Canada, our

strongest ally. He's not perfect. My comments apply to the USA and Canada in regards to the Chinese Communist Party

leverage over both of our countries.

 

The man has been correct about the trade issue, supply chains, and depending on a dangerous regime.

Both Canada and the US should be less eager to outsource key industries, and our futures to a regime that

systematically lies and cheats it's trading partners - especially with this disaster the regime created for the whole world.

 

Mcliu has it right - source it and diversify it elsewhere.

[Investor20]

https://medium.com/@Jason_Scott_Warner/the-sober-math-everyone-must-understand-about-the-pandemic-2b0145881993

 

If he is right that 50 people have it for every 1 we know about, then 22 people have died out of 180,000 infected in NYC.

 

You have to take into account time it takes for the virus to run its course, though. Daily exponential growth means the vast majority of infections are early stage and haven’t had time to create complications.

 

Do we also upwardly adjust the 180,000 number to add back the number of people who were once infected but no longer are?

 

Really we need to look at this data at a cohort level, which as far as I know does not exist publicly.  Without it we need to look at places like China where it's mostly run its course - otherwise we'll be comparing apples and oranges.

 

The Chinese data tells us that 3.4% of the cases they identified died.  But it doesn't tell us the % of infected that were identified.

 

The Diamond Princess is the best population that I've heard of yet.  1% of infected died -- relatively old people go on cruises.

 

So if we were to take the number of people who died in NYC yesterday, and if we can estimate when they contracted it, then perhaps we could estimate the number of infected people in NYC at that time.  If we then estimate the rate of spread, we can take a stab at how many are infected in NYC today.

 

This was done by John Ioannidis at Stanford whose profile is given here

https://profiles.stanford.edu/john-ioannidis

 

The article here:

https://www.statnews.com/2020/03/17/a-fiasco-in-the-making-as-the-coronavirus-pandemic-takes-hold-we-are-making-decisions-without-reliable-data/

 

He estimates that when Diamond Princess is extrapolated to American demographics:

 

"The one situation where an entire, closed population was tested was the Diamond Princess cruise ship and its quarantine passengers. The case fatality rate there was 1.0%, but this was a largely elderly population, in which the death rate from Covid-19 is much higher.

 

Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%). "

 

I posted the link before, but did not explain the rationale.

[Gregmal]

https://denver.cbslocal.com/2020/03/20/coronavirus-greffex-vaccine-john-price-aurora-covid-19-development/

 

 

[Jurgis]

Totally unrelated to recent messages has anyone else noticed a run on ATM‘s? My wife ventured out today and noticed long lines at drive through ATM‘s. Is this now a toilet paper 2.0 hoarding run?

 

Yeah, I cannot get toilet paper, so I use $ bills instead. Cheaper too.

[ERICOPOLY]

Totally unrelated to recent messages has anyone else noticed a run on ATM‘s? My wife ventured out today and noticed long lines at drive through ATM‘s. Is this now a toilet paper 2.0 hoarding run?

 

Yeah, I cannot get toilet paper, so I use $ bills instead. Cheaper too.

 

Reminds me of Beavis:

[LC]

UK vs Italy trajectory:

 

[ERICOPOLY]

UK vs Italy trajectory:

 

 

Terrifying speed and identical rate of spread

[JayGatsby]

Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%). "

 

I posted the link before, but did not explain the rationale.

This guy seems to agree with that, estimating 0.45% based on South Korea: https://www.haaretz.com/israel-news/.premium.MAGAZINE-israeli-expert-trump-is-right-about-covid-19-who-is-wrong-1.8691031 (Opening in incognito got me around the pay wall. The title is kinda dumb, but good article nonetheless)

[minten]

Absolutely - I'm not banking on a 90% correction, but I think 30% is a bit shallow with those comparables - particularly given how expensive we started and how this could potentially develop.

 

The wild-card is this all gets fixed much sooner than we now think: better treatment, curves start to bend, whatever.. It might not be that likely, but it's a possibility, unlike any other recession. The economy could go into full gear, fueled even more by an endless supply of money and a consumer no doubt very eager to spend if they still got cash, within months, if not weeks, instead of years or decades. So, accounting for this possibility, should soften how deep the market should logically go. Because there's always that chance you wake up in the morning and there's a complete fix (figuratively speaking).

 

The virus developing in Europe does show there's so much we do not know yet about how this will develop, and you can't just copy Italy to the rest the world. The spread seems to be so weirdly different in different countries (and not only compared to the Asian countries). The extremely low death rate in Germany for one. Or the Scandinavian countries that started out in line with the rest of Europe but have somehow really bended the curve this last week, with in some cases (Sweden) much less contaiment measures than the South of Europe.  I know, there are differences in testing etc, but still. And Italy that keeps going up and up and up (unlike what I'd expected). The same virus seems to have a enormous wide variance in how it hits a country, from very hard, to very mild, for reasons we just do not know yet.

 

 

[Vanshon]

UK vs Italy trajectory:

 

 

This table is made up! If you look at England’s numbers they have reported 233 total deaths as of March 21 including 40 on the 19th and 33 on the 20th.  Yes it will get worse but this is a bit of fiction.

[StevieV]

Maybe the most reasonable comparison isn't 2015/2018, but 1929 and 2008 with 50-60% decline being base case because we weren't @ 21x earnings in 2008.

 

Just remember that the March 2009 bottom was very brief. The "buyable" bottom was -45%. If you were a couple weeks early or a couple weeks late, you'd be buying at 40-45% discount. Everybody counts the rally from March 9, but almost nobody bought then. I was buying in April 2009 at much higher prices.

 

This seems most like 1929, but remember the FDIC, employment insurance, monetary policy, stimulus make this scenario unlikely.

 

Two good points.  Impossible to time buying at the bottom anyway.

 

The other thing I sometimes think about is the discussion about being able to stomach 30% or 50% losses or whatever if investing in stocks.  I think that actually understates the case.  Nobody knows what the bottoms will be.  If the market gets to the down 50% level, people won't be only concerned that they are down 50%.  They will be concerned about being down more from there.

 

Gov't action is at least one reason that this different than 1929.  Not necessarily better in all ways, but at least different.

[minten]

Honestly, I can think of about a hundred ways in which this is different than 1929. And only two or three ways in which this is somewhat similar.

[John Hjorth]

Bill Gates - TEDTalks [March 2015] - The next outbreak?.

[ERICOPOLY]

Honestly, I can think of about a hundred ways in which this is different than 1929. And only two or three ways in which this is somewhat similar.

 

Thank goodness we have our deposits centralized in the too-big-to-fail banks instead of spread across thousands upon thousands of small banks as was the case in the 1930s.

[Spekulatius]

minten, thank you for posting. This explains why testing i.e. accurate information is a critical factor in early stage viral outbreaks.

 

For all we know, widespread testing could show the severity of this virus is totally overblown as critics on this thread have suggested, and therefore the pandemic responses are unwarranted. Our portfolios and emotions could have been spared much stress.

 

This is incorrect, and dangerous thinking.

 

It is true:  accurate information is a critical factor, but it is not possible for humans to obtain such early in these viral outbreaks.

 

The pandemic response is warranted - the precautionary principle is the only guide that would ensure the survival of the species.

 

In these situations, you don't need accurate knowledge of the probabilities in order to know what to do.

 

Our emotions and stress are wiser guide than our intelligence in deciding how to react.

 

Strongly agree with this. That's how the precautionary principle works. When there is wide uncertainty with a lot at stake, you err on the side of taking things seriously and overreacting.

 

I would have thought more people on this board would be fans of the margin of safety, but ¯\_(ツ)_/¯

 

By the way, I haven't been paying attention to the US election. Did Andrew Yang win? I hear the US Gov't is handing out cash now.

 

Yes Andrew Young (UBI), Liz Warren (student loan interest rates forgiven) won, Bernie (Medicare for all) is next. It’s free for all, Airlines, Cruise lines are already fed in the soup line. Shale and Energy is begging. I guess the lobbyists for all the industries are working overtime.

 

Clearly, we have an extraordinary economic situation, but it is still surprising to see much more government intervention than in countries that are called socialist here. I’d be more in favor of something that helps individuals, if we have learned anything from the GFC it should have been that.

You stole my follow on jokes that I had planned. Pretty amazing isn't it. Quite a shift

 

Trump has always been populist and a bit socialist. It's just a right wing and flyover state version of socialism.

 

The real outrage here is simply that better leadership and earlier action would likely have resulted in lower overall costs, less disruption, and less panic. Consistent governance might be better leadership than slashing, then growing in a panic.

I think we forgot to credit AOC, because MMT is coming as well.

 

[Castanza]

Let’s not forget all the stuff behind the scenes being passed.

 

Patriot Act signed again

 

DOJ just asked congress if it could suspend due process.

 

 

[rb]

Let’s not forget all the stuff behind the scenes being passed.

 

Patriot Act signed again

 

DOJ just asked congress if it could suspend due process.

Never let a good crisis go to waste right?

[Castanza]

Let’s not forget all the stuff behind the scenes being passed.

 

Patriot Act signed again

 

DOJ just asked congress if it could suspend due process.

Never let a good crisis go to waste right?

 

This type of request has never been granted. Absolutely insane. The closes thing was the despicable handling of the Japanese during wwii. Katrina also had some similar stuff happen. Hundreds of law abiding citizens had their guns confiscated leaving their homes, businesses, vulnerable to looting.

[KJP]

Let’s not forget all the stuff behind the scenes being passed.

 

Patriot Act signed again

 

DOJ just asked congress if it could suspend due process.

Never let a good crisis go to waste right?

 

This type of request has never been granted. Absolutely insane. The closes thing was the despicable handling of the Japanese during wwii. Katrina also had some similar stuff happen. Hundreds of law abiding citizens had their guns confiscated leaving their homes, businesses, vulnerable to looting.

 

What exactly is the text of the request that you're saying has never been granted before?  Many district courts, on their own authority, have already suspended all civil and criminal trials and have excluded that time from counting toward the requirements of the Speedy Trial Act, with specific exceptions to be granted on a case-by-case basis.  To my knowledge, however, no district court has suspended proceedings entirely, which would effectively suspend the writ of habeas corpus in that district (but query whether, in the event a federal district court was closed and thus there were no federal habeas venue, a state court could assume jurisdiction to grant a writ even to a federal prisoner, assuming Congress had not suspending the writ). 

[Castanza]

Let’s not forget all the stuff behind the scenes being passed.

 

Patriot Act signed again

 

DOJ just asked congress if it could suspend due process.

Never let a good crisis go to waste right?

 

This type of request has never been granted. Absolutely insane. The closes thing was the despicable handling of the Japanese during wwii. Katrina also had some similar stuff happen. Hundreds of law abiding citizens had their guns confiscated leaving their homes, businesses, vulnerable to looting.

 

What exactly is the text of the request that you're saying has never been granted before?  Many district courts, on their own authority, have already suspended all civil and criminal trials and have excluded that time from counting toward the requirements of the Speedy Trial Act, with specific exceptions to be granted on a case-by-case basis.  To my knowledge, however, no district court has suspended proceedings entirely, which would effectively suspend the writ of habeas corpus in that district (but query whether, in the event a federal district court was closed and thus there were no federal habeas venue, a state court could assume jurisdiction to grant a writ even to a federal prisoner, assuming Congress had not suspending the writ).

 

The primary qualm is the request to detain individuals without due process indefinitely without trial.

[Guest cherzeca]

my focus has turned from the public health implications of corona (as I have been clear, we are misallocating our resources and needlessly shutting down our economy) to financial, and I must say I have been impressed with the response so far.  very much prefer mnuchin to hank paulson.  https://www.zerohedge.com/political/mnuchin-fed-make-4-trillion-business-loans-send-3000-checks-family-four