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  • Well. It's not like people weren't worried about liquidity before this started shaking out. It's why I leaned into shorter duration funds when I rebalanced.

    And I always wondered how ETF's would fare in a serious rout/panic. But I never bought any.

    Thanks for the link. A few more days like yesterday, and today, and rivets will be popping all over.
  • @davidrmoran- Your link is very interesting when matched with observations made yesterday by @catch22. I've taken the liberty of cross-referencing.
  • That was interesting reading. The part about sellers raising cash by selling treasuries and thereby causing yields to increase mirrors an explanation in another article I read earlier today.
  • A follow up article, of sorts:
    in recent days, as fears of a pandemic have escalated, the market for Treasuries has experienced a liquidity problem — meaning that the buying and selling of this kind of debt at reasonable prices has suddenly gotten a lot tougher. That, in turn, made already nervous investors even more frantic on Thursday, when the S&P 500 index plunged so far and so fast that trading was temporarily halted. ...

    Any signs of distress involving these bonds — a rare occurrence — means bigger problems could be underfoot for the financial system.
  • davfor said:

    That was interesting reading. The part about sellers raising cash by selling treasuries and thereby causing yields to increase mirrors an explanation in another article I read earlier today.

    Does that mean the pounce is coming??
  • I thought of this thread while reading this piece from Reuters about the Fed's attempt to calm the bond markets.

    I think they buried the lede.

    The Fed also saw low take-up of the new loans by primary dealers. Banks borrowed only $119.5 billion from the $1.5 trillion on offer at the three new emergency operations on Thursday and Friday.
    And rumors of course

    Rumors of large investors trying to sell large holdings of various bonds has added to negative market sentiment.
    Gonna have to push the string a little harder.
    “More is needed and expected to stop this liquidity squeeze from escalating into a deeper funding crunch,” Morgan Stanley analysts said in a report sent on Friday.
    Unlimited liquidity. How does that grab you Morgan Stanley?

    U.S. Treasury Secretary Steven Mnuchin said on Friday that the U.S. Treasury and the Federal Reserve were working to keep markets open and to provide “unlimited liquidity.”
  • Howdy folks,

    Several things going on to create the perfect storm for the global economy.

    1. Trade war. I won't devote any time to the incredible damage continuing to happen due to this idiocy. No trade war in the history of mankind has ended well. End of discussion.

    2. Oil price war. The Sauds have decided that now is the time to squeeze their Russian and Shale oil competitors and take back market share. Their cost of production is under $10. Shale is between $40-100. Fracking is over $100. Before this occurred our shale industry was up to their ears in debt (cheap money) and that is where all of our yield has been coming from, perhaps directly, but for sure indirectly. How many of us have income funds or ETFs that have various forms High Yield paper to juice the yield? The answer is probably 100%. The shale oil debt paper is better used as toilet paper and most of these players are soon to be OB.

    3. Liquidity crisis. The market crashes and margin calls go out. Folks have to liquidate assets to cover. Many of the cash type instruments out there are NOT liquid because of #2 above. They are having to somehow get cash to stay alive.

    4. The author mentioned gold. Liquidity issues are forcing holders to sell their paper gold and silver (options, ETFs, funds, etc.). This is what is driving both the POG and POS down below where the market thinks it should be. This is resulting in either skyrocketing premiums or lack of supply. Classic case of artificial price controls in the real world where people know differently. Just so you know, gold is continuing to hit all time highs as I write in every other currency on the planet - just not the dollar.

    5. COVID-19 is causing the economy to stop. Not slow but stop. Unless Washington and all Americans get their act together soonest, this is going to get ugly like Italy. Think of how many million people are out of a job right now. How many of these people are living check to check? Also keep in mind that this is forcing the world to shift from a face to face economy and culture to a virtual one. Are you ready? What is going to have to change?

    6. Total lack of political leadership at the national level - both parties and for years. Don't look to Washington for any help whatsoever. Look to your state and local governments and your universities.

    We will get through this but let's not make it worse than it has to be.

    This is why we have to Flatten the Curve.

    and so it goes,

    peace and flatten the curve,


  • Hi @rono
    I will add, and this was discussed during the 2008 market melt; that a quick "helper" is for the Treasury to issue all U.S. individual taxpayers on current record (a gross, upper income limit would have to be established based upon last year's filing) a check (now) for say, $2,000. A payroll tax reduction doesn't help everyone and is too slow to bump the economy.
    This money would not be included in taxable income going forward at any taxing authority level.
    The current social ramifications of COVID are fully different than the 2008 melt. That financial circumstance didn't stop most folks from doing normal activities, eh?
  • Yes, a whole new ballgame. It isn't going to be pretty. Sometimes I recently feel as if I've stepped through the mirror into one of those science fiction end-of-the-world as we know it stories.
  • At Old_Joe, yes. Lots of choices for the sci-fi area. And even, Alice in Wonderland; for what's real and not, may apply, eh?
  • msf
    edited March 14
    "This is why we have to Flatten the Curve."

    All the bullet items shown are economic. Why would spreading out the same number of incidents over a longer period of time ("flattening the curve") help the economy? IMHO, we need to (a) flatten the curve and (b) shrink the total area under the curve to protect people in spite of the negative impact to the economy.
    Governments will not be able to minimise both deaths from coronavirus disease 2019 (COVID-19) and the economic impact of viral spread. Keeping mortality as low as possible will be the highest priority for individuals; hence governments must put in place measures to ameliorate the inevitable economic downturn.
    A key issue for epidemiologists is helping policy makers decide the main objectives of mitigation—eg, minimising morbidity and associated mortality, avoiding an epidemic peak that overwhelms health-care services, keeping the effects on the economy within manageable levels, and flattening the epidemic curve to wait for vaccine development and manufacture on scale and antiviral drug therapies. Such mitigation objectives are difficult to achieve by the same interventions, so choices must be made about priorities. For COVID-19, the potential economic impact of self-isolation or mandated quarantine could be substantial, as occurred in China.
    Anderson et al., How will country-based mitigation measures influence the course of the COVID-19 epidemic?, The Lancet, March 9, 2020.

    Here's a short opinion piece describing this, concluding "We can go for saving people, or we can go for saving the economy, but we cannot go for both." It offers the opinion that "What you need to know is that the [UK] government is choosing the economy."

    Finally, here's an interactive "fun with charts" page (NYTimes OpEd) where you can alter the timing of government intervention and the severity of the intervention to see the projected efficacy in "flattening the curve". Though it doesn't model the economic impacts.
  • I've just received all of this information via email from a close personal friend. He is retired, previously held the position of Chief of Medicine at one of our San Francisco hospitals, and specialized in pulmonary medicine.

    I realize that much of this information has appeared in various places at various times, but this seems to be a comprehensive summary of all that is known and suspected in medical circles. Due to the length, I'm posting this in two sections.

    Part 1:

    University of California, San Francisco BioHub Panel on COVID-19
    March 10, 2020

    Joe DeRisi: UCSF’s top infectious disease researcher. Co-president of ChanZuckerberg BioHub (a JV involving UCSF / Berkeley / Stanford). Co-inventor of the chip used in SARS epidemic.
    Emily Crawford: COVID task force director. Focused on diagnostics
    Cristina Tato: Rapid Response Director. Immunologist.
    Patrick Ayescue: Leading outbreak response and surveillance. Epidemiologist.
    Chaz Langelier: UCSF Infectious Disease doc

    What’s below are essentially direct quotes from the panelists. I bracketed the few things that are not quotes.

    Top takeaways
    ■ At this point, we are past containment. Containment is basically futile. Our containment efforts won’t reduce the number who get infected in the US.

    ■ Now we’re just trying to slow the spread, to help healthcare providers deal with the demand peak. In other words, the goal of containment is to "flatten the curve", to lower the peak of the surge of demand that will hit healthcare providers. And to buy time, in hopes a drug can be developed.

    ■ How many in the community already have the virus? No one knows.

    ■ We are moving from containment to care.

    ■ We in the US are currently where at where Italy was a week ago. We see nothing to say we will be substantially different.

    ■ 40-70% of the US population will be infected over the next 12-18 months. After that level you can start to get herd immunity. Unlike flu this is entirely novel to humans, so there is no latent immunity in the global population.

    ■ [We used their numbers to work out a guesstimate of deaths— indicating about 1.5 million Americans may die. The panelists did not disagree with our estimate. This compares to seasonal flu’s average of 50K Americans per year. Assume 50% of US population, that’s 160M people infected. With 1% mortality rate that's 1.6M Americans die over the next 12-18 months.]
    ... • The fatality rate is in the range of 10X flu.
    ... • This assumes no drug is found effective and made available.

    ■ The death rate varies hugely by age. Over age 80 the mortality rate could be 10-15%. [See chart by age Signe found online, attached at bottom.]

    ■ Don’t know whether COVID-19 is seasonal but if is and subsides over the summer, it is likely to roar back in fall as the 1918 flu did

    ■ I can only tell you two things definitively. Definitively it’s going to get worse before it gets better. And we'll be dealing with this for the next year at least. Our lives are going to look different for the next year.

    What should we do now? What are you doing for your family?

    ■ Appears one can be infectious before being symptomatic. We don’t know how infectious before symptomatic, but know that highest level of virus prevalence coincides with symptoms. We currently think folks are infectious 2 days before through 14 days after onset of symptoms (T-2 to T+14 onset).

    ■ How long does the virus last?
    On surfaces, best guess is 4-20 hours depending on surface type (maybe a few days) but still no consensus on this. The virus is very susceptible to common anti-bacterial cleaning agents: bleach, hydrogen peroxide, alcohol-based.

    ■ Avoid concerts, movies, crowded places. We have cancelled business travel.

    ■ Do the basic hygiene, eg hand washing and avoiding touching face.

    ■ Stockpile your critical prescription medications. Many pharma supply chains run through China. Pharma companies usually hold 2-3 months of raw materials, so may run out given the disruption in China’s manufacturing.

    ■ Pneumonia shot might be helpful. Not preventative of COVID-19, but reduces your chance of being weakened, which makes COVID-19 more dangerous.

    ■ Get a flu shot next fall. Not preventative of COVID-19, but reduces your chance of being weakened, which makes COVID-19 more dangerous.

    ■ We would say “Anyone over 60 stay at home unless it’s critical”. CDC toyed with idea of saying anyone over 60 not travel on commercial airlines.

    ■ We at UCSF are moving our “at-risk” parents back from nursing homes, etc. to their own homes. Then are not letting them out of the house. The other members of the family are washing hands the moment they come in.

    Three routes of infection
    ... • Hand to mouth / face
    ... • Aerosol transmission
    ... • Fecal oral route

    What if someone is sick?

    ■ If someone gets sick, have them stay home and socially isolate. There is very little you can do at a hospital that you couldn’t do at home. Most cases are mild. But if they are old or have lung or cardio-vascular problems, read on.

    ■ If someone gets quite sick who is old (70+) or with lung or cardio-vascular problems, take them to the ER

    ■ There is no accepted treatment for COVID-19. The hospital will give supportive care (eg IV fluids, oxygen) to help you stay alive while your body fights the disease. ie to prevent sepsis.

    ■ If someone gets sick who is high risk (eg is both old and has lung/cardio-vascular problems), you can try to get them enrolled for “compassionate use" of Remdesivir, a drug that is in clinical trial at San Francisco General and UCSF, and in China. Need to find a doc there in order to ask to enroll. Remdesivir is an anti-viral from Gilead that showed effectiveness against MERS in primates and is being tried against COVID-19. If the trials succeed it might be available for next winter as production scales up far faster for drugs than for vaccines.

    ■ Why is the fatality rate much higher for older adults?
    ... • Your immune system declines past age 50
    ... • Fatality rate tracks closely with “co-morbidity”, ie the presence of other conditions that compromise the patient’s hearth, especially respiratory or cardio-vascular illness. These conditions are higher in older adults.
    ... • Risk of pneumonia is higher in older adults.
    (Part 2 follows)
  • Part 2:

    What about testing to know if someone has COVID-19? Bottom line, there is not enough testing capacity to be broadly useful. Here’s why.

    ■ Currently, there is no way to determine what a person has other than a PCR test. No other test can yet distinguish "COVID-19 from flu or from the other dozen respiratory bugs that are circulating”.

    ■ A Polymerase Chain Reaction (PCR) test can detect COVID-19’s RNA. However they still don’t have confidence in the test’s specificity, ie they don’t know the rate of false negatives.

    ■ The PCR test requires kits with reagents and requires clinical labs to process the kits.

    ■ While the kits are becoming available, the lab capacity is not growing

    ■ The leading clinical lab firms, Quest and Labcore have capacity to process 1000 kits per day. For the nation.

    ■ Expanding processing capacity takes “time, space, and equipment.” And certification. ie it won’t happen soon.

    ■ UCSF and UCBerkeley have donated their research labs to process kits. But each has capacity to process only 20-40 kits per day. And are not clinically certified.

    ■ Novel test methods are on the horizon, but not here now and won’t be at any scale to be useful for the present danger.

    How well is society preparing for the impact?
    ■ Local hospitals are adding capacity as we speak. UCSF’s Parnassus campus has erected “triage tents” in a parking lot. They have converted a ward to “negative pressure” which is needed to contain the virus. They are considering re-opening the shuttered Mt Zion facility.

    ■ If COVID-19 affected children then we would be seeing mass departures of families from cities. But thankfully now we know that kids are not affected.

    • School closures are one the biggest societal impacts. We need to be thoughtful before we close schools, especially elementary schools because of the knock-on effects. If elementary kids are not in school then some hospital staff can’t come to work, which decreases hospital capacity at a time of surging demand for hospital services.

    ■ Public Health systems are prepared to deal with short-term outbreaks that last for weeks, like an outbreak of meningitis. They do not have the capacity to sustain for outbreaks that last for months. Other solutions will have to be found.

    ■ What will we do to handle behavior changes that can last for months?
    ... • Many employees will need to make accommodations for elderly parents and those with underlying conditions and immune-suppressed.
    ... • Kids home due to school closures

    ■ [Dr. DeRisi had to leave the meeting for a call with the governor’s office. When he returned we asked what the call covered.] The epidemiological models the state is using to track and trigger action. The state is planning at what point they will take certain actions. ie what will trigger an order to cease any gatherings of over 1000 people.

    Where do you find reliable news?
    ■ The John Hopkins Center for Health Security site. Which posts daily updates. The site says you can sign up to receive a daily newsletter on COVID-19 by email. [I tried and the page times out due to high demand. After three more tries I was successful in registering for the newsletter.]
    ■ The New York Times is good on scientific accuracy.

    Observations on China
    ■ Unlike during SARS, China’s scientists are publishing openly and accurately on COVID-19.

    ■ While China’s early reports on incidence were clearly low, that seems to trace to their data management systems being overwhelmed, not to any bad intent.

    ■ Wuhan has 4.3 beds per thousand while US has 2.8 beds per thousand. Wuhan built 2 additional hospitals in 2 weeks. Even so, most patients were sent to gymnasiums to sleep on cots.

    ■ Early on no one had info on COVID-19. So China reacted in a way unique modern history, except in wartime.

    Every few years there seems another: SARS, Ebola, MERS, H1N1, COVID-19. Growing strains of antibiotic resistant bacteria. Are we in the twilight of a century of medicine’s great triumph over infectious disease?
    ■ "We’ve been in a back and forth battle against viruses for a million years."
    ■ But it would sure help if every country would shut down their wet markets.
    ■ As with many things, the worst impact of COVID-19 will likely be in the countries with the least resources, eg Africa. See article on Wired magazine on sequencing of virus from Cambodia.

  • Pretty cool interactive graph.
  • @Mark- yes indeed.
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