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Weekly Indicators for March 30 – April 3 at Seeking Alpha

by New Deal democrat

Weekly Indicators for March 30 – April 3 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

This was the week when the bottom finally fell out of almost all the remaining data.

Clicking over and reading will bring you up to the virtual moment on the economy, and reward me a little bit for the effort I put into this endeavor, especially now that I am devoting most of my time to the likely impacts of the coronavirus.

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Coronavirus dashboard for April 4: with lockdowns in place, testing still far behind, no action on necessary “test, track, quarantine” plan

Coronavirus dashboard for April 4: with lockdowns in place, testing still far behind, no action on necessary “test, track, quarantine” plan

 – by New Deal democrat

Here is the update through yesterday (April 3)

I’ve changed the format, moving the “just the facts, ma’am” data to the top, and comments at the end.

The four most important metrics are starred (***) below.

Number and rate of increase of Reported Infections (from Johns Hopkins via arcgis.com)

  • Number: up +32,857 to 278,458 (vs. +28,879 on April 2)
  • ***Rate of increase: day/day: 13% (vs. 34.6% baseline, 15% for the past week, and 13% on April 2)

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The Climate Crisis and the Green New Deal

The Climate Crisis and the Green New Deal

The Covid-19 pandemic won’t last forever, and at some point we will have to return to figuring out how to respond to the climate crisis.  (What a depressing opening line.  No, I have no desire to live in a world of permanent crisis.)  Is the answer a Green New Deal?  Challenge has just published my analysis of this; you can find the link here.

Abstract: The Green New Deal, an attractive agenda of increased investment in energy efficiency and renewable energy sources, is not remotely sufficient to stabilize global warming at a non-catastrophic level. Such a policy needs to be accompanied by direct measures to curtail the use of fossil fuels, although this may complicate the intended messaging.

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Remdesivir and Transfer Pricing Part II

Remdesivir and Transfer Pricing Part II

Now that I sketched out the transfer pricing for Gilead Sciences with respect to their successful HIV and Hep C products (as much as I can say based on publicly available information), it is time to speculate a bit on how Remdesivir may play out. There is a lot we do not know including whether this treatment receives regulatory approval and how it will be priced if it does. Note for example this story:

More than 150 organisations and individuals on Monday urged US biotechnology firm Gilead not to enforce exclusivity over a drug that might be used to treat COVID-19 patients. In an open letter, 145 non-governmental organisations, including Doctors Without Borders (MSF) and Oxfam, and 12 individuals claimed Gilead Sciences held primary patents of remdesivir in more than 70 countries. That meant they could block generic development of the drug until 2031. The open letter to Gilead chief executive Daniel O’Day was circulated by MSF. “We write to request that Gilead take immediate actions to ensure rapid availability, affordability and accessibility of its experimental therapy remdesivir for the treatment of COVID-19, pending the results of the clinical trials demonstrating its efficacy,” it said.

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Credit Spreads: Comparing COVID-19 to the Collapse of Lehman Brothers

Credit Spreads: Comparing COVID-19 to the Collapse of Lehman Brothers

On March 18, Reuters noted something I have been following of late:

Concerns about the impact of the coronavirus on corporate America’s balance sheets has tripled the premium investors are demanding to hold even the highest-rated corporate bonds. The difference between the average yield of investment-grade U.S. bonds over virtually risk-free Treasuries widened to 303 basis points (bps) on Wednesday, according to the ICE/BofA investment grade index. That’s up from 101 bps at the start of the year and the highest since July 2009, For riskier high-yield securities, the average spread over Treasuries on Wednesday was 904 bps, the highest since October 2011, and more than 2-1/2 times the rate at the start of the year, using the ICE/BofA high-yield index … This hit to earnings has come at a time when U.S. corporate debt is near all-time highs, as is the size of the so-called triple-B segment of the market – companies one notch above junk status.

The spread between long-term corporate bond rates with credit rating BBB and long-term government bond rates jumped very quickly to almost 4%, which was not quite as high as the 5% or more spreads observed after the collapse of Lehman Brothers. FRED provides a series entitled ICE BofA BBB US Corporate Index Option-Adjusted Spread that dates back to 1997 when this spread was modest. It hit sort of a tidal wave during the turn of the millennium with the collapse of the internet/computer/telecommunication boom and a host of notorious bankruptcies. What happened after the collapse of Lehman Brothers was a tsunami. I did find some Thomson Reuters discussion entitled the implications of the credit crunch for intercompany loans, which talked about market interest rates as of February 2009:

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This is our president, and it’s sickening.

This is the complete letter Trump sent to Senator Schumer on April 2nd.   It is beyond embarrassing.

 

Senator Charles E. Schumer
United States Senator
Washington, D.C.  20515

Dear Senator Schumer:

Thank you for your Democrat public relations letter and incorrect sound bites, which are wrong in every way.

  1. As you are aware, Vice President Pence is in charge of the Task Force. By almost all accounts, he has done a spectacular job.
  2. The Defense Production Act (DPA) has been consistently used by my team and me for the purchase of billions of dollars’ worth of equipment, medical supplies, ventilators, and other related items. It has been powerful leverage, so powerful that companies generally do whatever we are asking, without even a formal notice.  They know something is coming, and that’s all they need to know.
  3. A “senior military officer” is in charge of purchasing, distributing, etc. His name is Rear Admiral John Polowczyk.  He is working 24 hours a day, and is highly respected by everyone.  If you remember, my team gave you this information, but for public relations purposes, you choose to ignore it.
  4. We have given New York many things, including hospitals, medical centers, medical supplies, record numbers of ventilators, and more. You should have had New York much better prepared than you did, and as Dr. Fauci and Dr. Birx said yesterday, New York was very late in its fight against the virus.  As you are aware, the Federal Government is merely a back-up for state governments.  Unfortunately, your state needed far more of a back-up than most others.

If you spent less time on your ridiculous impeachment hoax, which went haplessly on forever and ended up going nowhere (except increasing my poll numbers), and instead focused on helping the people of New York, then New York would not have been so completely unprepared for the “invisible enemy.” No wonder AOC and others are thinking about running against you in the primary. If they did, they would likely win.

Fortunately, we have been working with your state and city governments, Governor Andrew Cuomo and Mayor Bill DeBlasio, to get the job done.  You have been missing in action, except when it comes to the “press.”  While you have stated that you don’t like Andrew Cuomo, you ought to start working alongside him for the good of all New Yorkers.

I’ve known you for many years, but I never knew how bad a Senator you are for the state of New York, until I became President.

If you have any questions, please do not hesitate to call.  Or, in the alternative, call Rear Admiral Polowczyk.

Sincerely yours,

Donald J. Trump

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Coronovirus politics

Coronovirus politics from the Boston Globe:

There are indeed two ways in which Trump’s handling of this crisis are being viewed. Where most Democrats see lying and stupidity, most Republicans see optimism and hope. As the virus races around the world, mainstream Democrats see proof that we live in a global connected world — while Trump Republicans see proof that we need tighter borders. Where Democrats see presidential messages shifting daily as unclear and inconsistent communication, Republicans see frequent and authentic updates and genuine effort in the face of uncertainty.

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The D Word

The D Word

Yes, depression, and not the psychological type, although the economic type leads to the psychological type, whether ot not it is the other  way around (see Keynes’ “animal spirits).

I often make fun of Robert J. Samuelson in the Washington Post, but in Washington Post today he raised the possibility that we are going into a depression, not just a bad recession.  On TV this evening I heard Austen Goolsby throw it out as well.  I suspect we are going to hear it a lot more.

The problem is not just that we have seen the highest increase in joblessness ever, but the increasing prospect that there will not be a quick recovery once the virus is under control. This is partly due to the global nature of this pandemic and the economic decline that has come with it.

A sign of what may be coming is what is going on in China.  The virus seems to be under control, despite some doubts about their numbers and new cases happening due to people arriving there.  But they have been to get their economy started up again, even in Wuhan. Supposedly 98% of firms have restarted.  But there are problems.  One is that many such places are missing crucial workers still under quarantine somewhere  or other.  Then there is the other side of this, the demand side.  China expects to sell goods through exports, but other countries are not buying.  And also domestic consumers are not buying either out of fear and low income.  Apparently there are factories running machines and using power even though they are not producing anything just to please the government that is making these claims of 98% of firms operating, but this seems to be an exaggeration.

Clearly at least on the demand side getting money to people and businesses through easy credit and a large fiscal stimulus are the obvious things to try to avoud this D outcome.  But Samuelson fears that they may be insufficient to this current situation, with no obvious alternative.  I fear he might be right on this one

Barkley Rosser

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Coronavirus dashboard for April 2: nationwide lockdown nearly complete, but the surge in testing has completely stalled

Coronavirus dashboard for April 2: nationwide lockdown nearly complete, but the surge in testing has completely stalled

 – by New Deal democrat

Here is the update through yesterday (April 1)

Close to 90% of the US population is now under lockdown, and it appears to be lowering the rate of exponential growth of new infections.

But testing in the past 6 days has plateaued at about 100,000/day and is not keeping pace at all with the growth in new infections. We will not be able to transition from the Sledgehammer of lockdowns to the scalpel of aggressive testing and quarantines until this changes. Deaths continue to climb at a steady exponential rate consistent with infections 2 weeks ago.

To transition to a South Korea style program, we also need to be able to trace infections and quarantine those newly infected. For that we need millions of thermometers, masks, and other equipment. There is no indication at all that this is happening.

The four most important metrics are starred (***) below.

Number and rate of increase of Reported Infections (from Johns Hopkins via arcgis.com)

  • Number: up +27,089 to 216,722 (vs. +25,023 on March 31)
  • ***Rate of increase: day/day: 14% (vs. 34.6% baseline, 18% for the past week, and 15% on March 31)

The exponential rate of growth in US cases has begun to slow:

Ben Engebreth is started tracking coronvirus infection and testing numbers for each state, with graphs, here.

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Why the States Must Surge Medical Supplies, explained in two easy points

Why the States must surge medical supplies, explained in two easy points

by New Deal democrat

Point 1:

The most recent “plan” of the Trump Administration is to extend the lockdown through the end of April. It is based on the below graph from a foundation endowed by Bill and Melinda Gates:

The graph anticipates roughly 100,000 deaths during April and May, peaking in mid-April at about 2500 deaths per day.

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