Fallback Friday – US Passes China to Become Most Infected Nation

clarisezoleta

85,996!

That's how many infections there are in the US as of 6:49 this morning and China has 81,897 so we blew right past them – even though we had 3 more months to prepare than China did and we were certainly not taken by surprise – other than our President, who asked us "Who could have seen this coming?"

It was way back on January 22nd when we had the first US case of the coronavirus. I noted it in our Morning Report saying:

One thing that's distracting everybody at the moment is the Chinese virus scare, with 50% more cases today than there were yesterday (now 470) so no, it's not at all under control. The US case that panicked our markets yesterday was from a guy who was in China recently and it does seem to be contained (so far).

In drugstores and at airports, and on the online marketplaces increasingly at the heart of Chinese commerce, fear and confusion manifested themselves in shortages or long lines for suddenly scarce products promising protection from the deadly but still largely mysterious respiratory disease. Surgical masks flew off shelves, travelers canceled plans and rumors flooded social media. Drug makers are doing well, travel stocks are doing poorly.

The very next day, we initiated our first virus hedge because that is what you are supposed to do when you come across economic uncertainty and want to protect your portfolios. What we didn't count on, however, is that two months later, the US would still be totally unprepared for its own viral epidemic or that our President would spend more time in denial than in meetings about controlling the virus. Rather than lead us through this crisis, Trump made 33 false claims about the virus in the first two weeks of March alone – he is literally killing people with his bullshit!

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It is 24 hours later and the US has gone from 69,000 to 85,000 cases in the past 24 hours. There will be well over 100,000 cases on Monday and 200,000 by the end of next week and, if we are still not getting things together and responding to desperate needs for protective gear in the hospitals and SERIOUS protocols to halt the spread of the virus, the only thing we'll have by Easter (4/12) is 500,000 cases of the virus – almost 10 times what we have on this curent(ish) map.

As you can see from the World Health Organization study above, that means 50,000 people will die though it's hard to imagine how it will be that low considering the US only has about 125,000 respirators in the whole country so, if we can't keep the number of cases below 500,000 (about 25% require hospitalization), we're going to be screwed – no matter how efficient we are at moving supplies and patients around.

imrs

Speaking of inefficiency, our Government apparently has 1.5 MILLION N95 face masks in a warehouse in Indiana but they haven't shipped them where needed because they are past their expiration date DESPITE the CDC saying that they would be fine since the date is fairly arbitrary and simply means the masks should be inspected before use.

Indiana is Mike Pence's home state. Mike Pence is in charge of our virus response task force. Do you think it would be possible for you to screw up your job this badly and keep it?

The real danger here isn't the virus, it's that we might re-elect Team Trump to deal with the aftermath of this crisis and the crisis after this one.

Heston

We're extrapolating some bad numbers here but "only" 50,000 deaths – we had 114,328 people shot by guns last year in the US. Hell, if we can get some of those NRA lobbyists to work for the Coronavirus, I bet we can bring it back next year stronger than ever. After all, it is our constitutional right to die of any virus we choose to, isn't it?

Meanwhile, 50,000 deaths and sadly even 500,000 deaths is survivable by the US Economy – it will carry on without us and, like Trump, won't give the victims a second thought and will simply look for the next way to enrich itself and, last time I checked, getting all remorseful about the dead wasn't very profitable (unless you own a funeral home, of course).

There are 330,000,000 people in this country and if you take away 500,000 of them, there will be 329,500,000 people in this country so how much do you think that will affect the go-forward GDP? In that, Trump is right, the "cure" is worse than the disease in terms of economic impact as we are stopping 50% of commerce for 330,000,000 people in order to, HOPEFULLY, save 500,000 lives so the impact each month on our GDP is about $750Bn while the impact of 500,000 dead (0.15%) is just $27.3Bn per year.

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Even if we lose 5 MILLION people to the virus, that's just $273Bn per year so you can understand how a sociopath like President Trump would muse that it simply isn't worth all this effort just to stop some losers from dying, right? You know Donald Trump doesn't think he can get the virus – just like he thinks he can look into an eclipse without frying his corneas…

As investors, we do need to think a little bit like Trump and act as if human lives don't matter and simply do the math and calculate the effect of this virus on the economy over the long-term. In the short-run, you can't stop people from panicking and US having more victims than China is rattling a lot of people who've been buying stocks over the past few days – especially the ones who were believing all the BS on Fox news and the White House Press briefings stating that things were under control. They are not!

Still the worst-case scenario is that Trump remains completely ineffective in mustering a response to the virus and the states will be on their own and some will do well and some will do poorly in controlling the spread but at least our Constitution got that right – the states don't have to follow the President – they can do a lot of things on their own and New York and California are already starting to since, clearly, they are getting no help from Washington, DC. 

Have a safe weekend,

- Phil

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