The widely discussed fact that younger people are less at risk from coronavirus is 100% true. This data from the Centre For Disease Control & Prevention (CDC) is one of the best estimates we have for how this disease affects those who become infected. Hopefully it confirms what you already know; that fatality rates for confirmed cases in the 20-44 age group are extremely low: around 0.1-0.2%.
However, low fatality rates can lull people into a false sense of security. The CDC also estimates that the proportion of 20-44 age group confirmed cases that have required hospitalisation is somewhere between 14% & 21% so far.
Given that you’re reading a newsletter about data we’re aware that we’re probably preaching to the converted, but these hospitalisation rates really do emphasise the importance of flattening the curve.
If millions of 20-44 year olds get Covid-19, the vast majority will be end up being totally fine. But if almost one-fifth of them need hospital treatment in order to be fine, then hospitals will get overwhelmed extremely quickly.
Matt’s Note June 19th: Look at Table 3 Here for another more up to date case surveillance report from the CDC
EDIT: Matt’s Note: while random sampling “antibody tests” done in New York may initially suggest that death/hospitalization rates could be lower than initially believed due to a large portion of cases being asymptomatic [without symptoms] (presymptomatic?), it’s unclear to me if there there could be false positive rate in the test, a sampling problem skewing these numbers, or if the new numbers are indeed accurate.
Regardless, even in the best case the numbers being presented thusly are much higher than the normal range of known flu-like illnesses and are greater in magnitude than I’m personally comfortable with.
EDIT: Matt’s Note: a more recent study from Indiana University released preliminary findings (using more comprehensive antibody testing) that may indicate a lower infection fatality rate than presented here (though still significantly higher than that of the seasonal flu):
IUPUI scientists estimate the infection-fatality rate for the novel coronavirus in Indiana to be 0.58 percent, making it nearly six times more deadly than the seasonal flu, which has an infection-fatality rate of 0.1, according to the U.S. Centers for Disease Control and Prevention.
The full nature of antibodies / antibody testing and the significance of these results are not clear to me at this time.
While my foremost goal is to provide accurate and timely information to readers, I am somewhat concerned that this study (to many people’s minds) may dull their sense of the health risks of this virus and the necessity of Non-Pharmecutical Interventions (NPI’s) including physical distancing, limiting travel, face coverings, etc. to combat the spread of this disease.
On a purely objective level, I feel it necessary to state that lethality numbers don’t necessarily always paint the full picture. Covid19 / SARS-COV-2 is likely to be a ugly (severe health complications) illness for just about anyone:
I am by no means, however, either studied or qualified to speak with authority on these topics.
Please continue to consult the advice of qualified public health officials.
Infectious disease expert Michael Osterholm has cast some doubt today in an interview today on NPR regarding certain forms of antibody testing, as it exists currently in the USA (for certain purposes).
Please continue to consult the advice of qualified public health officials.
Matt’s Note: Specific pictures presented in this article should now be regarded as historical and not currently up-to-date. Please continue to consult qualified epidemiologists and/or the IMHE models for reference.
Now we also face an immediate crisis. In the past week, Covid-19 has started behaving a lot like the once-in-a-century pathogen we’ve been worried about. I hope it’s not that bad, but we should assume it will be until we know otherwise.
There are two reasons that Covid-19 is such a threat. First, it can kill healthy adults in addition to elderly people with existing health problems. The data so far suggest that the virus has a case fatality risk around 1%; this rate would make it many times more severe than typical seasonal influenza, putting it somewhere between the 1957 influenza pandemic (0.6%) and the 1918 influenza pandemic (2%).2
Second, Covid-19 is transmitted quite efficiently. The average infected person spreads the disease to two or three others — an exponential rate of increase. There is also strong evidence that it can be transmitted by people who are just mildly ill or even presymptomatic.3 That means Covid-19 will be much harder to contain than the Middle East respiratory syndrome or severe acute respiratory syndrome (SARS), which were spread much less efficiently and only by symptomatic people.
Matt’s note: Despite my optimism for our situation now that various forms of “lockdown” have been implemented nationwide, the continued growth of Covid19 in the United States is deeply concerning. If left unchecked, the eventual drastic exponential growth could lead to disastrous loss of life, property, and an unimaginable strain on healthcare services.
Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood. While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.
There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.
I have written extensively about this peril, including in the following:
My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well. Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact. This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.
For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through March 20, 2020, with a last value of 19173.98):
2020-06-02 Matt’s Note: the 100 trillion Zimbabwean note is presented here merely for dramatization purposes.
Please exercise good judgment and seek the advice of trusted professionals rather than considering these writings as financial advice.
That being said, I’m not sure where I stand on the issue of the potential devaluing of the dollar. I have heard opinions that it could be unlikely due to the large amount of foreign dollar-denominated debt and the dollar-traded commodities markets.
Given the current unprecedented actions being taken by central banks, I do not believe it would be unwise, however, to monitor this situation closely.
On Friday (March 20, 2020) I wrote a post (“Federal Reserve Actions To Address Financial And Economic Weakness“) detailing recently announced Federal Reserve actions intended to address various problematical conditions. These conditions include actual and expected substantial economic weakness, financial instability, and various rapidly falling asset prices.
In that post I also highlighted my thoughts on intervention efforts. I have written extensively about interventions of all types, including Quantitative Easing (QE) and past economic stimulus programs. Posts discussing intervention measures can generally be found in the “Interventions” category.
Early today (March 23, 2020) the Federal Reserve made additional announcements. Among those announcements was one regarding the amount of QE it will possibly do, as well as other newly enacted intervention programs.
The new announcement with regard to QE is discussed in this March 23 FOMC Statement. An excerpt:
The Federal Open Market Committee is taking further actions to support the flow of credit to households and businesses by addressing strains in the markets for Treasury securities and agency mortgage-backed securities. The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions. The Committee will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions, and will assess the appropriate pace of its securities purchases at future meetings.
The paramount phrase is that the stated asset purchases will be done “in the amounts needed.” Most observers appear to interpret this as (potentially) “unlimited QE.”
^Left as a fun exercise for the reader, watch this graph over the next 6 months.
Matt’s note for the layperson: QE refers to Quantitative Easing, or basically, printing money to buy things in hopes that it spurs the economy.
The U.S. printed gobs of money to get out of the ’08 recession. This time around, it’s unclear if the same tricks will work.
The downside of QE is that it’s effectively a hidden tax to, well, anyone with money sitting in a bank account or under their mattress. By printing lots of money, there’s more of it around. Therefore, the money you’ve worked so hard to earn becomes less valuable.
QE is often easier for governments to do politically than collecting money through taxes because most people aren’t really aware of it or understand it, but by far it more negatively impacts the poor (most holdings in fixed-dollar items) than the rich (usually holdings in dollar-agnostic assets) and it broadens the wealth gap.
Isn’t it awful when you see a slow-moving trainwreck unfolding before your very eyes?
Like two trains on a collision course, the speed may not be too great but the inevitability and magnitude of the crash can’t be doubted.
If only this could have been predicted or avoided somehow…
I don’t know, maybe with central banks following rules-based interest rates such as the “Taylor rule” (???) instead of breeding an environment the past 10 years of low interest rate loans to anyone with a business plan and a pulse?
“Those who do not learn from history are doomed to repeat it”
The last 10 years of a roaring economy were pretty sweet weren’t they? Welp, fun’s over.
Japan’s asset bubble pop in 1989/90 showed us even a strong economy can be subject to mismanagement. In their (and now our) case, this takes the form perpetually of low interest rates and too easy loans in a roaring economy.
These low rates leave a mess in the making for when a recession actually *does* hit and rates can’t be lowered any further.
I’m not a smart man, but I would wager that “helicopter drops” and other forms of fiscal stimulus (at this point likely to be based on QE) will be only meekly effectual at best.
This is not a demand crisis a la 08, so throwing money at the issue won’t work the way it did back then. Be smart. Look at the problem from all sides. What we’re encountering is a public health, labor, and supply problem. Throw money at that instead.
Ineffectual and poorly though out stimulus could serve only serve to weaken the dollar.
EDIT: Correction to earlier statement: I greatly regret in any potential way downplaying the risks of asymptomatic transmission. It has been shown to be very likely to be possible for some time now
The theory of aerosolized (droplets that float) respiratory transmission is worth considering. To reduce spread (and therfore burden on healthcare systems), It’s important to limit in person engagements, engagements indoors, and engagements with large groups if at all possible.
EDIT: I am disappointed with the World Health Organization here at denying the risks of airborne transmission without proof, rationale, or context. On the contrary, there is evidence that Sars-cov2 could be transmitted through aerosolized respiratory transmission and the risk is now recognized by many credible institutions link
EDIT: aerosolized particles (i.e. emitted during breathing, speaking) have been shown to be a potential vector:
With the global economy experiencing a synchronized slowdown, any number of tail risks could bring on an outright recession. When that happens, policymakers will almost certainly pursue some form of central-bank-financed stimulus, regardless of whether the situation calls for it.
Fiscal and monetary loosening is not an appropriate response to a permanent supply shock. Policy easing in response to the oil shocks of the 1970s resulted in double-digit inflation and a sharp, risky increase in public debt. Moreover, if a downturn renders some corporations, banks, or sovereign entities insolvent – not just illiquid – it makes no sense to keep them alive. In these cases, a bail-in of creditors (debt restructuring and write-offs) is more appropriate than a “zombifying” bailout.
In short, a semi-permanent monetization of fiscal deficits in the event of another downturn may or may not be the appropriate policy response. It all depends on the nature of the shock. But, because policymakers will be pressured to do something, “crazy” policy responses will become a foregone conclusion. The question is whether they will do more harm than good over the long term.
I wish I had already owned gold. Or TIPS, Series I bonds, whatever Singapore’s dollar is, or another haven currency.
If you’ve ever come to know me or read enough of my writing, you’d find I often write and have stronger opinions about things I know little about than I ought to have any sense or reason to. This may be one of those times. Bonds have since been “crushed” by the dreaded liquidity trap à lá Japan.
I would be interested in exploring whether treasury inflation protected securities (TIPS) are a reasonable purchase in this environment of supply shocks, credit crunch, and massive QE. It seems unlikely at present to be a great buy, but who knows? I don’t have much faith in the performance of equities, in the near future at least, anyways
*most of the following is guesswork on my part, I don’t know this for certain
The triple whammy of lowering interest rates from central banks, cheapening oil prices as Russia and Saudi Arabia engage in a price war and dump cheap oil into markets, and wide impacts of the coronavirus could pose a serious threat to many of the world’s banks, especially those that have struggled with profit opportunities in the wake of perpetually low interest rates and leverage this past decade.
Generally, banks make money by charging people money to access their balance sheets. If they don’t charge enough, there can be problems. If lending rates are higher, they can fudge the numbers a bit more and make more money when dealing with large volumes of loans (at least, as I understand it).
If lending rates are lower, there can be problems.
The author also says that oil shortages in the 70’s caused supply shortages (and therefore inflation), but that current surpluses in oil will have deflationary pressures.
While this may be true, I don’t know if generalized supply shortages caused by the coronavirus could have a counteracting, or more effective inflationary pressure. Should be interesting to see.
These are interesting and historic times to be sure.
Edit: a further note:
I know next to nothing about macroeconomics, but just from what I’ve been watching on Bloomberg yesterday it seems like people are advocating for central banks to immediately drop interest rates to zero and pour dump trucks worth of cash on the emerging recession. I don’t quite know if this would be a good idea.
The stimulus done in ’08 was supposedly very effective, but it’s unclear whether the same could be said for this time around:
Left as a fun exercise for the reader, watch this graph (of the federal reserve’s balance sheet) for the next six months:
We are calling on every country to act with speed, scale and clear-minded determination.
Although we continue to see the majority of cases in a handful of countries, we are deeply concerned about the increasing number of countries reporting cases, especially those with weaker health systems.
However, this epidemic is a threat for every country, rich and poor. As we have said before, even high-income countries should expect surprises. The solution is aggressive preparedness.
We’re concerned that some countries have either not taken this seriously enough, or have decided there’s nothing they can do.
We are concerned that in some countries the level of political commitment and the actions that demonstrate that commitment do not match the level of the threat we all face.
This is not a drill.
This is not the time to give up.
This is not a time for excuses.
This is a time for pulling out all the stops.
Countries have been planning for scenarios like this for decades. Now is the time to act on those plans.
(NYT) China’s Battle Against Coronavirus: 7 Takeaways
(NYT) Inside China’s All-Out War on the Coronavirus
Do we know what this virus’s lethality is? We hear some estimates that it’s close to the 1918 Spanish flu, which killed 2.5 percent of its victims, and others that it’s a little worse than the seasonal flu, which kills only 0.1 percent. How many cases are missed affects that.
There’s this big panic in the West over asymptomatic cases. Many people are asymptomatic when tested, but develop symptoms within a day or two.
In Guangdong, they went back and retested 320,000 samples originally taken for influenza surveillance and other screening. Less than 0.5 percent came up positive, which is about the same number as the 1,500 known Covid cases in the province. (Covid-19 is the medical name of the illness caused by the coronavirus.)
There is no evidence that we’re seeing only the tip of a grand iceberg, with nine-tenths of it made up of hidden zombies shedding virus. What we’re seeing is a pyramid: most of it is above ground.
Once we can test antibodies in a bunch of people, maybe I’ll be saying, “Guess what? Those data didn’t tell us the story.” But the data we have now don’t support it.
——–2020-04-04 Matt’s Note: There has been more research and it seems asymptomatic trasnmission is likely———
That’s good, if there’s little asymptomatic transmission. But it’s bad in that it implies that the death rates we’ve seen — from 0.7 percent in parts of China to 5.8 percent in Wuhan — are correct, right?
I’ve heard it said that “the mortality rate is not so bad because there are actually way more mild cases.” Sorry — the same number of people that were dying, still die. The real case fatality rate is probably what it is outside Hubei Province, somewhere between 1 and 2 percent.
How did the Chinese reorganize their medical response?
First, they moved 50 percent of all medical care online so people didn’t come in. Have you ever tried to reach your doctor on Friday night? Instead, you contacted one online. If you needed prescriptions like insulin or heart medications, they could prescribe and deliver it.
But if you thought you had coronavirus?
You would be sent to a fever clinic. They would take your temperature, your symptoms, medical history, ask where you’d traveled, your contact with anyone infected. They’d whip you through a CT scan …
Wait — “whip you through a CT scan”?
Each machine did maybe 200 a day. Five, 10 minutes a scan. Maybe even partial scans. A typical hospital in the West does one or two an hour. And not X-rays; they could come up normal, but a CT would show the “ground-glass opacities” they were looking for.
(Dr. Aylward was referring to lung abnormalities seen in coronavirus patients.)
If you were still a suspect case, you’d get swabbed. But a lot would be told, “You’re not Covid.” People would come in with colds, flu, runny noses. That’s not Covid. If you look at the symptoms, 90 percent have fever, 70 percent have dry coughs, 30 percent have malaise, trouble breathing. Runny noses were only 4 percent.
The swab was for a PCR test, right? How fast could they do that? Until recently, we were sending all of ours to Atlanta.
They got it down to four hours.
How good were the severe and critical care?
China is really good at keeping people alive. Its hospitals looked better than some I see here in Switzerland. We’d ask, “How many ventilators do you have?” They’d say “50.” Wow! We’d say, “How many ECMOs?” They’d say “five.” The team member from the Robert Koch Institute said, “Five? In Germany, you get three, maybe. And just in Berlin.”
(ECMOs are extracorporeal membrane oxygenation machines, which oxygenate the blood when the lungs fail.)
Who paid for all of this?
The government made it clear: testing is free. And if it was Covid-19, when your insurance ended, the state picked up everything.
In the U.S., that’s a barrier to speed. People think: “If I see my doctor, it’s going to cost me $100. If I end up in the I.C.U., what’s it going to cost me?” That’ll kill you. That’s what could wreak havoc. This is where universal health care coverage and security intersect. The U.S. has to think this through.
What about the nonmedical response?
It was nationwide. There was this tremendous sense of, “We’ve got to help Wuhan,” not “Wuhan got us into this.” Other provinces sent 40,000 medical workers, many of whom volunteered.
In Wuhan, our special train pulled in at night, and it was the saddest thing — the big intercity trains roar right through, with the blinds down.
We got off, and another group did. I said, “Hang on a minute, I thought we were the only ones allowed to get off.” They had these little jackets and a flag — it was a medical team from Guangdong coming in to help.
Isn’t it possible only because China is an autocracy?
Journalists also say, “Well, they’re only acting out of fear of the government,” as if it’s some evil fire-breathing regime that eats babies. I talked to lots of people outside the system — in hotels, on trains, in the streets at night.
They’re mobilized, like in a war, and it’s fear of the virus that was driving them. They really saw themselves as on the front lines of protecting the rest of China. And the world.
The Coronavirus, by the Numbers
We’ve seen all sorts of numbers for fatality rates. Does the latest estimate of 3.4 percent globally make sense?
Early on, people looked at total current cases and deaths, which, as I said, is a flawed calculation, and concluded that the case fatality rate must be 2 percent based on China data. If you run the same calculation on yesterday’s totals for China, you get an apparent CFR (case fatality rate) of near 4 percent. People are speculating that something is happening with the virus, where it actually is just this statistical illusion that we’ve known about from Day 1. I’d say on best available data, when we adjust for unreported cases and the various delays involved, we’re probably looking at a fatality risk of probably between maybe 0.5 and 2 percent for people with symptoms.
If you were the average person, what would you pay attention to — in terms of the news and the numbers?
One signal to watch out for is if the first case in an area is a death or a severe case, because that suggests you had a lot of community transmission already. As a back of the envelope calculation, suppose the fatality rate for cases is about 1 percent, which is plausible. If you’ve got a death, then that person probably became ill about three weeks ago. That means you probably had about 100 cases three weeks ago, in reality. In that subsequent three weeks, that number could well have doubled, then doubled, then doubled again. So you’re currently looking at 500 cases, maybe a thousand cases.
I think the other thing that people do need to pay attention to is the risk of severe disease and fatality, particularly in older groups, in the over-70s, over-80s. Over all we’re seeing maybe 1 percent of symptomatic cases are fatal across all ages. There’s still some uncertainty on that, but what’s also important is that 1 percent isn’t evenly distributed. In younger groups, we’re talking perhaps 0.1 percent, which means that when you get into the older groups, you’re potentially talking about 5 percent, 10 percent of cases being fatal.
We’re looking at about 1M US cases by the end of April, 2M by ~May 5, 4M by ~May 11, and so on. Exponentials are hard to grasp, but this is how they go. 4/n
As the healthcare system begins to saturate under this case load, it will become increasingly hard to detect, track, and contain new transmission chains. In absence of extreme interventions, this likely won’t slow significantly until hitting >>1% of susceptible population. 5/n
What does a case load of this size mean for healthcare system? We’ll examine just two factors — hospital beds and masks — among many, many other things that will be impacted.
The US has about 2.8 hospital beds per 1000 people. With a population of 330M, this is ~1M beds. At any given time, 65% of those beds are already occupied. That leaves about 330k beds available nationwide (perhaps a bit fewer this time of year with regular flu season, etc). 7/n
Let’s trust Italy’s numbers and assume that about 10% of cases are serious enough to require hospitalization. (Keep in mind that for many patients, hospitalization lasts for *weeks* — in other words, turnover will be *very* slow as beds fill with COVID19 patients). 8/n
By this estimate, by about May 8th, all open hospital beds in the US will be filled. (This says nothing, of course, about whether these beds are suitable for isolation of patients with a highly infectious virus.) 9/n
If we’re wrong by a factor of two regarding the fraction of severe cases, that only changes the timeline of bed saturation by 6 days in either direction. If 20% of cases require hospitalization, we run out of beds by ~May 2nd. 10/n
If only 5% of cases require it, we can make it until ~May 14th. 2.5% gets us to May 20th. This, of course, assumes that there is no uptick in demand for beds from *other* (non-COVID19) causes, which seems like a dubious assumption. 11/n