Coronavirus

[LC]

Viking, while I agree, the cynic (realist?) in me says, "Never gonna happen."

 

Trump needs a partially effective vaccine.

 

It's the only way he can calm the tides of angst we see. And it's the only way people will feel "safe" returning to life-as-normal, at least before the November elections.

 

At some point I think you start to see people who say fuck it, enough. Stress levels and tension are extremely high. First it was fear, and still is, but in social media circles I have seen many start to question what we are doing and for who? That can get dangerous. Throw in not working, no money coming in, your kids not going to school driving you up the wall and every day you get up and the death rate in the US is at 100-125-150.

 

...

 

And what are we afraid of ? A disease that we know may have an 86% as symptomatic rate, that so far has killed 8784 people out of 7.8 Billion people,  .000116%. People who we know on average are nearing the end of their lives. People who succumb every day to diseases we are numb to. I know many are aware of the flu data on deaths but some aren't on the most common every day killers in the US. Every year in the US alone;

 

orthopa, this is exactly why widespread testing was, and is needed. If we know beyond a shadow of a doubt that this is a real shit-your-pants pandemic, people will not say "fuck it".

 

If we find out it's just, well, a really bad flu-like virus and there's not much we can do about it, well that helps us justify lifting some quarantine procedures.

 

Screw everything else that has happened with Trump, he has put a crater in this country with how he handled this.

[TwoCitiesCapital]

10 years from now, do you think the economy will look more like it did a month ago or as it looks today? Depending on how you answer that, determines how you should invest.

 

It looks to me like airlines, hotels, restaurants, cruise industry, travel industry, Boeing are all essentially bankrupt as of today. Most will not survive with no revenue if we do a soft lockdown that next 2-3 months. We know the government is going to try and bail some out. That is a tough thing for an investor to figure out (who the winners and losers are going to be). Didn’t work great for bank investors in 2008 (BAC and C); the companies survived but shareholders had their head handed to themselves.

 

Shadow banking system might be the next shoe to fall... overleveraged companies.

 

Oil and gas industry...

 

Looks to me like their might be a real bifurcation in the market. A stock pickers market. 30% of companies weather the storm and 70% get shit kicked. Not great for ETF holders.

 

Private equity would be my guess as a casualty.

 

Another thing I noticed - treasuries were very weak today and interest rates have shot up. That rarely happens in such a down market. Is the financial system getting squeaky? If treasuries yields would explode upwards it would be game over, imo.

 

 

Noticed that too - people have been saying even Treasury liquidity is off so people dumping what they can at what prices they can to get cash.

 

Could it be the inflation scare of the House floating 2k/month payouts to every adult citizen and 1k/month for every child?

 

If it passes, That's lots of f*cking money about to flood the system to a lot of people who don't really need it at a time when you dont have to spend it on the essentials (same bill allows deferral of ALL consumer and small business debt service like mortgages and credit cards and student loans w/ no penalties).

 

I'm all for getting money into the hands of people who need it - but 4-8k/month for a household is A LOT and it sounds like it would be going to everyone regardless of immediate need.

 

Meh. The bottom 90% of people have been screwed for 3 decades plus. $5k/mo is peanuts compared to decline in wealth over time. Unlikely to be for more than few mo after it runs thru the Senate. Then again, Trumpy might push for it because it helps him in November to have given checks out to every citizen.

 

Those at the top have benefitted disproportionately from Monetary Policy past decade. Time to give some fiscal pump to those down below.

 

We wonder why inflation has been persistently low for so long...putting money in the bottom 90% may push that inflation number up and that is not a bad thing during a crisis like this.

 

I'm ok with those in need getting it. But those in need are part time workers who aren't working. Small business owners that have been forced to close for societal well being. Full time workers about to get reamed by industries like travel and hospitality.

 

For those, some level of support makes a lot of sense.  2k/adult and 1k/ child each month seems like a lot, but I'd still support it if it were targeted in this manner. Giving handouts to the entire lower and middle classes regardless of needs seems insane.

 

If its such a great idea, why don't we just give everyone 8k/month into perpetuity until we're the most prosperous and wealthiest nation ever!

[Cigarbutt]

...

This situation is obviously natural early in the outbreak of a novel pathogen.  The fact that the Chinese rapidly developed a test so early is amazing.  But a rapidly available test means you sacrifice accuracy.  For epidemiological screening, you need to identify possible cases quickly with a rapid test that that has a high sensitivity rate.  But a test with high sensitivity means you're sacrificing specificity.  Epidemiologists will get a better handle on specificity over time as confirmatory tests become available.

cobafdek, how big of a deal is this?

A serological assay to detect SARS-CoV-2 seroconversion in humans

https://www.medrxiv.org/content/10.1101/2020.03.17.20037713v1

...

Results: The assays are sensitive and specific...

I'm not an infectious disease specialist with an interest in pandemics and I'm not cobafdek (who, or others, may be able to answer better although I've always assumed he or she was a psychiatrist).

The Coronavirus serological assays (antibody detection) research is moving very rapidly and recent publications have reported a sensitivity of 88.66% and specificity of 90.63%.

https://sph.nus.edu.sg/wp-content/uploads/2020/03/COVID-19-Science-Report-Diagnostics-13-Mar.pdf

https://www.ncbi.nlm.nih.gov/pubmed/32104917

The study referred to above (from what i can discern), is more recent and may suggest some practical improvements for the tests but the number of samples is lower and i don't see enough 'power' in the data to go above a generic qualitative statement about sensitivity and specificity (although undisclosed supplements may reveal this info).

 

...

Another thing I noticed - treasuries were very weak today and interest rates have shot up. That rarely happens in such a down market. Is the financial system getting squeaky? If treasuries yields would explode upwards it would be game over, imo.

Recently, I broke a rule of mine and did not buy a security when it met a pre-defined target (TRV). It may be a mistake but I need to sleep this through. The reason for the unusual hesitation is irrational and is based on the bizarre behavior of treasuries. Lately, rate movements have been huge (really huge being so close to zero) and long rates have started to rise when, as typically has been the case (forever it seems), with negative developments causing flight to safety. At the time of this writing, rates are negative at the short end and are rising significantly at the long end. I don't know what it means but with all this new money coming in from everywhere and with the multiple indicators pointing to global widespread liquidity stress, it just feels like we've entered a financial twilight zone. When asked last week about the unusual interest rate environment, Mr. Buffett qualified the situation as "unbelievable" and went Yoda: “I would say that's the most important question in the world, and I don't know the answer. Now, if we knew the answer, it wouldn't be the most important question.” I'll try to not let this variable enter the equation but it's quite unsettling.

[Castanza]

Viking, while I agree, the cynic (realist?) in me says, "Never gonna happen."

 

Trump needs a partially effective vaccine.

 

It's the only way he can calm the tides of angst we see. And it's the only way people will feel "safe" returning to life-as-normal, at least before the November elections.

 

At some point I think you start to see people who say fuck it, enough. Stress levels and tension are extremely high. First it was fear, and still is, but in social media circles I have seen many start to question what we are doing and for who? That can get dangerous. Throw in not working, no money coming in, your kids not going to school driving you up the wall and every day you get up and the death rate in the US is at 100-125-150.

 

...

 

And what are we afraid of ? A disease that we know may have an 86% as symptomatic rate, that so far has killed 8784 people out of 7.8 Billion people,  .000116%. People who we know on average are nearing the end of their lives. People who succumb every day to diseases we are numb to. I know many are aware of the flu data on deaths but some aren't on the most common every day killers in the US. Every year in the US alone;

 

orthopa, this is exactly why widespread testing was, and is needed. If we know beyond a shadow of a doubt that this is a real shit-your-pants pandemic, people will not say "fuck it".

 

If we find out it's just, well, a really bad flu-like virus and there's not much we can do about it, well that helps us justify lifting some quarantine procedures.

 

Screw everything else that has happened with Trump, he has put a crater in this country with how he handled this.

 

Trump is probably screwed either way. If this is worse than expected and we see a lot of deaths his chances of winning are low. If this isn’t anywhere near as bad as we though he screwed because companies and people will be pissed they were forced to close over something that “could have been tested sooner etc.” Then again, he’s a “wartime president”. Don’t they always get re-elected?!  :P

 

It’s going to be interesting. People will vote with their “tip of the iceberg” wallets as they always do.

[Kaegi2011]

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

 

This is a rather interesting read.  Anyone more qualified to speak about this?  Specifically this caught my eye...

 

We show that in the UK and US context, suppression will minimally require a combination of social distancing of the entire population, home isolation of cases and household quarantine of their family members. This may need to be supplemented by school and university closures, though it should be recognised that such closures may have negative impacts on health systems due to increased absenteeism. The major challenge of suppression is that this type of intensive intervention package – or something equivalently effective at reducing transmission – will need to be maintained until a vaccine becomes available (potentially 18 months or more) – given that we predict that transmission will quickly rebound if interventions are relaxed. We show that intermittent social distancing – triggered by trends in disease surveillance – may allow interventions to be relaxed temporarily in relative short time windows, but measures will need to be reintroduced if or when case numbers rebound. Last, while experience in China and now South Korea show that suppression is possible in the short term, it remains to be seen whether it is possible long-term, and whether the social and economic costs of the interventions adopted thus far can be reduced.

 

 

[drzola]

Well this rebuttal( hyperlink ) plausibly critiques your bold highlighted hypothetical prediction from their modelling paper.

 

https://static1.squarespace.com/static/5b68a4e4a2772c2a206180a1/t/5e70eb32b16229792eb14836/1584458547530/ReviewOfFergusson.pdf

 

 

Sincerely;

 

Steve

[EliG]

I'm not an infectious disease specialist with an interest in pandemics and I'm not cobafdek (who, or others, may be able to answer better although I've always assumed he or she was a psychiatrist).

The Coronavirus serological assays (antibody detection) research is moving very rapidly and recent publications have reported a sensitivity of 88.66% and specificity of 90.63%.

https://sph.nus.edu.sg/wp-content/uploads/2020/03/COVID-19-Science-Report-Diagnostics-13-Mar.pdf

https://www.ncbi.nlm.nih.gov/pubmed/32104917

The study referred to above (from what i can discern), is more recent and may suggest some practical improvements for the tests but the number of samples is lower and i don't see enough 'power' in the data to go above a generic qualitative statement about sensitivity and specificity (although undisclosed supplements may reveal this info).

 

Thank you, Cigarbutt.

 

 

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

 

This is a rather interesting read.  Anyone more qualified to speak about this?

 

I am not qualified but Bill Gates (and, more importantly, his scientific advisors) are. Here's what he said about the study you linked:

 

"Fortunately it appears the parameters used in that model were too negative. The experience in China is the most critical data we have. They did their "shut down" and were able to reduce the number of cases. They are testing widely so they see rebounds immediately and so far there have not been a lot. They avoided widespread infection. The Imperial model does not match this experience. Models are only as good as the assumptions put into them. People are working on models that match what we are seeing more closely and they will become a key tool. A group called Institute for Disease Modeling that I fund is one of the groups working with others on this."

 

https://old.reddit.com/r/Coronavirus/comments/fksnbf/im_bill_gates_cochair_of_the_bill_melinda_gates/fkujznm/

 

[Kaegi2011]

I'm not an infectious disease specialist with an interest in pandemics and I'm not cobafdek (who, or others, may be able to answer better although I've always assumed he or she was a psychiatrist).

The Coronavirus serological assays (antibody detection) research is moving very rapidly and recent publications have reported a sensitivity of 88.66% and specificity of 90.63%.

https://sph.nus.edu.sg/wp-content/uploads/2020/03/COVID-19-Science-Report-Diagnostics-13-Mar.pdf

https://www.ncbi.nlm.nih.gov/pubmed/32104917

The study referred to above (from what i can discern), is more recent and may suggest some practical improvements for the tests but the number of samples is lower and i don't see enough 'power' in the data to go above a generic qualitative statement about sensitivity and specificity (although undisclosed supplements may reveal this info).

 

Thank you, Cigarbutt.

 

 

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

 

This is a rather interesting read.  Anyone more qualified to speak about this?

 

I am not qualified but Bill Gates (and, more importantly, his scientific advisors) are. Here's what he said about the study you linked:

 

"Fortunately it appears the parameters used in that model were too negative. The experience in China is the most critical data we have. They did their "shut down" and were able to reduce the number of cases. They are testing widely so they see rebounds immediately and so far there have not been a lot. They avoided widespread infection. The Imperial model does not match this experience. Models are only as good as the assumptions put into them. People are working on models that match what we are seeing more closely and they will become a key tool. A group called Institute for Disease Modeling that I fund is one of the groups working with others on this."

 

https://old.reddit.com/r/Coronavirus/comments/fksnbf/im_bill_gates_cochair_of_the_bill_melinda_gates/fkujznm/

 

 

Well this rebuttal( hyperlink ) plausibly critiques your bold highlighted hypothetical prediction from their modelling paper.

 

https://static1.squarespace.com/static/5b68a4e4a2772c2a206180a1/t/5e70eb32b16229792eb14836/1584458547530/ReviewOfFergusson.pdf

 

 

Sincerely;

 

Steve

 

Thank you both for the quick response.  W/r/t the Bill Gates' response, which I can understand, my question would be whether China is a good example to follow.  Here's what I have heard in speaking with folks in China:

 

China's lockdown was severe, over a long period, and as such the disease is **contained** (e.g., not endemic).  I see support for this when I read that China is now forcing everyone coming into the country to be placed in quarantine for 14 days at their expense to ensure the person is not infecting the Chinese population, which has no general immunity.  If the virus is not endemic, as it was isolated to ~1% of the Wuhan population (and much smaller % for the total of China), then there should be no fear of it flaring up again.

 

In contrast to China, the rest of the world seems to have really spread the disease, and is way past the containment stage and it seems endemic.  If that's the case, someone portion of the population will have an active case and thus can still spread it around, causing another wave. 

 

Is the above logic a bridge between what Bill said and what the study I referenced concludes? 

 

[Kaegi2011]

I'm not an infectious disease specialist with an interest in pandemics and I'm not cobafdek (who, or others, may be able to answer better although I've always assumed he or she was a psychiatrist).

The Coronavirus serological assays (antibody detection) research is moving very rapidly and recent publications have reported a sensitivity of 88.66% and specificity of 90.63%.

https://sph.nus.edu.sg/wp-content/uploads/2020/03/COVID-19-Science-Report-Diagnostics-13-Mar.pdf

https://www.ncbi.nlm.nih.gov/pubmed/32104917

The study referred to above (from what i can discern), is more recent and may suggest some practical improvements for the tests but the number of samples is lower and i don't see enough 'power' in the data to go above a generic qualitative statement about sensitivity and specificity (although undisclosed supplements may reveal this info).

 

Thank you, Cigarbutt.

 

 

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

 

This is a rather interesting read.  Anyone more qualified to speak about this?

 

I am not qualified but Bill Gates (and, more importantly, his scientific advisors) are. Here's what he said about the study you linked:

 

"Fortunately it appears the parameters used in that model were too negative. The experience in China is the most critical data we have. They did their "shut down" and were able to reduce the number of cases. They are testing widely so they see rebounds immediately and so far there have not been a lot. They avoided widespread infection. The Imperial model does not match this experience. Models are only as good as the assumptions put into them. People are working on models that match what we are seeing more closely and they will become a key tool. A group called Institute for Disease Modeling that I fund is one of the groups working with others on this."

 

https://old.reddit.com/r/Coronavirus/comments/fksnbf/im_bill_gates_cochair_of_the_bill_melinda_gates/fkujznm/

 

 

Well this rebuttal( hyperlink ) plausibly critiques your bold highlighted hypothetical prediction from their modelling paper.

 

https://static1.squarespace.com/static/5b68a4e4a2772c2a206180a1/t/5e70eb32b16229792eb14836/1584458547530/ReviewOfFergusson.pdf

 

 

Sincerely;

 

Steve

 

Thank you both for the quick response.  W/r/t the Bill Gates' response, which I can understand, my question would be whether China is a good example to follow.  Here's what I have heard in speaking with folks in China:

 

China's lockdown was severe, over a long period, and as such the disease is **contained** (e.g., not endemic).  I see support for this when I read that China is now forcing everyone coming into the country to be placed in quarantine for 14 days at their expense to ensure the person is not infecting the Chinese population, which has no general immunity.  If the virus is not endemic, as it was isolated to ~1% of the Wuhan population (and much smaller % for the total of China), then there should be no fear of it flaring up again absent new vectors of transmission (eg., foreigners who have been exposed to the virus ans has made a full circle...).

 

In contrast to China, the rest of the world seems to have really spread the disease, and is way past the containment stage and it seems endemic.  If that's the case, someone portion of the population will have an active case and thus can still spread it around, causing another wave. 

 

Is the above logic a bridge between what Bill said and what the study I referenced concludes?

 

[no_free_lunch]

Recently, I broke a rule of mine and did not buy a security when it met a pre-defined target (TRV). It may be a mistake but I need to sleep this through. The reason for the unusual hesitation is irrational and is based on the bizarre behavior of treasuries. Lately, rate movements have been huge (really huge being so close to zero) and long rates have started to rise when, as typically has been the case (forever it seems), with negative developments causing flight to safety. At the time of this writing, rates are negative at the short end and are rising significantly at the long end. I don't know what it means but with all this new money coming in from everywhere and with the multiple indicators pointing to global widespread liquidity stress, it just feels like we've entered a financial twilight zone. When asked last week about the unusual interest rate environment, Mr. Buffett qualified the situation as "unbelievable" and went Yoda: “I would say that's the most important question in the world, and I don't know the answer. Now, if we knew the answer, it wouldn't be the most important question.” I'll try to not let this variable enter the equation but it's quite unsettling.

 

I see the same thing but I don't understand it.  How can bond funds and stocks sell of at the same time?  One thing is clear, the jig is up for the central banks.

[cobafdek]

Here's my one hopeful observation that the Covid-19 pandemic may not really be as much of a pandemic as it feels like right now.  It has to do with the testing issue.

 

All the testing we hear about in the news is about a screening test.  RT-PCR is a screening test.  That's the only testing available so far.  It is not a diagnostic test.  All "diagnoses" and "cases" reported in the news (worldwide 188,609 cases to date as of this post) is based on a screening test.

 

Many PCRs for many different infectious diseases are known to have unacceptably high false positive rates.  This can only be determined by a gold standard test, such as a viral culture.  I've searched and so far have found no information about viral cultures or other confirmatory testing for Covid-19.

 

There are many coronaviruses out there.  It's possible there is significant cross-reactivity between some of these other coronaviruses, or other non-corona respiratory viruses, with the Covid-19 RT-PCR.  In other words, many of the cases currently being identified may actually be identifying something else.

 

This situation is obviously natural early in the outbreak of a novel pathogen.  The fact that the Chinese rapidly developed a test so early is amazing.  But a rapidly available test means you sacrifice accuracy.  For epidemiological screening, you need to identify possible cases quickly with a rapid test that that has a high sensitivity rate.  But a test with high sensitivity means you're sacrificing specificity.  Epidemiologists will get a better handle on specificity over time as confirmatory tests become available.

 

cobafdek, how big of a deal is this?

 

 

A serological assay to detect SARS-CoV-2 seroconversion in humans

https://www.medrxiv.org/content/10.1101/2020.03.17.20037713v1

 

 

Methods: Here we describe serological enzyme-linked immunosorbent assays (ELISA) that we developed using recombinant antigens derived from the spike protein of SARS-CoV-2. These assays were developed with negative control samples representing pre-COVID 19 background immunity in the general population and samples from COVID19 patients.

 

Results: The assays are sensitive and specific, allowing for screening and identification of COVID19 seroconverters using human plasma/serum as early as 3 days post symptom onset. Importantly, these assays do not require handling of infectious virus, can be adjusted to detect different antibody types and are amendable to scaling.

 

It's a huge development.

 

This study says they've identified antibodies to SARS-CoV-2.  That means we will soon be able to get a better handle on how many people exposed/infected sometime in the past but remained asymptomatic.  Therefore, there is major potential for the case fatality rate to be estimated downward, possibly by a lot.  If it can be shown to be similar to influenza or better, current draconian measures might be able to be lifted sooner rather than later (and we will see the mother of all bear market reversals).

 

Identifying the different types of antibodies (IgM, IgGs, etc.) gives clinicians an alternative way to diagnose SARS-CoV-2, and to distinguish acute infections (IgM+) from convalescent or remote infections (IgGs).  They report detection is possible within 3 days of exposure (IgM).  And these antibodies can be detected with a blood test, so that lab personnel may not need the expensive personal protective equipment needed to collect samples needed for the prior available test (RT-PCR), which required collecting naso- and oropharyngeal samples, not really practical for large population-wide screening.

 

What remains to be determined is whether these antibodies confer immunity (and if so, for how long), or whether they are merely markers for the infection.  If they reliably confer immunity, we can know which medical personnel are safer to employ in evaluating and treating these patients, thereby protecting their other vulnerable medical colleagues.

 

Trials are already underway in China where they are using the serum of convalescent patients to treat active cases.  This research might allow fine tuning which antibody or antibodies are the effective ones.

 

And, of course, this will aid in the development of a vaccine, possibly much sooner than the 12-18 months surmised by Fauci.

 

Bad news is that they found very little cross-reactivity to existing human coronaviruses, which means the published R0 estimates are probably pretty accurate, indicating it is highly transmissible.

 

(Also bad news, for me, is that it exposed my ignorance of the field, since ordinary doctors like me are just barely amateur microbiologists or virologists.  In my original post, I called the RT-PCR a "screening" test.  Reading this latest article, I now understand that the RT-PCR is considered the diagnostic test for the acute infection.  Time and clinical experience will clarify things the proper sequencing of testing - I anticipate the antibody blood tests will become the initial screening tests, and results will be confirmed with the RT-PCR to reduce false positives.)

[mcliu]

Recently, I broke a rule of mine and did not buy a security when it met a pre-defined target (TRV). It may be a mistake but I need to sleep this through. The reason for the unusual hesitation is irrational and is based on the bizarre behavior of treasuries. Lately, rate movements have been huge (really huge being so close to zero) and long rates have started to rise when, as typically has been the case (forever it seems), with negative developments causing flight to safety. At the time of this writing, rates are negative at the short end and are rising significantly at the long end. I don't know what it means but with all this new money coming in from everywhere and with the multiple indicators pointing to global widespread liquidity stress, it just feels like we've entered a financial twilight zone. When asked last week about the unusual interest rate environment, Mr. Buffett qualified the situation as "unbelievable" and went Yoda: “I would say that's the most important question in the world, and I don't know the answer. Now, if we knew the answer, it wouldn't be the most important question.” I'll try to not let this variable enter the equation but it's quite unsettling.

 

I see the same thing but I don't understand it.  How can bond funds and stocks sell of at the same time?  One thing is clear, the jig is up for the central banks.

 

https://www.marketwatch.com/story/fed-sets-new-loan-program-designed-to-ease-turmoil-in-money-markets-2020-03-18

[EliG]

It's a huge development.

 

...

 

 

Thank you. I appreciate the detailed response.

 

 

[no_free_lunch]

Based on cobafdek, positive news out of China/South Korea it appears it may be a good time to add. I really feel this is full bore mania and everyone just knows that the market will continue to drop.  Maybe this is the apocalypse but maybe this is just another challenge that we will solve. I don't know all the details but I can see a future where we go about our lives but with a number of safeguards. More testing, some social distancing, better hygiene standards, that sort of thing.

 

To link back to investing i am looking at senior focused REITs with NHI on the top of my list. Dividend is over 13% and debt is somewhere around 7x ocf.  I am open to other suggestions.

 

 

[Investor20]

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/

 

The data and analysis from Diamond princess is particularly interesting IMO.

 

The author has good credentials.

 

John P.A. Ioannidis is professor of medicine, of epidemiology and population health, of biomedical data science, and of statistics at Stanford University and co-director of Stanford’s Meta-Research Innovation Center.

 

 

[Okonomen]

I am actually starting to get worried about debt covenants for a lot of otherwise strong companies. Just think about it... e.g. AutoZone. It's a retailer. Very strong resilient business model with 2,5x ND/EBITDA. Let's say they got a covenants saying <5x ND/EBITDA and we have a large part of 2020 with potential US lockdown or similar... People won't come to the store, so AZO will have very low or perhaps even negative EBITDA for lets say.. 2-3 quarters? This will hit covenants and potential default an otherwise great business?! I assume the bank owning the debt would give some slack, but the banks can give slack to the thousands of companies in the potential sceario I put up for Autozone in this post... Any thoughts? Am I worried over nothing? Just thinking of all the covanants that are going to get breached soon

[Read the Footnotes]

 

If you were a 70 year-old retired doctor or nurse and you took the time to pull up the morbidity and mortality numbers by age group off of the WHO's website (or other websites) would you come out of retirement?  If I were 70 years old, I'd be trying desperately to dodge this one...  I am guessing that, as a group, retired health professionals are not in desperate need for an extra $10,000, so it's a bit hard to imagine that they would be motivated to expose themselves to a bunch of sick people.

https://nypost.com/2020/03/18/in-one-day-1000-nyc-doctors-and-nurses-enlist-to-battle-coronavirus/?utm_source=reddit.com

[stahleyp]

 

If you were a 70 year-old retired doctor or nurse and you took the time to pull up the morbidity and mortality numbers by age group off of the WHO's website (or other websites) would you come out of retirement?  If I were 70 years old, I'd be trying desperately to dodge this one...  I am guessing that, as a group, retired health professionals are not in desperate need for an extra $10,000, so it's a bit hard to imagine that they would be motivated to expose themselves to a bunch of sick people.

https://nypost.com/2020/03/18/in-one-day-1000-nyc-doctors-and-nurses-enlist-to-battle-coronavirus/?utm_source=reddit.com

 

Believe it or not the vast majority of doctors (unlike bankers) don't do it for the money.

[Read the Footnotes]

 

 

cobafdek, how big of a deal is this?

 

A serological assay to detect SARS-CoV-2 seroconversion in humans

https://www.medrxiv.org/content/10.1101/2020.03.17.20037713v1

 

 

 

 

It's a huge development.

 

. . .

 

(Also bad news, for me, is that it exposed my ignorance of the field, since ordinary doctors like me are just barely amateur microbiologists or virologists.  In my original post, I called the RT-PCR a "screening" test.  Reading this latest article, I now understand that the RT-PCR is considered the diagnostic test for the acute infection.  Time and clinical experience will clarify things the proper sequencing of testing - I anticipate the antibody blood tests will become the initial screening tests, and results will be confirmed with the RT-PCR to reduce false positives.)

Good discussion.

 

It's still a potential huge leap forward and an important step toward getting us back to normal. Testing is important for treatment of individuals, but also important for knowing who has had exposure and adjusting models based on that data, but also it allows the individual who is likely no longer susceptible to make informed decisions, and return to a more normal life.

 

Draconian steps are likely needed. CV is so widespread within the USA and many other countries, that we need to do everything we can to rob the fire of fuel and oxygen. Shutdowns are one part of that equation, but antigen testing will allow us to return to normal much faster. Don't forget to make an estimate of how long it would take to roll out yet another testing system on a wide scale nationally.

 

https://foreignpolicy.com/2020/03/18/america-united-states-lockdown-coming/

[SharperDingaan]

Recently, I broke a rule of mine and did not buy a security when it met a pre-defined target (TRV). It may be a mistake but I need to sleep this through. The reason for the unusual hesitation is irrational and is based on the bizarre behavior of treasuries. Lately, rate movements have been huge (really huge being so close to zero) and long rates have started to rise when, as typically has been the case (forever it seems), with negative developments causing flight to safety. At the time of this writing, rates are negative at the short end and are rising significantly at the long end. I don't know what it means but with all this new money coming in from everywhere and with the multiple indicators pointing to global widespread liquidity stress, it just feels like we've entered a financial twilight zone. When asked last week about the unusual interest rate environment, Mr. Buffett qualified the situation as "unbelievable" and went Yoda: “I would say that's the most important question in the world, and I don't know the answer. Now, if we knew the answer, it wouldn't be the most important question.” I'll try to not let this variable enter the equation but it's quite unsettling.

 

I see the same thing but I don't understand it.  How can bond funds and stocks sell of at the same time?  One thing is clear, the jig is up for the central banks.

 

We used to own some of those bond funds  ;)

 

After recent events, there is more downside than upside to continued ownership. Cash is far preferable.

There is zero incentive to buy an equity until it is known whether curve flattening is working. Results should be out in about 2-3 weeks.

And if the collective stream of bids progressively dry up .... equity prices should fall a lot further.

Hence, happy to wait.

 

SD

 

 

 

[stahleyp]

How can bond funds and stocks go up at the same time? That's been happening for the last...40 years. :P

 

 

If they can go up together, there's no reason they can't go down together. 

[Liberty]

https://www.nature.com/articles/s41591-020-0822-7

 

“ Estimating clinical severity of COVID-19 from the transmission dynamics in Wuhan, China”

[Kaegi2011]

https://www.bloomberg.com/news/articles/2020-03-19/coronavirus-in-young-people-is-it-dangerous-data-show-it-can-be

 

The data bears out that concern. In Italy, the hardest hit country in Europe, almost a quarter of the nearly 28,000 coronavirus patients are between the ages of 19 and 50, according to data website Statista.

 

Similar trends have been seen in the U.S. Among nearly 2,500 of the first coronavirus cases in the U.S., 705 were aged 20 to 44, according to the Centers for Disease Control and Prevention. Between 15% and 20% eventually ended up in the hospital, including as many as 4% who needed intensive care. Few died.

 

 

[A Dhandho Investor]

I see the same thing but I don't understand it.  How can bond funds and stocks sell of at the same time?  One thing is clear, the jig is up for the central banks.

 

We used to own some of those bond funds  ;)

 

After recent events, there is more downside than upside to continued ownership. Cash is far preferable.

There is zero incentive to buy an equity until it is known whether curve flattening is working. Results should be out in about 2-3 weeks.

And if the collective stream of bids progressively dry up .... equity prices should fall a lot further.

Hence, happy to wait.

 

SD

 

Your strategy only works if:

(1) you started selling before all others started selling

(2) you are able to buy before all others start to buy

 

So in essence, you're just trying to time the market.

 

Given the daily swings in the market, I just buy stocks at ridiculous valuations and I'm happy to buy more if they continue to fall or sell if valuations rise quickly. 

 

This week for instance Colruyt, one of the most defensive stocks on the Belgian stock exchange, went up by almost 50% when all other stocks got hammered. Today, when other stocks are getting back on their feet, Colruyt loses almost 10%. 

 

I think these times are a gift for value investors.

 

edit: in times like these I think it is quite logic that some price movements do not make sense. e.g. gold is supposed to be a hedge when equities fall, but I guess its quite rational for investors to sell their gold and buy more equities in times of large drops in share prices.

[Read the Footnotes]

https://www.bloomberg.com/news/articles/2020-03-19/coronavirus-in-young-people-is-it-dangerous-data-show-it-can-be

 

The data bears out that concern. In Italy, the hardest hit country in Europe, almost a quarter of the nearly 28,000 coronavirus patients are between the ages of 19 and 50, according to data website Statista.

 

Similar trends have been seen in the U.S. Among nearly 2,500 of the first coronavirus cases in the U.S., 705 were aged 20 to 44, according to the Centers for Disease Control and Prevention. Between 15% and 20% eventually ended up in the hospital, including as many as 4% who needed intensive care. Few died.

 

 

Thanks for sharing Kaegi.

This is really important. It shows what I was saying weeks ago regarding the data out of China. The risk to younger people is lower, but after adjusting for triage, you will see that the risks for young people have been understated and the risk for older people are overstated if you exclude periods when the health system is overwhelmed. During periods when the healthcare systems have been overwhelmed, out comes for older people became horrific. This break point needs to be understood and new data regarding the experience in the USA will really help.