Covid-19

[Dosser]

Now Trump is banning all travel from Europe for 30 days:

https://www.theguardian.com/world/live/2...r-measures

(have to scroll down to past the entries about Tom Hanks getting COVID-19.)

However, because the US has been unable to do enough testing, chances are that it is already spreading internally and widely in the US, but under-recorded. It is the knock on effects, rather than COVID-19 itself, that is going to do the real economic damage.

[weijian]

As WHO declares a pandemic this morning, i thought it might be apt to start to think about the secondary effects of Covid-19?

The lost love between OPEC-Russia looks like an independent event (but i thought there might be some cause-effect as Covid-19 triggered them to meet up, which then resulted in a breakdown in talks).

CORONAVIRUS: THE REAL RISKS AND HUMAN BIASES BEHIND THE PANIC

We tend to focus on first-order effects, not second- or third-order effects – If I wreck my car, I’m most likely to be upset about my wrecked car (first-order effect), not how I’m going to pick up my kids from school each day or how higher insurance premiums will affect my monthly budget (second-order effects), even though the second- and third-order effects will have a bigger impact on my life than the damaged car. Much of the analysis I’ve seen on coronavirus stops at the first-order effects. “Stay healthy, wash your hands, you’re going to be fine.” Hell, that was basically my analysis a few weeks ago. But the second and third-order effects of this could potentially be quite large.

Just one example: the US healthcare system is utterly broken. Roughly 60% of Americans can’t afford to pay for an unexpected emergency and 10% of Americans don’t have health insurance at all. Medicare (which insures old people) is already on shaky financial ground. 20 million extra people hitting the hospitals over the next year could cause a different type of epidemic: bankruptcies.

https://markmanson.net/coronavirus-risks-and-biases

[weijian]

Covid-19 now a non-event in Nordic countries

Of the 76 cases detected in Iceland, none have required hospitalisation; in Norway, only a handful of the 277 cases have been admitted to hospital.

This is partly due to a number of sociological and demographic factors, said experts.

The Nordics have a population that is generally healthy and vaccinated against illnesses; there is also universal health care, not much industrial pollution and not many are smokers, said Oystein Olsvik, a professor of medical microbiology at Tromso University in northern Norway.

"The Scandinavian population is generally less susceptible to this kind of illness that can develop in densely-populated regions of China," he added.

https://www.businesstimes.com.sg/technol...-countries

[sillyivan]

The worst news travel the fastest, so I'm here to bring some balance and hope to people.

https://www.straitstimes.com/world/unite...d-from-bug

Also, if anyone is interested, below is a tracker that's being updated frequently on covid19 statistics.

https://www.arcgis.com/apps/opsdashboard...7b48e9ecf6

Everyone's keeping out on the "Total Confirmed" cases, but few are keeping track of "Total Recovered".

[Behappyalways]

2020.03.14【文茜世界周報】新冠病毒研究解密　罕見兼具高傳染性與致死性
https://www.youtube.com/watch?v=y5r6uiHD...AU&index=4

[specuvestor]

Continuing with the COVID-19 post in China Economics

China now has less than 10k outstanding cases with 3k Critical and 3200 dead, with reported mortality rate of 3.97%. Excluding Hubei there's accumulated 13,281 cases with 119 deaths of 0.9% mortality. An unreluctant controlled case, the Diamond Princess Cruise with 3711 crew and passengers, has 697 cases and 7 deaths, with 1% mortality.

There are now 11 China provinces with no outstanding cases, if we believe their numbers. China markets are down much less this year while Shenzhen market is actually up. SG had peaked if not for the Jurong cluster and now mainly imported cases. But generally looks like FIFO while other Asian countries like Korea and Japan has already arrested the spread. There is skepticism about Japan due to the pending Olympics considerations, and Iran infected case probably grossly under-reported with 5.2% fatality.

Probably by the end of the month we will have better color on whether EU has peaked, with 20k cases in Italy alone and likely understated as well since there is 1800 deaths

To give some numbers:

Outside of mainland China (if one don’t trust China’s numbers) there are 890 confirmed cases with 5 deaths, 0.56% fatality; 123 recoveries so far
Global excluding just Hubei there are 13262 confirmed cases with 79 deaths, 0.6% fatality; 4699 recoveries so far

If we base on generally accepted 10% fatality for those in critical, China will record 2000th death by end of the month, while recoveries will exceed 20k. With ref to my 7th Feb post, the number of new confirmed and suspected adds according to China’s numbers peaked around Feb 5, excluding the one day spike on 12 Feb that included clinical diagnosis. I would double up on BlueKelah’s virtual bet that SG numbers peaked last week. But with the possible irresponsible DBS cluster, SG number of cases likely peak this week if not last week. Symptoms generally develop within 7 days.

The denominator is likely to be much larger based on precedents, so the % will be much smaller; rather than presume the other way round that as denominator gets larger the numerator increases proportionately. AIA and POSB / Chubb is offering insurance on COVID-19 so the actuaries are getting comfortable with the numbers

Following up with the posts: https://www.valuebuddies.com/thread-5531...#pid156198

It is probably more obvious now that social media is scarier than the flu itself. And the straw that broke a Camel’s back, though a straw, will have immense second order impact

It is probably also obvious now that Singapore cases peaked around 14 Feb. The draconian measures of Japan and Korea will probably see their cases peak by end of March. This will be a test for civil rights focused western world to see how they measure up in a pandemic. If panic takes hold, they will loot as personal interest is more important than community. As of now I’m not sure when they will peak which also means the second order impact cannot be ascertained

Outside of Hubei, China has 13065 cases with 112 deaths, mortality of 0.86%. Total cases in China now is 79972 with 2873 deaths and with 7365 critical we can expect another 700 deaths by end of this month. There are 42162 recoveries

Outside of China there is total 5101 cases of 78 deaths, mortality is 1.5% which anecdotally I think Iran has reported way below infected numbers. Otherwise the numbers seems quite consistent with 10% of "confirmed" infection can turn serious and 10% of that could result in death. For those that believe the Chinese numbers, you can also see the breakdown here: https://www.worldometers.info/coronaviru...ographics/

The same site estimates 81600 deaths from seasonal flu this year so far

[AQ.]

Quite a good summary from Goldmans. Nothing really surprising, but i bolded the pt i agreed most wholeheartedly with:

• 50% of Americans will contract the virus (150m people) as it's very communicable. This is on a par with the common cold (Rhinovirus) of which there are about 200 strains and which the majority of Americans will get 2-4 per year.
  
• 70% of Germany will contract it (58M people). This is the next most relevant industrial economy to be effected.
  
• Peak-virus is expected over the next eight weeks, declining thereafter.
  
• The virus appears to be concentrated in a band between 30-50 degrees north latitude, meaning that like the common cold and flu, it prefers cold weather. The coming summer in the northern hemisphere should help. This is to say that the virus is likely seasonal.
  
• Of those impacted 80% will be early-stage, 15% mid-stage and 5% critical-stage. Early-stage symptoms are like the common cold and mid-stage symptoms are like the flu; these are stay at home for two weeks and rest. 5% will be critical and highly weighted towards the elderly.
  
• Mortality rate on average of up to 2%, heavily weight towards the elderly and immunocompromised; meaning up to 3m people (150m*.02). In the US about 3m/yr die mostly due to old age and disease, those two being highly correlated (as a percent very few from accidents). There will be significant overlap, so this does not mean 3m new deaths from the virus, it means elderly people dying sooner due to respiratory issues. This may however stress the healthcare system.
  
• There is a debate as to how to address the virus pre-vaccine. The US is tending towards quarantine. The UK is tending towards allowing it to spread so that the population can develop a natural immunity. Quarantine is likely to be ineffective and result in significant economic damage but will slow the rate of transmission giving the healthcare system more time to deal with the case load.
  
• China’s economy has been largely impacted which has affected raw materials and the global supply chain. It may take up to six months for it to recover.
  
• Global GDP growth rate will be the lowest in 30 years at around 2%.
  
• S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall.
  
• There will be economic damage from the virus itself, but the real damage is driven mostly by market psychology. Viruses have been with us forever. Stock markets should fully recover in the 2nd half of the year.
  
• In the past week there has been a conflating of the impact of the virus with the developing oil price war between KSA and Russia. While reduced energy prices are generally good for industrial economies, the US is now a large energy exporter, so there has been a negative impact on the valuation of the domestic energy sector. This will continue for some time as the Russians are attempting to economically squeeze the American shale producers and the Saudi’s are caught in the middle and do not want to further cede market share to Russia or the US.
  
• Technically the market generally has been looking for a reason to reset after the longest bull market in history.
  
• There is NO systemic risk. No one is even talking about that. Governments are intervening in the markets to stabilize them, and the private banking sector is very well capitalized. It feels more like ‪9/11 than it does like 2008.
  

[karlmarx]

My present assumption is that economic activity will be bad for this year. Some industries will obviously be harder hit than others, but most will not be spared.

The present Asian equity market is offering pretty good value for those with a long-term time horizon.

[nsengkia]

Quite a good summary from Goldmans. Nothing really surprising, but i bolded the pt i agreed most wholeheartedly with:

• 50% of Americans will contract the virus (150m people) as it's very communicable. This is on a par with the common cold (Rhinovirus) of which there are about 200 strains and which the majority of Americans will get 2-4 per year.
  
• 70% of Germany will contract it (58M people). This is the next most relevant industrial economy to be effected.
  
• Peak-virus is expected over the next eight weeks, declining thereafter.
  
• The virus appears to be concentrated in a band between 30-50 degrees north latitude, meaning that like the common cold and flu, it prefers cold weather. The coming summer in the northern hemisphere should help. This is to say that the virus is likely seasonal.
  
• Of those impacted 80% will be early-stage, 15% mid-stage and 5% critical-stage. Early-stage symptoms are like the common cold and mid-stage symptoms are like the flu; these are stay at home for two weeks and rest. 5% will be critical and highly weighted towards the elderly.
  
• Mortality rate on average of up to 2%, heavily weight towards the elderly and immunocompromised; meaning up to 3m people (150m*.02). In the US about 3m/yr die mostly due to old age and disease, those two being highly correlated (as a percent very few from accidents). There will be significant overlap, so this does not mean 3m new deaths from the virus, it means elderly people dying sooner due to respiratory issues. This may however stress the healthcare system.
  
• There is a debate as to how to address the virus pre-vaccine. The US is tending towards quarantine. The UK is tending towards allowing it to spread so that the population can develop a natural immunity. Quarantine is likely to be ineffective and result in significant economic damage but will slow the rate of transmission giving the healthcare system more time to deal with the case load.
  
• China’s economy has been largely impacted which has affected raw materials and the global supply chain. It may take up to six months for it to recover.
  
• Global GDP growth rate will be the lowest in 30 years at around 2%.
  
• S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall.
  
• There will be economic damage from the virus itself, but the real damage is driven mostly by market psychology. Viruses have been with us forever. Stock markets should fully recover in the 2nd half of the year.
  
• In the past week there has been a conflating of the impact of the virus with the developing oil price war between KSA and Russia. While reduced energy prices are generally good for industrial economies, the US is now a large energy exporter, so there has been a negative impact on the valuation of the domestic energy sector. This will continue for some time as the Russians are attempting to economically squeeze the American shale producers and the Saudi’s are caught in the middle and do not want to further cede market share to Russia or the US.
  
• Technically the market generally has been looking for a reason to reset after the longest bull market in history.
  
• There is NO systemic risk. No one is even talking about that. Governments are intervening in the markets to stabilize them, and the private banking sector is very well capitalized. It feels more like ‪9/11 than it does like 2008.
  

Other epidemiological studies make a distinction between containment and suppression. 
https://edition.cnn.com/2020/03/17/healt...index.html
Suppression involves more drastic measure like Wuhan.
My understanding is that containment would be between eight to 12 weeks long with many deaths but rapid buildup of herd immunity that suppresses further spread.
Successful suppression would be longer as infections shoot up time and again as measures are relaxed for 12 to 18 months until a vaccine is available. 
A point can be made that most countries will blend their response between containment and suppression.
Markets being forward looking should rebound before the actual end of the health crises - with the proviso that there is no second order financial or political issues along the way (highly unlikely).
At any point of time, I am trying to pace out the speed of using up my remaining bullets based on the most likely predicted outcome.  This is itself a Bayesian probability that i adjust as the situation evolves and more information becomes available.
I am currently working on a three to six month i.e. a Jul through Sep run out of bullets target.
Would greatly appreciate any views on this.
Cheers!

[Dosser]

Second order economic and political fallout is inevitable, not just highly likely. There has been/will be massive wealth destruction. Not talking about paper wealth destruction (i.e. stock and bond markets) but real wealth - airlines, hotel chains, retail, live entertainment, and parts of the oil industry (shale and tar sands). Governments are trying to paper over this, but the paper is just paper. Goldman's may refer to a well capitalized banking sector, but they are thinking only about the US. There were worries about Deutsche and a number of Italian banks before any of this hit, and that is just the obvious ones. Counter party risk must be a major concern now.

A worry is that a lot of governments are waiting too long to take simple measures, and then over-reacting in a way that will massively impact their economies.

So, there are going to be shed loads of paper money around, including helicopter money, but limited goods available, especially everyday items. Sounds like a recipe for inflation to me, maybe the re-emergence of price controls, rationing, at least in some countries.