Coronavirus

[diehardtwinsfan]

 

And, whatever silverlining there is to diehard's post doesn't excuse the apparently total disregard of repeating falsehoods.  Listen to doctors and scientists, not smart guys on the internet. 

 

I cannot speak for you, but I've met a lot of "smart" people that aren't that smart. They may be real smart within their fields. They may have forgotten more of the nature of a molecule than I will ever know. They may have a better idea on how to treat this than any of us. But that doesn't mean they understand what will happen if the bond market collapses. It doesn't mean they understand what will happen if people start to starve. I agree we shouldn't be repeating falsehoods, but part of not repeating falsehoods is also making sure truths that don't fit the narrative are also included. A lie by omission is still a lie, and I think we all agree there's been plenty of that in this discussion too. 

 

No one in charge is thinking long term about this at all.

 

You can flatten the curve, but that will put very little dent in the mortality rate. That's simple math, and Brian's diagram a few pages back showed it clearly. Flattening the curve simply slows down the process, and grinding the economy to a full halt is going to cause a lot more problems... A LOT. Do you think people will sit idly by when they are unable to buy food? Have we already forgotten what nearly happened in Europe a few years ago when countries like Italy, Spain, and Greece couldn't service their debts? Do people even realize how close the world came to disaster back then and has anyone considered what stopping the global economy will do to these nations? We've already triggered a recession. We're on the verge of trigging something that will make 2008 look tame. As much as hate Trump, he's right about the economy needing to reopen. 

 

Oh, and what silver lining was there in my post?

[Craig Arko]

I have little interest in dying to pad stock portfolios.

 

But if any of you choose to volunteer to do so, I'll defend your right to.

[Squirrel]

It's not an issue of choosing who does and doesn't go. This is natural selection. This virus is going to kill who it's going to kill and there's literally nothing we can do about it. Flattening the curve isn't going to change the mortality rate. All it will do is extend it over a longer period of time but allow your hospitals the bandwidth to cope. It may save an extra life here or there, but it's long term mortality rate will not change.

 

Like it or not, it does the same thing most other viruses do. It attacks those who can fight it the least. Because there is no natural immunity, it will do what it does.

 

It's not an issue of acceptable losses. Those losses will happen. Our current course of action is going to add to them significantly.

Flattening the curve absolutely is about saving lives. In my opinion, it very erroneous to claim otherwise. It’s about making sure there is enough medical equipment and supplies and hospital beds to help the sick and about preserving medical staff. And not just with the virus but for other medical emergencies, too. Italy has had to make choices because there just wasn’t enough to go around when the spike hit.

[diehardtwinsfan]

 

I have little interest in dying to pad stock portfolios.

 

But if any of you choose to volunteer to do so, I'll defend your right to.

 

 

The issue is not dying to stock portfolios. The issue is what will happen when people are not able to buy food. The issue is what will happen if nations go insolvent. The issue is that in spite of all of this quarantining, it's not going to save many lives.

 

You're a math/science guy. You know how natural selection works. It's cold and I don't like it any more than you do, but you and I both know that flattening the curve only extends the time, it will save very few lives. That virus will kill who it's going to kill.

[Craig Arko]

 

 

The issue is not dying to stock portfolios. The issue is what will happen when people are not able to buy food. The issue is what will happen if nations go insolvent. The issue is that in spite of all of this quarantining, it's not going to save many lives.

 

You're a math/science guy. You know how natural selection works. It's cold and I don't like it any more than you do, but you and I both know that flattening the curve only extends the time, it will save very few lives. That virus will kill who it's going to kill.

I'm also an ethics/history guy.

 

Social darwinism went out about a hundred years ago. Still, I'll hope your family doesn't have to suffer as a result of certain peoples' proud ignorance.

[diehardtwinsfan]

 

Flattening the curve absolutely is about saving lives. In my opinion, it very erroneous to claim otherwise. It’s about making sure there are enough medical equipment and supplies and hospital beds to help the sick and about preserving medical staff. And not just with the virus but for other medical emergencies, too. Italy has had to make choices because there just wasn’t enough to go around when the spike hit.

 

I disagree. Flattening the curve is about lowering the rate of exposure. You may save a life or two here or there because medical providers will be better equipped to keep up, but that virus is still going to kill at its kill rate...And I have to ask, do you really think that food riots won't kill people? Do you really think that the increased crime when people have to resort to stealing for food or medical supplies won't kill? Do you really think that these things won't happen? I hope you're right if that's what you think, but I do not agree with you at all that these things will not happen.

 

Last week, I had an interesting conversation with that same bartender. I stay at an Embassy Suites when I travel, which if you don't know provides free hot breakfast and a snack buffet in the evening. Due to the virus, they started providing only snack kits that people could take back to their rooms. That got delayed because the truck got robbed and the food was stolen. That was before the mass quarantines (Maryland only shut down this week). Do you think that's going to get better as this goes on?

 

I know of two motivators that will get people to willingly die and kill a lot of people along the way: starvation and religion. I say this as a religious guy who is not at all proud of what has been done in the name of my God. It's pretty easy to look at what has been done in the name of religion and be upset, but don't kid yourself. People desperate to eat and give food to their children will do far worse. They have nothing to lose. We're playing a very dangerous game with that group right now.

[diehardtwinsfan]

 

I'm also an ethics/history guy.

 

Social darwinism went out about a hundred years ago. Still, I'll hope your family doesn't have to suffer as a result of certain peoples' proud ignorance.

 

 

I'm far more concerned about what happens to all of those who have nothing. For the record, my wife and I stand to benefit from a recession, not suffer. What I'm talking about is far worse than a simple recession though.  

[Squirrel]

I disagree. Flattening the curve is about lowering the rate of exposure. You may save a life or two here or there because medical providers will be better equipped to keep up, but that virus is still going to kill at its kill rate...And I have to ask, do you really think that food riots won't kill people? Do you really think that the increased crime when people have to resort to stealing for food or medical supplies won't kill? Do you really think that these things won't happen? I hope you're right if that's what you think, but I do not agree with you at all that these things will not happen.

 

Last week, I had an interesting conversation with that same bartender. I stay at an Embassy Suites when I travel, which if you don't know provides free hot breakfast and a snack buffet in the evening. Due to the virus, they started providing only snack kits that people could take back to their rooms. That got delayed because the truck got robbed and the food was stolen. That was before the mass quarantines (Maryland only shut down this week). Do you think that's going to get better as this goes on?

 

I know of two motivators that will get people to willingly die and kill a lot of people along the way: starvation and religion. I say this as a religious guy who is not at all proud of what has been done in the name of my God. It's pretty easy to look at what has been done in the name of religion and be upset, but don't kid yourself. People desperate to eat and give food to their children will do far worse. They have nothing to lose. We're playing a very dangerous game with that group right now.

I think this anecdote is a bit far-fetched. 

I choose science and medical authority. Flattening the curve will save lives. It wil lesson the burden at hospitals so more people can be treated over time. All at once and choices are then made as to who dies because there aren’t enough ventilators or respirators. We can lessen the over all mortality numbers this way and maybe the mortality rate, too. It might even delay exposure to many until a vaccine is available or bide time until drugs are repurposed or created to alleviate the worst symptoms. My niece is actually working on the latter now. Her company is busy with trials that will hopefully be available when the next wave hits. No one is suggesting we shelter in place for 12-18 months. But sheltering right now for the next few weeks will make a huge difference. It’s actually a proven fact.

 

And in your bartender scenario, or anyone living paycheck to paycheck, how do they pay for medical expenses? Is the inability to pay part of the natural selection process? I'm not sure what's worse ... dying because he can't afford medical attention, not seeking attention and spreading the virus, or dying from starvation because he can no longer afford food?

[Craig Arko]

And I'm more concerned about those who are dying, and those who are treating them who are also becoming sick, and some of them dying as well. What I'm talking about is far worse than a case of the flu though.

 

We certainly have different value systems.

[akmanak]

Food riots? Come on. What this virus comes down to is statistics when dealing with it. I won't do a long and drawn out post but diehard you are refusing to look at the overall numbers.

 

China put in mass quarantine measures right away and their numbers were relatively low and Italy, Spain, New York did not and their numbers are through the roof.

 

This virus if not contained, which has been stated by many doctors who study infectious diseases have said it will kill millions up millions if nothing is done.

 

We have to contain it by social distancing and we have to act like this indeed will kill millions. Sop comparing it to the flu because by doing that you throw off your numbers so much due to lack of testing that your opinion doesn't hold any validation.

[Craig Arko]

For you history buffs out there in Twins Territory, here's a reprinted article from the May 1919 journal Science about the lessons (apparently not) learned from the Flu pandemic of 1918. It's non-technical, and actually a pretty good read.

 

https://science.sciencemag.org/content/49/1274/501/tab-pdf

 

[stringer bell]

It is my understanding that flattening the curve absolutely can and will save lives. A certain percentage of people will die from COVID-19 no matter what but also a certain percentage would die needlessly if hospitals are overrun and ventilators are not available. I don't know how that can be argued. 

 

We can have the discussion about whether the cure for COVID-19 is worse than letting the chips fall where they may. I have to believe that most people don't buy the "people will die" argument when talking about their family and friends. 

 

As a relatively young senior citizen, I'm approaching but not in the high risk categories for the virus. I don't want to get it, but I'm relatively confident I would survive, probably without medical attention. If I transmitted that virus to the second circle outside of me (friends of friends, relatives of friends, friends of relatives), there could be tragic results. I will stay inside and do all I can not to infect anyone. 

[PseudoSABR]

 

As a relatively young senior citizen, I'm approaching but not in the high risk categories for the virus. I don't want to get it, but I'm relatively confident I would survive, probably without medical attention. If I transmitted that virus to the second circle outside of me (friends of friends, relatives of friends, friends of relatives), there could be tragic results. I will stay inside and do all I can not to infect anyone. 

I think we have to be very careful about believing in our own ability to survive this thing. Plenty of non-elderly are getting very sick and dying, without necessarily being at risk.  

[PseudoSABR]

Economists say Trump's coronavirus reopening plan is dead wrong

[Riverbrian]

 

I disagree. Flattening the curve is about lowering the rate of exposure. You may save a life or two here or there because medical providers will be better equipped to keep up, but that virus is still going to kill at its kill rate...And I have to ask, do you really think that food riots won't kill people? Do you really think that the increased crime when people have to resort to stealing for food or medical supplies won't kill? Do you really think that these things won't happen? I hope you're right if that's what you think, but I do not agree with you at all that these things will not happen.

 

Last week, I had an interesting conversation with that same bartender. I stay at an Embassy Suites when I travel, which if you don't know provides free hot breakfast and a snack buffet in the evening. Due to the virus, they started providing only snack kits that people could take back to their rooms. That got delayed because the truck got robbed and the food was stolen. That was before the mass quarantines (Maryland only shut down this week). Do you think that's going to get better as this goes on?

 

I know of two motivators that will get people to willingly die and kill a lot of people along the way: starvation and religion. I say this as a religious guy who is not at all proud of what has been done in the name of my God. It's pretty easy to look at what has been done in the name of religion and be upset, but don't kid yourself. People desperate to eat and give food to their children will do far worse. They have nothing to lose. We're playing a very dangerous game with that group right now.

 

Diehard, you are missing one very important factor. 

 

The Death Rate/Percentage depends on medical care. 

 

If proper medical care is accomplished. We could see Death rates under 1%. If the Hospitals become overwhelmed we could see death rates above 3%. Maybe as high as 6%. They are pretty damn high in Italy because of the hospitals being overwhelmed among other factors.  

 

And of course... Hospitals being overwhelmed happens because of more cases and more cases makes that gap between 1% and 3% huge. 

 

And... you can't look at the current death rates and do current math. There is around a two week lag. People infected two weeks ago are not confirmed... yet. Confirmed cases today are not dead... yet.

 

All those numbers come tomorrow and the day after that and the day after that. I'm reading stuff from experts who say that limiting contact by 25% can cut the number of cases by 50%... but because of the lag we won't see the results of social distancing for a couple more weeks. Which means upward exponential growth until then. The next couple of weeks is going to be new ride for us all.  

 

You are right... Social distancing is about lowering the rate of exposure, which in turns leads to preventing a significant amount of deaths. You lose me when you reduce it to "You may save a life or two here or there because medical providers will be better equipped to keep up". The savings in terms of lives could be quite significant.  

 

As for your main point about the economy. I'm neither Democrat or Republican and I am about as anti-political a person as you've met and I have no plans to join either side at any time. I will say this without reservation. The country has never been more divided and getting worse by the second and it's spiraling out of control with no end in sight, I plan to stay in the middle and stay out of political discussion because I'm watching both sides drift further from me and it has gotten to the point that one side can't even talk to the other side.      

 

You are correct when it comes to the risk and the economy. The cold hard reality is this: 

 

When we elect someone for President, Governor, The US Senate, The US Congress, State Legislators, Mayors and even Bob down the street for City Council. We elect them for times like these. The job always has the risk of something like this coming down the pike and it produces the stunning responsibility of making the determination on who lives and dies. During good times the live or die number is small and times like these the live or die number is large. It's like being a General and making the determination that this battalion has to be sacrificed for the greater good. 

 

That is the debate before all of them right now. We voted and we now live with our choices.

 

And just like there is a lag between infection to confirmed and a lag from confirmed to death. There is a lag between election day and our elected officials having to make large scale life and death decisions.

 

Meaning, the decisions we make today matters in what happens tomorrow. On March 25th, 2020 we are living with the consequences of decisions made in January, In January we were living with the consequences of those we elected in whatever November it was. 

 

 

[glunn]

Below is a letter from Bill Ackman, a successful hedge fund manager, that I think is informative:

 

Dear Pershing Square Investor,

On March 3, 2020, we disclosed that we had acquired large notional hedges which have asymmetric payoff characteristics; that is, the risk of loss from these hedges was limited, while their potential upside was many multiples of our capital at risk. We did so because of our concern about the negative effect of the coronavirus on the U.S. and global economies, and on equity and credit markets.  Below, we summarize the events that have taken place since the initiation of the hedges that have led us to unwind them using the proceeds to increase our exposure to existing and new investments.

Since our purchase of the hedges, U.S. and global equity and credit markets have declined dramatically while our hedges have increased substantially in value.  Furthermore, beginning last week various U.S. state governments have aggressively confronted the health and economic risks of the coronavirus through unprecedented state-led, non-essential business closures and shelter-in-place/stay-at-home implementations or “lockdowns,” (a word we don’t love, but we haven’t found a better one). 

As the virus has worked its way west, the only method that has proven successful to stop the rise in infections, sickness, and death is a strong-form lockdown, first implemented in Wuhan, on Monday night in the U.K., and Tuesday in India.  In the United States, California and New York went into lockdown first, and were followed by Connecticut, Delaware, Illinois, Indiana, Hawaii, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, Ohio, Oregon,  Washington, West Virginia, Wisconsin, with more likely to come soon. Others like Florida, Missouri, Pennsylvania, and Texas have initiated weaker-form lockdowns in parts of their states.

We believe it is inevitable that in order to halt the advance of the virus and preserve the ability of local, city, and state healthcare systems to deal with the volume of critical care patients, nearly all states will eventually initiate strong-form, non-essential business closures and stay-at-home regulations. 

Some have argued that we should fully reopen the economy now, as the coronavirus kills mostly the old and immune-compromised, and a relatively small percentage of those infected.  Beyond the ethical considerations of such an approach, it has become increasingly clear that the high percentage of younger U.S. citizens with co-morbidities – including obesity, diabetes, and hypertension, as well as those who take medications for other conditions that reduce immunity, and/or who smoke or vape – will have a substantially higher death rate than has been experienced in other countries.  Furthermore, overwhelming the healthcare system will not only increase the death rate from the coronavirus, it will also magnify the loss of life from heart attacks, strokes, and automobile accidents as these trauma patients also lose access to overcrowded ICU beds and emergency rooms.

Because states cannot close their borders, a rolling program of state-led lockdowns is highly suboptimal as states in lockdown can be re-infected by visitors, and their exiting residents can infect other states when they depart in advance of the lockdown.  When the Chinese government announced the lockdown of Wuhan, millions of Wuhan residents left in advance of the curfew, spreading the virus throughout China and the rest of the world.  As each U.S. state has announced its own lockdown, many of its residents have left, spreading the virus around the country.

Even though California and New York went first, they will not be able to safely reopen their states for business until approximately three to four weeks after the last state initiates its shutdown, as they would risk reinfection by residents entering from non-lockdown states.  For this reason, we believe that the federal government will soon initiate a total-US shutdown with a defined reopening date about 30 days later.  If the federal government does not impose such a lockdown, we believe it is likely that effectively all fifty states will do so eventually, with the additional delay costing many thousands of more lives, and much greater economic destruction.

You don’t need to be a virologist, immunologist, or epidemiologist to understand why a 30-day nationwide lockdown makes sense.  The coronavirus cannot live outside its host, the human body, for more than four or five days, and then, only if the virus is on plastic or metal.  If we minimize human interaction for two weeks or so beyond the infection and viral shedding period of approximately two weeks, we can, therefore, vastly reduce, and eventually cap the growth in cases. 

A 30-day, countrywide lockdown will have the additional benefit of helping the healthcare system and its supply chain catch up to the growing case load in order to meet the immediate needs of our hospitals and their patients. State governors like NY Governor Andrew Cuomo, with the support of the federal government, are heroically working to address this problem on behalf of our citizens.  As New Yorkers, we are incredibly grateful for Governor Cuomo’s leadership which will save many lives.

It is critical to have a defined lockdown period for the entire country.  Most businesses can afford to, and will choose to retain their employees if they know that their business can reopen in a short, defined period of time as it is extremely time consuming, expensive and difficult to rehire high quality, trusted talent.   This is even more true when the federal government provides financial support to these businesses during the lockdown.  Unfortunately, the large job losses that we are seeing today are due to the indeterminate nature of the shutdowns that have been announced.  It is the rare business that can afford to pay its employees for months without a date certain that they can reopen.

Upon completion of an enforced lockdown, the country can be reopened carefully as China has so far successfully done.  The key to a successful reopening beyond the maintenance of social distancing, hand washing, mask use and other related practices is a broad-based testing regime and tracing program.  This will enable the inevitable viral breakouts to be identified early and minimized with localized quarantines, reducing the impact on the overall U.S. economy and the need for future shutdowns.  Until there is a vaccine, however, seniors and other at-risk members of the population will need to exercise a high-level of caution.

It has been extraordinarily challenging to fight the invisible enemy.  We can fix this by using antibody blood tests to determine (1) who has been infected, is thereby immune and can return to work, (2) who is actively infected and needs to be quarantined, and (3) who is uninfected.  Broad-based antibody-based screening will also give us an accurate estimate of what percentage of the population is actually infected allowing us to better estimate the percentage who become critically ill from the virus, who have limited if any symptoms, and a more accurate estimate of the death rate.   Antibody blood screening tests have the advantage of being able to accurately and rapidly identify not only infected patients, but also those who have previously been exposed to the virus, but were not known to be infected, either because they never developed symptoms, or had symptoms that were never correctly diagnosed.

Antibody tests can be deployed in a much more cost-effective manner to detect community spread, and with much greater accuracy and scalability than the current drive-thru, nasal swab PCR test.  They require only a simple blood test and can yield results in hours rather than days and can be administered by Quest Diagnostics or Labcorp much like a traditional blood test.  Imagine how differently and effectively we could have managed this crisis if we actually knew who was infected.

The Pershing Square Foundation just invested capital to help scale the manufacture of antibody testing kits produced by Covaxx, a newly formed subsidiary of United Biomedical Inc., a company with decades of experience in the development, registration, manufacture and distribution of viral testing kits and vaccines. Covaxx has already deployed over 100,000 COVID-19 antibody tests across China (Hubei, Beijing, Shanghai) and in the U.S.  Covaxx is currently deploying its COVID-19 tests across San Miguel County, Colorado (article link).  Covaxx believes it can scale its COVID-19 test to hundreds of millions of tests in relative short order.  To learn more, please contact Mei Mei Hu at mhu@unitedbiomedical.com.  

The federal government and the U.S. Treasury have intervened in financial markets in an unprecedented fashion, and the Congress is on the brink of passing legislation which will help bridge the economy and our country’s workforce and citizens during what we believe to be a temporary but massive economic shock.  We are encouraged by the Treasury Secretary’s and Administration’s all-in approach to mitigating the damage to the capital markets, and for keeping financial markets functioning and open, which are critical for our economy and capitalism to work.

For all of the above reasons, we became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices that are built to withstand this crisis, and which we believe will flourish long term. 

On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds, compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio.  Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices.  Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.

We have redeployed substantially all of the net proceeds from our hedges by adding to our investments in Agilent, Berkshire Hathaway, Hilton, Lowe’s, and Restaurant Brands.  We have also purchased several new investments including reestablishing our investment in Starbucks which we sold in January.  The proceeds of the hedges have enabled us to become a substantially larger shareholder of a number of our portfolio companies, and to add some new investments, all at deeply discounted prices.  Even after these additional investments, we maintain a cash position of about 17% of the portfolio.

We continue to expect that markets (and our performance) will remain volatile, and therefore, new opportunities may present themselves that are superior to investments we currently own.  This may lead us to sell certain of our existing holdings including investments we recently purchased.  We may also choose to reestablish similar or different forms of hedges or raise more cash based on developments with the coronavirus and other market factors.  In other words, we are more likely to have higher portfolio turnover in this environment.

We are in one of the most challenging periods of time for our country, and for the world.  Thousands of people have or will soon become severely sick, and many will die.  This is a tragedy that could have been prevented with better long-term planning, which should have begun more than a decade ago.  I have always said that experience is making mistakes and learning from them.  And learn from this we must.

Sincerely,

William A. Ackman
Pershing Square Capital Management, L.P.

[glunn]

And here is an article about how much Ackman made from the crisis --

 

https://www.etrade.wallst.com/v1/stocks/news/search_results.asp?docKey=1-DN20200325007823-6OD9KV31TDUQ5I3LE80GR58T9K&DMSourceID=Dow%20Jones&Source=Dow%20Jones&docDate=2020-03-25%2014:52:00&headline=%20How%20Bill%20Ackman%20Turned%20%2427%20Million%20Into%20%242.6%20Billion%20During%20the%20Coronavirus%20Crisis%20--%20Barrons.com&refSymbols=US;A|US;HLT|US;LOW|NL;PSH|US;QSR|CA;QSR

[gunnarthor]

https://mn.gov/governor/covid-19/faq.jsp

[Squirrel]

https://www.instagram.com/p/B-KeNqMJL9c/?igshid=tme32qlcpv72

 

https://www.instagram.com/p/B-KuxwBD9c_/?igshid=1pwllc9no2n77

 

https://www.instagram.com/p/B-IaFoGF-Aj/?igshid=o8u0dmiawvhu

[Vanimal46]

Stay safe everyone! If you’re a MN resident under the new stay at home order, go pick up your essentials and hang tight. Go outside for walks... Buy some puzzles. We’re all in it together.

[Squirrel]

Below is a letter from Bill Ackman, a successful hedge fund manager, that I think is informative:

 

Dear Pershing Square Investor,

On March 3, 2020, we disclosed that we had acquired large notional hedges which have asymmetric payoff characteristics; that is, the risk of loss from these hedges was limited, while their potential upside was many multiples of our capital at risk. We did so because of our concern about the negative effect of the coronavirus on the U.S. and global economies, and on equity and credit markets.  Below, we summarize the events that have taken place since the initiation of the hedges that have led us to unwind them using the proceeds to increase our exposure to existing and new investments.

Since our purchase of the hedges, U.S. and global equity and credit markets have declined dramatically while our hedges have increased substantially in value.  Furthermore, beginning last week various U.S. state governments have aggressively confronted the health and economic risks of the coronavirus through unprecedented state-led, non-essential business closures and shelter-in-place/stay-at-home implementations or “lockdowns,” (a word we don’t love, but we haven’t found a better one). 

As the virus has worked its way west, the only method that has proven successful to stop the rise in infections, sickness, and death is a strong-form lockdown, first implemented in Wuhan, on Monday night in the U.K., and Tuesday in India.  In the United States, California and New York went into lockdown first, and were followed by Connecticut, Delaware, Illinois, Indiana, Hawaii, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, Ohio, Oregon,  Washington, West Virginia, Wisconsin, with more likely to come soon. Others like Florida, Missouri, Pennsylvania, and Texas have initiated weaker-form lockdowns in parts of their states.

We believe it is inevitable that in order to halt the advance of the virus and preserve the ability of local, city, and state healthcare systems to deal with the volume of critical care patients, nearly all states will eventually initiate strong-form, non-essential business closures and stay-at-home regulations. 

Some have argued that we should fully reopen the economy now, as the coronavirus kills mostly the old and immune-compromised, and a relatively small percentage of those infected.  Beyond the ethical considerations of such an approach, it has become increasingly clear that the high percentage of younger U.S. citizens with co-morbidities – including obesity, diabetes, and hypertension, as well as those who take medications for other conditions that reduce immunity, and/or who smoke or vape – will have a substantially higher death rate than has been experienced in other countries.  Furthermore, overwhelming the healthcare system will not only increase the death rate from the coronavirus, it will also magnify the loss of life from heart attacks, strokes, and automobile accidents as these trauma patients also lose access to overcrowded ICU beds and emergency rooms.

Because states cannot close their borders, a rolling program of state-led lockdowns is highly suboptimal as states in lockdown can be re-infected by visitors, and their exiting residents can infect other states when they depart in advance of the lockdown.  When the Chinese government announced the lockdown of Wuhan, millions of Wuhan residents left in advance of the curfew, spreading the virus throughout China and the rest of the world.  As each U.S. state has announced its own lockdown, many of its residents have left, spreading the virus around the country.

Even though California and New York went first, they will not be able to safely reopen their states for business until approximately three to four weeks after the last state initiates its shutdown, as they would risk reinfection by residents entering from non-lockdown states.  For this reason, we believe that the federal government will soon initiate a total-US shutdown with a defined reopening date about 30 days later.  If the federal government does not impose such a lockdown, we believe it is likely that effectively all fifty states will do so eventually, with the additional delay costing many thousands of more lives, and much greater economic destruction.

You don’t need to be a virologist, immunologist, or epidemiologist to understand why a 30-day nationwide lockdown makes sense.  The coronavirus cannot live outside its host, the human body, for more than four or five days, and then, only if the virus is on plastic or metal.  If we minimize human interaction for two weeks or so beyond the infection and viral shedding period of approximately two weeks, we can, therefore, vastly reduce, and eventually cap the growth in cases. 

A 30-day, countrywide lockdown will have the additional benefit of helping the healthcare system and its supply chain catch up to the growing case load in order to meet the immediate needs of our hospitals and their patients. State governors like NY Governor Andrew Cuomo, with the support of the federal government, are heroically working to address this problem on behalf of our citizens.  As New Yorkers, we are incredibly grateful for Governor Cuomo’s leadership which will save many lives.

It is critical to have a defined lockdown period for the entire country.  Most businesses can afford to, and will choose to retain their employees if they know that their business can reopen in a short, defined period of time as it is extremely time consuming, expensive and difficult to rehire high quality, trusted talent.   This is even more true when the federal government provides financial support to these businesses during the lockdown.  Unfortunately, the large job losses that we are seeing today are due to the indeterminate nature of the shutdowns that have been announced.  It is the rare business that can afford to pay its employees for months without a date certain that they can reopen.

Upon completion of an enforced lockdown, the country can be reopened carefully as China has so far successfully done.  The key to a successful reopening beyond the maintenance of social distancing, hand washing, mask use and other related practices is a broad-based testing regime and tracing program.  This will enable the inevitable viral breakouts to be identified early and minimized with localized quarantines, reducing the impact on the overall U.S. economy and the need for future shutdowns.  Until there is a vaccine, however, seniors and other at-risk members of the population will need to exercise a high-level of caution.

It has been extraordinarily challenging to fight the invisible enemy.  We can fix this by using antibody blood tests to determine (1) who has been infected, is thereby immune and can return to work, (2) who is actively infected and needs to be quarantined, and (3) who is uninfected.  Broad-based antibody-based screening will also give us an accurate estimate of what percentage of the population is actually infected allowing us to better estimate the percentage who become critically ill from the virus, who have limited if any symptoms, and a more accurate estimate of the death rate.   Antibody blood screening tests have the advantage of being able to accurately and rapidly identify not only infected patients, but also those who have previously been exposed to the virus, but were not known to be infected, either because they never developed symptoms, or had symptoms that were never correctly diagnosed.

Antibody tests can be deployed in a much more cost-effective manner to detect community spread, and with much greater accuracy and scalability than the current drive-thru, nasal swab PCR test.  They require only a simple blood test and can yield results in hours rather than days and can be administered by Quest Diagnostics or Labcorp much like a traditional blood test.  Imagine how differently and effectively we could have managed this crisis if we actually knew who was infected.

The Pershing Square Foundation just invested capital to help scale the manufacture of antibody testing kits produced by Covaxx, a newly formed subsidiary of United Biomedical Inc., a company with decades of experience in the development, registration, manufacture and distribution of viral testing kits and vaccines. Covaxx has already deployed over 100,000 COVID-19 antibody tests across China (Hubei, Beijing, Shanghai) and in the U.S.  Covaxx is currently deploying its COVID-19 tests across San Miguel County, Colorado (article link).  Covaxx believes it can scale its COVID-19 test to hundreds of millions of tests in relative short order.  To learn more, please contact Mei Mei Hu at mhu@unitedbiomedical.com.  

The federal government and the U.S. Treasury have intervened in financial markets in an unprecedented fashion, and the Congress is on the brink of passing legislation which will help bridge the economy and our country’s workforce and citizens during what we believe to be a temporary but massive economic shock.  We are encouraged by the Treasury Secretary’s and Administration’s all-in approach to mitigating the damage to the capital markets, and for keeping financial markets functioning and open, which are critical for our economy and capitalism to work.

For all of the above reasons, we became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices that are built to withstand this crisis, and which we believe will flourish long term. 

On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds, compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio.  Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices.  Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.

We have redeployed substantially all of the net proceeds from our hedges by adding to our investments in Agilent, Berkshire Hathaway, Hilton, Lowe’s, and Restaurant Brands.  We have also purchased several new investments including reestablishing our investment in Starbucks which we sold in January.  The proceeds of the hedges have enabled us to become a substantially larger shareholder of a number of our portfolio companies, and to add some new investments, all at deeply discounted prices.  Even after these additional investments, we maintain a cash position of about 17% of the portfolio.

We continue to expect that markets (and our performance) will remain volatile, and therefore, new opportunities may present themselves that are superior to investments we currently own.  This may lead us to sell certain of our existing holdings including investments we recently purchased.  We may also choose to reestablish similar or different forms of hedges or raise more cash based on developments with the coronavirus and other market factors.  In other words, we are more likely to have higher portfolio turnover in this environment.

We are in one of the most challenging periods of time for our country, and for the world.  Thousands of people have or will soon become severely sick, and many will die.  This is a tragedy that could have been prevented with better long-term planning, which should have begun more than a decade ago.  I have always said that experience is making mistakes and learning from them.  And learn from this we must.

Sincerely,

William A. Ackman

Pershing Square Capital Management, L.P.

Maybe, lacking central leadership, the governors should just all agree to 30 days, now. Too many people coming and going. Just shut it all down, 30 days, and then work from there. The China and SKorea models have worked.

[Craig Arko]

 

Stay safe everyone! If you’re a MN resident under the new stay at home order, go pick up your essentials and hang tight. Go outside for walks... Buy some puzzles. We’re all in it together.

Since you're in Texas, we should be able to keep a safe distance.

 

As an aside, I dislike the term 'social distancing.' We need physical distancing, but social interconnection is an essential part of our humanity. It would be a shame to lose any more of that.

[Riverbrian]

Italy is ahead of us on the Curve. Spain is ahead of us on the curve. 

 

So Here is an article from the future. Spoiler Alert:

 

https://www.fox46charlotte.com/news/we-are-collapsing-coronavirus-pummels-medics-in-spain-and-italy

 

 

[Riverbrian]

Quiet Night at Home

 

CNN on the TV with no audio. 

 

I can't hear what they are saying but a thought has occurred to me. 

 

Sanjay Gupta must be tired. He's on morning, noon and night. 

[Richie the Rally Goat]

https://www.twincities.com/2020/03/25/mayo-clinic-doctors-comfort-a-nation-with-their-rendition-of-imagine/

[Brock Beauchamp]

 

It's not an issue of choosing who does and doesn't go. This is natural selection. This virus is going to kill who it's going to kill and there's literally nothing we can do about it. Flattening the curve isn't going to change the mortality rate. All it will do is extend it over a longer period of time but allow your hospitals the bandwidth to cope. It may save an extra life here or there, but it's long term mortality rate will not change. 

 

Like it or not, it does the same thing most other viruses do. It attacks those who can fight it the least. Because there is no natural immunity, it will do what it does. 

 

It's not an issue of acceptable losses. Those losses will happen. Our current course of action is going to add to them significantly. 

 

 

The numbers are undeniable and almost every medical expert is telling us the same thing: ease the curve and fewer people die.

 

Ventilators and the necessary ICU machinery are not readily available to cure every person sick with the same disease because of course they're not. Never in modern medical history has a single disease come on this strongly with the same necessary medical machinery needed to ease the mortality rate. We've built a capitalistic system that serves predicted need, not emergency need. I'm not even saying that's bad, I'm merely saying we only build and sell the machines we need under typical circumstances. These are not typical circumstances and that means we have fewer medical facilities than needed.

 

Let's put it in more numerical terms.

 

Say a single metro area has 100 ventilators, respirators, or whatever equipment is needed to keep the mortality low on COVID-19. Until that metro reaches 100 ICU patients with COVID-19 simultaneously, the mortality rate stays pretty low depending on age and personal circumstance, probably in the range of 1-2%.

 

That 101st patient has, if not a 100% mortality rate, close to it. As does every patient after that 101st patient. The mortality rate can go from 1, 2, 4% to 90% in a real hurry under your ugly Social Darwinism system.

 

We are not an anti-science forum, please respect that.

[PseudoSABR]

Let's put the statistical reality this way: in Spain and Italy--which are two weeks ahead of us--if you are sick enough to get tested, 10% of you will die. 

[gunnarthor]

i think a lot of the governors have been handling this pretty well. The federal response has been iffy. I'm really worried about Easter. Seems like a lot of people think it should be over by then and I'm not sure it will be. But - and I'm not sure they've expressed this well - a good number of people can't continue to do social isolation long-term so it would be nice if we don't **** it up this time. Unemployment filings will sky-rocket soon, if they haven't already done so.

[diehardtwinsfan]

 

And I'm more concerned about those who are dying, and those who are treating them who are also becoming sick, and some of them dying as well. What I'm talking about is far worse than a case of the flu though.

 

We certainly have different value systems.

Look, I'm concerned about these things too. I'm simply saying we're doing it wrong. 

 

You can quarantine the at risk people. It will be far more benefical in the long run for all of us. As it is, there's a shortage of tests. With that, you can keep the tests where they are needed and be much more careful protecting the people who are at risk for this. COVID is harmless in my age group along with my kids. Yes there exceptions, but the danger in covid isn't the kill rate nearly as muh as the fact that there's no herd immunity. You aren't solving that problem with these mass quarantines. You're extending it. COVID will still spread, just slower. At risk people will still contract it, and they will still die from it. Hospitals won't be swarmed, which will help to some extent, but COVID will still get it's due.

 

I would add, my other point regarding lives is that there's a real problem with our safety nets. They won't be able to handle 30% unemployment, and people need to eat. Have we already forgotten how close Europe came to disaster just a few years ago with food riots in Italy and Greece? Those will return. People will die there too. Nations could potentially go under here. What happens then?

[diehardtwinsfan]

 

 

Let's put the statistical reality this way: in Spain and Italy--which are two weeks ahead of us--if you are sick enough to get tested, 10% of you will die. 

This is a link (and an interesting article) to Johns Hopkins data from March 24.

 

This statement is wrong. It is only true in Italy where they don't have nearly enough tests and were quite quite unprepared for this in general. 

 

And the article itself is asking question as to why Germany's rate is so low (with the conclusion that they are testing more and did a bit better job isolating it, not that there's something significantly different about Germany's environment), and if places like Germany, S. Korea, Switzerland, and the US are any indication at all, this is inline (in terms of kill rate) with the flu or SARS. 

 

I'll reiterate what I said prior. The danger in this virus is that it's highly contagious and most people who have it never know because it's harmless in them, and with no herd immunity, it will spread. There is literally nothing we can do to stop that. I'm not saying don't quarantine. I am saying that a full stop to the global economy is going to kill too.