Once in a Lifetime - Ben Hunt, Epsilon Theory
What do I mean by sociopathy and division?
I mean the way our political and economic leaders beat the narrative drum about how this virus prefers to kill the old rather than the young, as if that matters for our policy choices, as if older Americans are lesser Americans, as if we should think of them differently – with less empathy – than Americans who are more like “us”.
Why We Sleep — a tale of institutional failure - Andrew Gelman
That latest tale of research malfeasance in the very popular "pop science" bestseller Why We Sleep. The author Matthew Walker seems to have very egregiously omitted data to support his hypotheses.
The Corona Crisis vs. The Great Depression - Ben Carlson
Sober-minded compare/contrast between now and the Great Depression. Some dynamics are similar, others are very different (a well-functioning Fed, social programs, Keynesianism).
A Vision of Post-Pandemic New York - Tyler Cowen, Bloomberg
Fiscal Policy during a Pandemic - Miguel Faria e Castro, St Louis Fed
I find that UI benefits are the most effective tool to stabilize income for borrowers, who are the hardest hit, while savers favor unconditional transfers. Liquidity assistance programs are effective if the policy objective is to stabilize employment in the affected sector.
Lockdowns and GDP Is there a tradeoff? - Andrew G. Atkeson
If we lock everyone down, we save lives, but we lose economic output. But what if we go back to work now? We will lose lives, but will we gain economic output?
Two COVID-19 initiatives - Alex Danco
Corporate Socialism: The Government is Bailing Out Investors & Managers Not You - Nassim Taleb
I have major problems with Taleb's premise of the financial crisis bailouts – specifically that there was some quid pro quo with Geithner and "the financial industry" vis-a-vis Geithner supposedly defending the bankers. But I agree 1000% with Taleb's larger point that if the US Government is bailing out an industry, someone ought to take a haircut.
NY Fed: Fight the Pandemic, Save the Economy: Lessons from the 1918 Flu - Sergio Correia, Stephan Luck, and Emil Verner
The authors draw two main conclusions using city-level data from the 1918 Flu pandemic. First, higher mortality rates lead to lower economic growth. Second, non-pharmaceutical interventions (social distancing) lead to both lower mortality and better economic outcomes over the medium term (e.g. lower unemployment and higher growth).
On the contrary, cities that intervened earlier and more aggressively experienced a relative increase in real economic activity after the pandemic subsided. Altogether, our findings suggest that pandemics can have substantial economic costs, and NPIs can lead to both better economic outcomes and lower mortality rates.
The St. Louis Fed’s Financial Stress Index, Version 2.0
This post provides great detail on how the Fed improved on the Financial Stress Index to improve it's accuracy.
A Short History of Dead Cat Bounces - Ben Carlson
Pension funds and so-called balanced mutual funds need to start re-jigging their portfolios in favor of stocks as the selloff in equities and rally in government bonds has driven down the value of their equity relative to their bond positions. Commodity trading advisors and long-short equity hedge funds have also had to cover their short bets on stocks.
How Bill Ackman Turned $27 Million Into $2.6 Billion During the Coronavirus Crisis
Shorting historically tight credit spreads, as it turns out. That's how you 100x $27 million.
The Pandemic in My Neighborhood - Michael Lewis, Bloomberg
The Changing World Order - Ray Dalio
The Fed Goes All In With Unlimited Bond-Buying Plan - Jeanna Smialek, NYT
Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,
The Fed Asks for BlackRock’s Help in an Echo of 2008 - Matthew Goldstein, NYT
How the Pandemic Will End - Ed Yong, The Atlantic
The Cheesecake Factory Tells Landlords Across the Country It Won’t Be Able to Pay Rent on April 1 - Matthew Kang, Eater
Cheesecake Factory is the largest dine-in restaurant group in the country, and they're not paying their rent this month. How do you think mom and pops are going to manage? It's gonna be a rough month for commercial landlords and CMBS.
Nobody Wants a Margin Call Right Now - Matt Levine, Bloomberg
- Southwest Airlines And Alaska Air: Built To Survive Coronavirus - Seeking Alpha
- Icahn is shorting the commercial real estate market - CNBC
- Now There's a Mortgage Crisis Too - Matt Levine, Bloomberg
- The Speed Premium in an exponentially growing pandemic world - Marginal Revolution
I tweeted about this yesterday (before reading this), the speed narrative must be in the zeitgeist.
- Yes, It's Tight Money
- Why Time No Longer Has Meaning, According to Science - LifeHacker
As it turns out, this warping of time has an explanation rooted in how our brains record memories during times of extreme fear and stress.
- Why It’s Hard to Invest in Cybersecurity - Differential VC
Customers, enterprise and SMBs, typically will prefer a one-stop shopping solution to a problem like cybersecurity. They are unlikely to want to piece together a collection of incompatible best-in-class solutions to individual subproblems. They will likely prefer a monolithic solution that offers adequate cybersecurity in one product.
- Infinite Games - Graham Duncan
For me, there is no end to this activity, no prize or summit where I’m done and will feel satiated. To build trust is enjoyable in its own right.
- What’s in Congress’s $2 Trillion Coronavirus Stimulus Package - Bloomberg
- The Fed: Avoiding a Depression
Helpful context for the Fed's recent actions. It all comes down to making sure the economy has enough liquidity. It starts with the banking system and flows through to essentially all parts of the credit markets: treasury securities, repo markets, money markets, commercial paper, residential and commercial mortgage debt, even investment-grade corporate bonds.
The Fed’s immediate goal is to keep credit flowing to the real economy.
- NBER: The Coronavirus and the Great Influenza Pandemic: Lessons from the "Spanish Flu" for the Coronavirus's Potential Effects on Mortality and Economic Activity
- The Forgotten 1957 Pandemic and Recession - Marginal Revolution
- Bill Gross: How Technology Can Solve the Climate Crisis
A mind-blowing, inspiring presentation from Bill Gross that frames the climate change fight in a very digestible way, and presents some incredible technologies he's investing in to create sustainable energy and solve the problem.
- Party Zero: How a Soirée in Connecticut Became a ‘Super Spreader’ - NYT
The Westport soirée — Party Zero in southwestern Connecticut and beyond — is a story of how, in the Gilded Age of money, social connectedness and air travel, a pandemic has spread at lightning speed. The partygoers — more than half of whom are now infected — left that evening for Johannesburg, New York City and other parts of Connecticut and the United States, all seeding infections on the way.
- Fed Bombshell - The Grumpy Economist
A useful explanation as to why the Fed's actions are not inflationary:
When the Fed buys a Treasury bill, it creates new money with which to buy the bill. It simply increases the amount of reserves, which banks can freely transform to cash, so you can think of it as printing up money to buy the bill. Why doesn't this cause immense inflation? Well, the Fed backs the money with the bill. The overall quantity of government debt has not changed, just the composition.
- Buying During a Crisis
- How I’m Managing My Own Money Through the Crisis - Ben Carlson
Stocks could continue to fall further. As a long-term investor, I don’t mind. I have plenty of time to wait and if I regret buying down 50% in 30 years we’ve got bigger problems on our hands than the stock market.
A challenge to ignore professional financial pundits preaching moderate consensus views on CNBC. We're in uncharted territory, our escape story out the coronavirus economy won't likely look familiar to most of us.
John Cochrane (The Grumpy Economist) sounds the warning bell on the ability of Covid-19 to lead to a financial panic, hence the Fed's recent actions to support credit markets, which have shown clear signs of strain. I agree with his diagnosis that the economy is fundamentally strong, we just have this tricky issue of needing to shut down a large part of the economy for a few months, which we just don't have any precedent or policy tools for. Businesses and individuals have a continuing stream of obligations while the income spigot has been abruptly shut off.
Cochrane's prescription is mostly focused on the supply side. I agree with him that it would be a massive mistake to let firms fall into bankruptcy and fail during this economic pause. Cochrane argues for loans as a % of last year's income tax return. Fine, unless you made very little money last year, in which case loans do next to nothing for you. Loans are good, we need loans too, but not in lieu of cash payments to hourly workers and people losing jobs. Cochrane argues cash payments won't get spent in the way that we need right now. Cochrane's probably right that they won't get spent right now, but they will get spent, at one point or another.
Andrew Ross Sorkin recommends something similar to the above proposal, but much looser and more flexible: a no-interest bridge loan to businesses, payable over a 5 year payback period. It would likely cost somewhere in the trillions.
It's worth considering a proposal like this in terms of the downside opportunity cost -- lost economic output over the medium term. It seems to become more obvious by the day that this will be the deepest and quickest recession in decades, probably since the great depression, so the downside risk here could be keeping us out of a prolonged deflationary depression.
A strong argument against a payroll tax cut, as it only helps those who have a job, and employed people are less likely to spend the stimulus. Three proposals are thrown out: pay every person under 40 $10,000 (more likely to spend), government bonuses for every person who gets tested, and extending unemployment benefits beyond the normal 26-week period.
An argument for a large infrastructure spending bill to jumpstart the economy once the immediate coronavirus risk passes.
If Congress passes a major infrastructure and clean-energy bill before the April recess, shovels can start hitting the ground when workers, businesses and investors are looking for signs of hope, indications of growth, and reasons to believe that the worst has passed.
Blood bank supplies have been decimated as a result of the economic shutdown.
About 4,000 blood drives scheduled for March, April and May have been canceled, reducing projected supply by 130,000 donations, according to America’s Blood Centers, an industry group.
Go here to find out where you can donate.