Special
Edition - an outbreak of respiratory illness
caused by a novel (new) coronavirus that was first detected in Wuhan City,
Hubei Province, China. The virus has been designated SARS-CoV-2, while the
disease it causes has been designated COVID-19.
It has been a lousy last couple of weeks and the
prospects soon, not so good.
So, I suggest getting all of us through these
unnerving times is to pick something you like and do it. Something to raise
your spirits, make you feel good.
For me it is pie, I like pie. It makes me happy. Yes,
I am concerned about my family, community, students, friends, and I will
continue to be concerned. But, every now and then these next few weeks, how
about a little slice of pie? Lemon Meringue would be nice.
What makes you happy; a good walk, giving blood,
reading a good novel, watching a sporting event (no we can’t do that), talking
with your kids or grand kids, a good burger, a nap, a good joke, a nice
bourbon….whatever, how about taking time out from all the uncertainty and
select something you like.
Me, I like pie!
COVID-19 NOTES
– Sales of wine, beer and liquor in Seattle, Chicago and Boston soared 300
to 500 percent in the last week, compared to sales in January.
There are an estimated 45,000 intensive care unit
beds in the United States.
Toilet paper is typically made to order. Because it
is bulky, it is not profitable to store the rolls in large quantities, so the
industry typically has only a few months inventory on hand at any given time. Tell
me about it.
This
weekend, the world declared war on the coronavirus.
The
Federal Reserve took drastic emergency action yesterday to stabilize the
economy. It cut interest rates by a full percentage point and said it would buy
$700 billion in Treasuries and mortgage-backed securities.
Businesses
facing a sudden drop in customers need short-term loans to keep the lights on
and pay employees.
All
told, the Fed's aggressive actions are intended to keep financial markets
functioning and lending flowing to businesses and consumers.
The
private sector mobilizes
During
World War II, Chrysler and GM began making fuselages, airplane engines, and
tanks. Today, companies are also ditching their day-to-day to serve the greater
need.
LVMH,
the French luxury group, is converting facilities that typically produce
cosmetics and perfumes for brands like Christian Dior to make disinfectant gel
and prevent a shortage of hand sanitizer.
The
U.K. is talking to Rolls-Royce, manufacturer JCB, and other firms to help make
ventilators.
Consumer
goods companies are shifting priorities in order to keep stores stocked with
essential items. They'll stop making nice-but-not-necessary goods, like scented
bleach, and crank out the highest-priority items, like food staples.
Google
and the U.S. government are launching a website today dedicated to providing
the public with COVID-19 resources.
The
Financial Services Forum, which includes the biggest banks in the U.S. like
JPMorgan and Citigroup, said its members would halt stock buybacks through Q2
to provide more capital to customers affected by COVID-19.
The
road ahead
Millions
of healthcare workers, volunteers, and service workers are on the front lines
caring for affected populations.
The
government is also calling on us, everyday citizens, to make extraordinary
sacrifices. The CDC has recommended we hold off on gathering in groups of 50 or
more people for the next eight weeks. That means no music festivals, no
weddings, no trivia nights, no Morning Brew happy hours.
It's
hard to imagine what the next few months will be like. But what's comforting is
knowing that in this battle, we're all fighting on the same side.
POLITICS 101 – The coronavirus crisis is merely the latest
episode in the political drama of our time: It’s either President Trump’s
fault, or it is not.
It
ought to be possible to believe that we have a serious and escalating health
crisis now, of uncertain ultimate scale and reach; that the government’s
response was appropriately aggressive at first—with the initial travel
restrictions on countries most affected—but then became dilatory and perhaps
even complacent as the infection hovered unpredictably offshore; and that,
above all, with infections and deaths rising and economic confidence
collapsing, urgent further measures should be taken to address it.
Meanwhile,
the President’s opponents are gearing up to ensure that whatever happens, he
gets no credit.
For
those of you who hoped that our modern political dispensation—where there’s no
longer objective reality but simply a Democratic truth and a Republican
truth—might not survive a real national crisis, don’t get your hopes up.
In
a curious way, perhaps, we had better hope for all our sakes that the Mr. Trump
and his critics are right—that this escalating scare will in the end be
remembered as a political event. Because if it isn’t, if the tedious,
demoralizing name-calling and finger-pointing is in the end eclipsed by
unimaginable tragedy, the president will not be the only one paying the price.
COLLEGE
CHRONICLES – Higher education has
long clung to well-defined seasonal rituals, governed by deadlines that order the
phases of the admissions process. At many prominent colleges, the calendar has
revolved around May 1, the national deposit deadline for applicants.
Not
in 2020. As of Sunday night, at least three dozen institutions — including
Augustana College, Northern Arizona University, and the University of Illinois
at Chicago — had pushed back their deposit deadlines by a month, and several
more are poised to do so this week. The traditional deadline might leave some
colleges too little time to yield the class they plan to enroll — and the
revenue they expect to bring in.
As
institutions shut their doors and transition to online instruction, the status
of nonacademic employees — including dining-service workers and those from
independent contractors — is being left in the balance.
If
the pandemic stretches into the summer, colleges could be forced to make tough
decisions: Should they reduce payments to certain contractors in order to
invest in better distance learning? Perhaps terminate some “nonessential”
employees in order to continue to pay those deemed “essential”?
THE
EPICENTER? - The "epicenter"
of the pandemic has now shifted to Europe, the World Health Organization said
Friday. Here's the latest across the globe...
U.S.:
With new travel restrictions in place, some airports were overwhelmed with
returning passengers Saturday night, leading to hours-long lines and lots of
social undistancing. The Dept. of Homeland Security has limited inbound flights
from restricted countries to 13 airports.
Spain:
The government said people should not leave home outside of going to work or
buying essential items.
France:
All "non-essential" stores, such as restaurants and cafes, were
ordered to close.
Italy:
One writer compared the hushed atmosphere in the north to a post-apocalyptic
film. Yesterday, the country reported its largest one-day death count from the
virus.
The
U.K.: Prime Minister Boris Johnson has been criticized for implementing lighter
restrictions than his European peers. The country's health secretary defended
the approach, but cases rose 43% on Saturday.
China:
The country, which has suffered more than 3,200 deaths from COVID-19, recently
reported only 11 new cases, per Dr. Anthony Fauci, the U.S.' top infectious
disease expert.
MARKET WEEK
- Our routines may be a little out of whack, but at least the Earth still
revolves around the Sun. This week, winter ends and spring begins.
Monday: Freedom of Information Day
Tuesday: Retail sales; St. Patrick’s Day (acceptable to drink alone?);
presidential primaries (AZ, FL, IL, OH); FedEx earnings; second anniversary of
the Cambridge Analytica scandal
Wednesday: Housing starts
Thursday: First day of spring; first round of NCAA tournament would’ve been
played, The Swami is out of work.
Friday: Existing home sales; incredible timing for International Day of
Happiness
The U.S., the world's biggest economy, is likely to
have a recession this year and the #2 economy, China, has already undergone a
significant slowdown.
That alone would have been enough to weigh on global
growth. But because major economies like Italy, Germany, the U.K., France and
Japan also are facing major outbreaks of their own, there is growing fear of
the entire world's GDP growth turning negative for multiple quarters this year.
As of Monday night, 15 countries had at least 1,000
confirmed cases of coronavirus, and 12 of those were among the world's 25
largest economies.
Worse, many of the countries expected to be hardest
hit by the outbreak are in some of the weakest economic positions, especially
those in the eurozone.
A major struggle for policymakers is that much of
the outbreak's economic impact is not yet measurable. That makes preparing for
and assessing the potential for damage a new challenge.
GERM WARFARE - The next great world war is here. But this time it's not country vs
country. It's humans vs a virus. And in this war, the soldiers on the front
lines are health care professionals, grocery store employees, janitors,
sanitation workers, delivery drivers, and all the others who keep the gears of
society turning. The generals are the governors, mayors, principals, and others
making the tough decisions to keep us safe; and who keep working for their
constituents and students, even as they're dealing with their own health and
safety concerns. And then there are the rest of us, the people on the
homefront; a term that, in this case, should be taken entirely literally.
"Ask not what your country can do for you – ask what you can do for your
country." What you can do for your country is: stay home, work from home,
learn from home, inform and support your neighbors, drop off stuff for older
people who shouldn't be going out, wash your hands. Or just do nothing. No one
is asking you to jump on a grenade. Right now Uncle Sam Needs You to just sit
on the couch and watch TV. It's a vital role and one many of us were born to
do. Don't take it from me. Take it from these ordinary Italians who were where
we are ten days ago.
We're just beginning an endurance test that has no
clear end.
SILVER
LINING - The current market turmoil tells me a new era is
breaking, so question everything. Will cable, energy, mobile and social media
ever come back? And if not, what’s next?
Well, the knee-jerk reactions will come first. Most
think the 2003 SARS epidemic in China ushered in that country’s era of
e-commerce, but it was going to happen anyway—the crisis only accelerated it.
So be wary about talk of robot and drone deliveries. It may come to that if the
virus spreads, but the economics still seem far out.
Will energy stay cheap forever after this week’s
devastation? I doubt it, but the economy can finally benefit from fracking’s cheap
natural gas. I’d bet so-called clean and renewable energy was set back a decade
by having to compete with lower prices. Cheap fossil fuels may also push back
any new adoption of carbon-free nuclear energy.
More interesting is the emptying of countless
college campuses, sending students home. Classes will be online-only until
further notice. Smart. But at some point, parents will surely ask, “Why again
are we paying 78 grand a year?” Is the end of universities far behind? I do
believe the end of higher education as we know it, is now over. Time for new
strategies and platforms.
Similarly, lots of companies are telling employees
to work at home. Will an era of telecommuting and no rush-hour traffic finally
arrive? Maybe not. Recall that early in Marissa Mayer’s tenure as Yahoo CEO,
she banned working from home because so many people were, as they say, mailing
it in.
The end of China’s dominance is certainly coming. No
one will ever again concentrate manufacturing in China alone. Vietnam and other
countries with low-cost labor will benefit. Maybe this is Africa’s moment.
Related: A louder globalization backlash may arise again—but since consumers
like cheap goods, it will flame out.
Another observation: Interest rates and the Federal
Reserve may be increasingly irrelevant. The Fed’s job seems to be to ensure the
availability of Treasuries—mostly, as we wrote last September, as collateral
for the repo market, which finances an increasing share of global trade. The
$500 billion announced Thursday is encouraging.
What about mobile and cloud computing, and even the
stock market and its trillion-dollar valuations? It’s worth asking, as venture
capital and private equity using cheap debt are keeping companies private
longer, or forever. Others think it is value stocks’ turn to shine, but that
usually requires a period of inflation that I certainly don’t see coming. Quite
the opposite.
No, growth will still rule, but with a different set
of leaders. In the bio world, DNA sequencing and Crispr gene editing are
starting to ramp up. Health care will be transformed by new ways to detect and
treat cancer and other ways to cure previously incurable diseases like
sickle-cell anemia.
In the high-tech world, mobile seems tired. Apple’s
hottest product is AirPods Pro, those Star Wars-inspired white sticks hanging
out of everyone’s ears. That’s an accessory, not an innovation. Here’s hoping
for some knock-your-socks-off new mobile products. Note also that we’re only
about a third of the way into the cloudification of enterprises. And we’re only
beginning to master machine learning and artificial intelligence, with their
ability to find patterns that humans can’t. I think the next tech era will be
driven by implementation of AI-infused systems into every business.
The past 30 year’s tech abundance means the
developing world’s billions will finally see productivity improvements and
attract an increasing share of investment.
New eras are notoriously hard to predict. So instead
of focusing on which cities are quarantined, start thinking about what’s next.
Very few investors do.
WHAT TO WATCH – Quarantined, how about some
streaming on Netflix:
“Space Jam” Miss the NBA, how about Michael
Jordan and Bugs Bunny?
“Love Is Blind” Bachelorette is over, this will
help.
“ZZ Top: That Little Ol’ Band from Texas” Thank
you KM, classic rock documentary.
“Our Planet” Great series on the good, bad,
and the ugly of our planet.
“The Kominsky Method” You
are older than 65, this is for you.
“Formula 1 Drive to Survive” NASCAR
is nothing compared to these guys.
SWAMI’S WEEK
TOP PICKS
– No more sports for a while, The Swami tries his skills elsewhere:
1). Over and
under when toilet paper will appear back in my local Vons market – three days.
2). Over and under how many days it will take faculty to realize
online teaching is a whole new ball game – two hours.
3). Over and under how long until you send the kids over to the
grandparents’ house – four days.
2020 Season
to Date (2-1)
Happy
St. Patrick’s Day - I hope this St. Patrick's Day brings
health and safety to you and yours. And please thank a front-line health
professional.
Next Blog: I am getting bored.
Until
Monday March 23, 2020 Adios.
Claremont,
California
March
17, 2020
#X-15-404
2,632
words, ten minute read
CARTOON OF THE
WEEK – Drabble by Kevin Fagan
RINK RATS
POLL – Coronavirus will lead to…
______
A recession
______ A Democrat President in 2021
______ 6.0% Unemployment by years’ end
______ Tokyo Olympics to be postponed
______ All of the above
QUOTE OF THE
MONTH
– “I long ago came to the conclusion that all life is 6 to 5 against.”
—
Damon Runyon
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