Tuesday, March 31, 2020

"How the coronavirus crisis is affecting food supply"

I'm guessing there won't be a lot of people in the West losing weight.
From Reuters, March 26:
Like other parts of the global economy, food supply chains have been disrupted by the coronavirus pandemic and empty supermarket shelves have become a symbol of the crisis.

Panic buying in some countries has led to some grocery staples like pasta and flour being sold out in supermarkets in recent weeks. Retailers say they are able to replenish most products while bakery and pasta firms in Europe and North America have cranked up production.

Food firms say panic purchases are subsiding once households have stocked up and as they adjust to lockdown routines.

However, shoppers may have to get used to less varied or more local food offerings.
Logistical snags from closed borders to reduced workforces are putting strain on usual supply routes, particularly for fresh produce.

With many planes grounded and ship containers hard to find after the initial coronavirus crisis in China, fruit and vegetable suppliers in Africa warn they are struggling to send goods to Europe.
In Kenya, the recent lockdown measures in China curbed shipments of imported fish, providing a boost to local fishermen but raising the risk of a supply shortage.

Prices of agricultural commodities have been volatile as traders have reacted to specific consequences for their sector while also being influenced by dramatic moves in share and oil prices....

Natural Gas: U.S. LNG Giant May Cut Production (LNG)

From Bloomberg via gCaptain:

U.S. LNG Behemoth Tests Slump in Sign it May Curb Production
One of the world’s biggest liquefied natural gas exporters is signaling it may throttle back production.
Cheniere Energy Inc. has tendered to buy six shipments for delivery to Europe later this year, a rare step for a company that’s fundamentally a seller of the fuel. The company could be testing the size of the current glut as it weighs output cuts, or even seeking cargoes for its customers that could be cheaper than producing and shipping its own from the U.S. Gulf Coast, according to a Bloomberg survey of traders.

Four of the six cargoes were awarded at a discount of about 20 to 30 cents to the European benchmark Dutch Title Transfer Facility, according to traders with knowledge of the information. The benchmark contract for May traded at about $2.24 per million British thermal units on Tuesday on ICE....MUCH MORE
Having been cut in half ($66 to $33) since January 17 the insiders have been nibbling at the stock:

3/9/2020Neal A ShearDirectorBuy3,750$37.28$139,800.0023,860  
3/5/2020Donald F Robillard JrDirectorBuy2,000$46.96$93,920.0030,121  
3/5/2020Jack A FuscoCEOBuy21,000$47.34$994,140.00703,814  
2/27/2020G Andrea BottaDirectorBuy5,500$45.67$251,185.0056,488


"Mount Sinai hospital leaders holed up in Florida vacation homes during coronavirus crisis"

Oh good grief, talk about "Dear New York, You're Doing It Wrong".
From the New York Post:
While heroic staffers beg for protective equipment and don garbage bags to treat coronavirus patients at a Mount Sinai hospital, two of the system’s top executives are waiting out the public health catastrophe in the comfort of their Florida vacation homes, The Post has learned.

Dr. Kenneth Davis, 72, the CEO of the Mount Sinai Health System who pulled down nearly $6 million in compensation in 2018, is ensconced in his waterfront mansion near Palm Beach.
Davis has been in the Sunshine State for weeks and is joined by Dr. Arthur Klein, 72, president of the Mount Sinai Health Network, who owns an oceanfront condo in Palm Beach.

As the duo work from “home,” the Upper East Side-based hospital system seems to be imploding....

European Medicines Agency: "...no medicine has yet demonstrated efficacy in treating COVID-19"

From the EMA March 31:

Update on treatments and vaccines against COVID-19 under development 
Supporting the rapid development and approval of effective and safe treatments for and vaccines against COVID-19 is EMA’s top priority to help save lives during the pandemic. Over recent weeks and months, the Agency has engaged with many developers of therapeutic medicines and there are a number of developments underway. However, at this point, on the basis of the preliminary data presented to the Agency, no medicine has yet demonstrated efficacy in treating COVID-19.
EMA’s COVID-19 response team has been in contact with developers of around 40 therapeutic medicines, allowing better understanding of potential treatments.

Among the potential treatments for COVID-19 that are undergoing clinical trials to assess their safety and efficacy against the disease are:
  • remdesivir (investigational)
  • lopinavir/ritonavir (currently authorised as an anti-HIV medicine)
  • chloroquine and hydroxychloroquine (currently authorised at national level as treatments against malaria and certain autoimmune diseases such as rheumatoid arthritis)
  • systemic interferons and in particular interferon beta (currently authorised to treat diseases such as multiple sclerosis)
  • monoclonal antibodies with activity against components of the immune system
EMA welcomes the launch of large clinical trials as they are necessary to generate the robust data needed to establish evidence for which medicines do work and thus to give appropriate advice to healthcare professionals and patients and enable regulatory decision-making, as advised by EMA’s human medicines committee (CHMP)....

"Organized Crime In The Time Of Corona"

A couple days ago the New York Post had a story that I didn't understand, "How coronavirus cripples the New York Mafia" so we didn't link.
This though, this I understand.
Crooks from the lowliest mugger to the top of the corrupt government heap in Africa (and elsewhere) are opportunistic. Amazingly so. They see and act on criminal opportunities that regular people are simply blind to.

From Forbes, March 27:
“La mafia è come la coronavirus—ti prenderà dovunque.” 
 [The mafia is like the coronavirus—it will get you wherever you are.]
— Sergio Nazzaro, spokesperson for the president of Italy’s Anti-mafia parliamentary commission, 
to the Global Initiative Against Transnational Organized Crime

This is a perfect opportunity for scams, 
and some of my former associates on the street are into it right now.”
— Michael Franzese, a former capo of the Colombo crime family, to Forbes
If transnational organized crime had its own stock market, it would have taken a serious beating this month like the world’s legitimate stock exchanges have suffered. Sealed borders are not exactly helpful for smuggling-supply chains of any type of contraband. Nor are locked-down streets of much value to drug dealers. In Bosnia, where vehicle theft is a massive problem, thieves are complaining that it’s harder to steal cars without being detected when streets are quiet and devoid of people—according to the Global Initiative Against Transnational Organized Crime [GI-TOC]. In China, where I traveled two decades ago to document its role as the world’s capital of counterfeiting, GI-TOC reports that Chinese factories on lockdown are leaving criminal enterprises without alternative sources of supply.

But before you shed any tears for the earth’s mobsters, their stock market is climbing again, as new opportunities are emerging, thanks to the pandemic—opportunities that may even be long-term. Think of mafia groups as viruses themselves, always aggressively adapting and morphing to infect societies for power and profit.

Yesterday, GI-TOC, a renowned Geneva-based network of more than 500 organized crime experts, released a valuable report titled “Crime and Contagion: The impact of a pandemic on organized crime.” The paper provides various examples from around the world of how organized crime (OC in law enforcement parlance) is coping and ultimately exploiting the COVID-19 nightmare....

Now I understand the lack of action in gambling mentioned in the NYP article. And I understand the Mexican cartels running into logistical problems procuring their fentanyl  from China. Ditto for their methamphetamine precursors. But you have to assume they've already made adjustments. These people are adaptable, like a virus.
They are not sitting at home waiting for their government check.

Complexity and Social Distancing

From Elemental at Medium:

Hold the Line.
‘This virus is unforgiving to unwise choices’
As an infectious disease epidemiologist (albeit a junior one), I feel morally obligated to provide information on what we are seeing from a transmission dynamic perspective and how it applies to the social distancing measures. Like any good scientist, I have noticed two things that are either not well articulated or not present in the “literature” of online media. I have also relied on other infectious disease epidemiologists for peer review of this piece.

Specifically, I want to make two aspects of these distancing measures very clear and unambiguous....
....“You should perceive your entire family to function as a single individual unit: If one person puts themselves at risk, everyone in the unit is at risk. Seemingly small social chains get large and complex with alarming speed. If your son visits his girlfriend, and you later sneak over for coffee with a neighbor, your neighbor is now connected to the infected office worker that your son’s girlfriend’s mother shook hands with. This sounds silly, it’s not. This is not a joke or hypothetical. We as epidemiologists see it borne out in the data time and time again. Conversely, any break in that chain breaks disease transmission along that chain.”....

"Why Germany's Coronavirus Death Rate Is Far Lower Than In Other Countries"

When things in the U.S. settle down a bit the FDA and the CDC are going to have some explaining to do. Or as someone said on March 17:
Rob Arnott: "This Too Shall Pass" 
And then we sit down and investigate what happened at the CDC.
You know, the place that calls itself The Centers for DISEASE CONTROL and PREVENTION....

From National Public Radio:
As confirmed cases of the coronavirus in Germany soared past 10,000 last week, hundreds of Berliners crowded Volkspark am Friedrichshain to play soccer and basketball, and to let their kids loose on the park's many jungle gyms.

The conditions seemed ideal for the spread of a virus that has killed thousands. Indeed, as of Wednesday, Germany had the fifth-highest number of cases.
Yet Germany's fatality rate so far — just 0.5% — is the world's lowest, by a long shot.
"I believe that we are just testing much more than in other countries, and we are detecting our outbreak early," said Christian Drosten, director of the institute of virology at Berlin's Charité hospital.

As Europe has become the epicenter of the global coronavirus pandemic, Italy's fatality rate hovers around 10%. France's is around 5%. Yet Germany's fatality rate from COVID-19 has remained remarkably low since cases started showing up there more than a month ago. As of March 25, there were 175 deaths and 34,055 cases.

Drosten, whose team of researchers developed the first COVID-19 test used in the public domain, said Germany's low fatality rate is because of his country's ability to test early and often. He estimates Germany has been testing around 120,000 people a week for COVID-19 during the monthlong period from late February to now, when it's reached epidemic proportions in the country, the most extensive testing regimen in the world.

And that means Germany is more likely to have a lower number of undetected cases than other countries where testing is less prevalent, which raises the question: Why is Germany testing so much?

"We have a culture here in Germany that is actually not supporting a centralized diagnostic system," said Drosten, "so Germany does not have a public health laboratory that would restrict other labs from doing the tests. So we had an open market from the beginning."

In other words, Germany's equivalent to the U.S. Centers for Disease Control and Prevention — the Robert Koch Institute — makes recommendations but does not call the shots on testing for the entire country. Germany's 16 federal states make their own decisions on coronavirus testing because each of them is responsible for their own health care systems....MORE

"Goldman Now Sees US GDP Crashing 34% In Q2"; "...Futures Slide As Dollar Surge Returns"

Two from ZeroHedge: 
"The Biggest Decline Ever": Goldman Now Sees US GDP Crashing 34% In Q2
....We were right, because early on Monday morning Goldman's Haztius did just that, and in a report titled "The Sudden Stop: A Deeper Trough, A Bigger Rebound", he writes that he is "making further significant adjustments to our GDP and employment estimates. We now forecast real GDP growth of -9% in Q1 and -34% in Q2 in qoq annualized terms (vs. -6% and -24% previously) and see the unemployment rate rising to 15% by midyear (vs. 9% previously)."

Detailing the assumptions behind his latest revision, Hatzius explains that he has increased his estimates of the peak hit to services consumption, manufacturing activity, and construction, "in light of new evidence on the severity of the hit across the different sectors" and now expects the level of GDP in April to be 13% below the January/February trend, as shown in Exhibit 1. "We assume that this drag then fades gradually by 10% each month in the services industry and by 12.5% in the manufacturing and construction industries."

Behind the core of the drop Goldman sees a 19% annualized drag from services consumption on Q2 growth, on top of a 3pp drag on Q1 growth. as shown in the next chart.
Ok but why do the reputable epidemiologists at Goldman believe the pandemic will fade in coming weeks? Here's why (and yes, warm weather makes an appearance):
While the exact timing of the medical and economic recovery is highly uncertain and relapses are plausible, our assumption is that stronger lockdown and social distancing measures and perhaps some weather effects reduce new infections sharply over the next month. Combined with potential medical breakthroughs or adaptation by firms and consumers, this slowdown in new infections is likely to lead to a gradual economic recovery. The slow pace of recovery in our forecast even in 2021 allows for longer-lasting scarring effects on businesses and workers
And at the risk of repeating ourselves too, we will say that within a week, Goldman will cut its forecast again this time to -50% as we approach the moment when even banks admit the entire US economy has ground to a halt....

Is it warmer temperature or is it the ultraviolet light in sunshine that kills viruses in summer?
It matters because it would change the recommendations on getting outside and catching some rays.

Also at ZH:

Rally Fizzles, Futures Slide As Dollar Surge Returns
The torrid quarter-end rally which many attributed to a flood of forced pension fund buying as part of aggressive rebalancing, reversed overnight as US index futures reversed all overnight gains even as European stocks headed for a fifth increase in six sessions amid ongoing debate whether the market meltdown has ended despite the accelerating spread of the coronavirus (spoiler alert: no), while treasury yields dipped below 0.7% while the disconcerting dollar rally is back front and center.
S&P 500 futures rose as high as 2,640 before sliding back under 2,600 as politicians were said to contemplate a fourth round of stimulus, but they struggled to stay in the green as speculation the pension fund bid had faded. Oil producers Exxon Mobil Corp. and Occidental Petroleum Corp. jumped in the premarket thanks to a rebound in oil prices from 18-year lows after the United States and Russia agreed to discuss stabilizing energy markets.

In Europe, energy shares led gains in the Stoxx 600 Index after the World Health Organization said signs emerged of some stabilization in the region’s outbreak. A measure of European corporate-credit stress eased further. Even with today's modest rebound Europe is still set for its worst quarter on record....
DJIA futures down 223, S&P down 28.

P&C: Business Interruption Insurance—Here Come the Lawyers

From Artemis:
Legal actions and efforts to enable businesses and also insurers to force through claims related to business interruption appear to be expanding, with potentially significant ramifications for some in the reinsurance and insurance-linked securities (ILS) market should any succeed.

It largely comes down to contract wording interpretation and the understandable desperation of business owners facing a significant financial hit, it seems.

These efforts tend to focus on attempts to prove that the ongoing Covid-19 coronavirus pandemic has caused some form of property damage, enabling claims on property insurance towers that include business interruption and even on property catastrophe reinsurance programs.
As we explained yesterday, there have been some efforts to force coronavirus pandemic related interruption claims into property catastrophe reinsurance programs.

We understand that one of these efforts is ongoing and features a smaller Canadian primary insurer that is attempting to claim that it should be able to trigger its property catastrophe reinsurance as the Covid-19 outbreak has caused damage claims under property insurance covers it has underwritten.
That boils down to the same issue as has been raised in the New Jersey General Assembly, where a bill has been tabled that calls for all coronavirus business interruption related claims to be honoured.
This bill was first raised last week but has since been amended and was expected to go back to the court yesterday, but was never raised (possibly due to objection).

Analysts at Credit Suisse explained how they see this NJ business interruption related bill, “The updated bill requires all property insurance policies that legally provide coverage for the loss of use of property and for occupancy and business interruption to be interpreted as including business interruption coverage due to COVID-19. Under the bill, insurers paying out COVID-19 claims under the potential new law would be eligible to file for reimbursement/relief with the NJ state Commissioner of Banking and Insurance.

“The costs would then be passed on and shared among insurers operating in NJ in the form of the already established annual special purpose apportionment that insurers pay annually to fund the state’s Division of Insurance. The law would retroactively go into effect as of March 9th, 2020, and would apply to insured businesses with less than 100 employees working 25+ hour weeks.”
These legal attempts to force coronavirus business interruption claims through are expanding now, with action also being seen in Ohio and Massachusetts.

In Ohio, House Bill 589 would require business interruption policies to cover “business interruption due to global virus transmission or pandemic during the state of emergency,” analysts at Credit Suisse said....

Monday, March 30, 2020

Shipping: "CMA CGM completes sale of eight port terminals to Terminal Link for US$815m"

As noted on the story of folks pawning their $10 million paintings: "It's always nice to have assets"
Also, liquidity is good.*
From Container Management:
CMA CGM Group has closed the first part of its agreement with China Merchants Port (CMP), with the sale of its stakes in eight port terminals to Terminal Link for US$815m in cash.

The transaction, which is part of the French company’s US$2.1bn liquidity plan, is meant to help it reduce its debt and immediately increase its liquidity.

This plan among others aims to reduce CMA CGM’s consolidated debt by more than US$1.3bn by the end of first-half 2020 and allows to extend certain financing facilities maturing during the year.
The initial disposal includes the following terminals: Odessa Terminal (Ukraine), CMA CGM PSA Lion Terminal (Singapore), Kingston Freeport Terminal (Jamaica), Rotterdam World Gateway (Netherlands), Qingdao Qianwan United Advance Container Terminal (China), Vietnam International Container Terminal (Ho Chi Minh City, Vietnam), Laem Chabang International Terminal (Thailand) and Umm Qasr Terminal (Iraq).

It is hoped that the Terminal Link joint venture, which was created in 2013 and is 51% owned by CMA CGM and 49% by CMP, will be able to expand its geographic footprint and global network, thereby enhancing its business development prospects....MORE
*One of the reasons we read books is so we can learn from the mistakes of other,s avoid making those mistakes, and get on with making mistakes of our own.
Here's the key takeaway from the insolvency of venerable and giant Krupp, brought low by what was in effect maturity transformation:

"Liquidity is expensive but illiquidity is much more so,
because it destroys the very existence of a firm"
-William Manchester, The Arms of Krupp

The family dynasty had a pretty good run, 1587 to 1968, for a while becoming the largest company in Europe before needing to be bailed out which required the fam to relinquish control.

Manchester's book is something like a half-million words long but it's those 18 in the quote above that really hit a nerve.
From an August 2007 post just after the quant-quake:
Liquidity in Business and Markets
I don't remember if it was Johannes or Ernst, it was a long time ago that I read Manchester, quoting one of the Schroeder boys on the insolvency of Krupp. That line has stuck with me. Here's the book.
So good for the Saadé clan for getting CMA CGM out ahead of any liquidity crunch.

"Tanker Rates Double as Oil Contango Spreads"

As we noted in the introduction to March 24's "Saudi Arabia Tanker Power Play Could Backfire as Oil Demand Shrinks":
Even though the front end of the cash and carry contango trade has been moving up faster than the out months there is still $5.50 between the front May's and the third-month August contract, more than enough to cover insurance and tanker lease, that is if you can find a tanker to lease.
 Glencore supposedly got the world's second-largest tanker, TI Europe for $1.1 million per month which seems very low considering the ship holds 3.1 mm/bbl...
It still seems very low.
We never saw a correction from Reuters or gCaptain so maybe it was an accurate price. Either way, we'll give them another shot. From Reuters via gCaptain, March 30:
Supertanker freight rates are on the rise for a second time this month as producers, refiners and traders scramble to secure ships to transport crude or store a fast-growing global glut of oil, industry sources said.

Freight rates for very large crude-oil carriers (VLCC) along the Middle East Gulf to China route were assessed at about $180,000 a day on Monday, up from some $125,000 on Friday and a weekly low of about $90,000 a day on Wednesday, according to several ship broking sources.

“Its difficult to say whether or not the rates will be sustained, or at what levels, but generally looking at Saudi’s export plans for the coming months at more than 10 million barrels per day (bpd) – as well as the demand for floating storage – then you can expect freight rates to remain strong,” said Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking.

“But how strong is the question,” said Singh, adding that forward prices for VLCCs for the second quarter were trading at some $170,000 a day for the Middle East to China route...MORE
And some of the stocks (all via FinViz):

FRO Frontline Ltd. daily Stock Chart
TNK Teekay Tankers Ltd. daily Stock Chart
EURN Euronav NV daily Stock Chart

Dear New York, You're Doing It Wrong

From the New York Post:

Crowds ignore social distancing rules to watch USNS Comfort 
Crowds of gawkers ignored New York’s social-distance regulations and packed the west side of Manhattan on Monday to watch a US Navy hospital ship arrive to give badly needed coronavirus aid. The throngs of people stood shoulder to shoulder and took photos of the USNS Comfort as it pulled into Pier 90 near West 50th Street at about 10:40 a.m., photos of the scene show.
Some waved American flags and others huddled against one another at the fence of the pier. Meanwhile, joggers out for a morning run brushed past the onlookers.

At least a dozen NYPD cops stood by and initially did not disperse the bone-headed bystanders as they gathered and snapped cellphone photos of the ship pulling into the pier.
After members of the City Hall press corps tweeted about the throngs of people, Mayor Bill de Blasio’s communications team directed the NYPD to get the crowds to disperse.....

They are amazing big boats but come on people...


USNS Comfort
USNS Comfort passes under the Verrazzano Bridge.

If The Electric Vehicle Business Ever Comes Back This Could Be Big

From the Asia Times, March 30:
BYD’s blade-shaped battery could redefine EV safety
Thanks to its structure, the battery can better use the space in the battery pack that drives an electric vehicle 
Imagine an electrical vehicle battery that can increase energy density per unit of volume by 50%, improve safety and enable a car to travel up to 600 kilometres on a single charge.

It appears the latter has been achieved, as Chinese electric carmaker BYD unveiled a new blade-shaped battery on Sunday, saying that many carmakers have shown interest in the space-saving and safer product, China Daily reported.

He Long, president of BYD’s battery business unit FinDreams, said, “Almost all carmakers you have heard of are in talks with us in terms of technical cooperation.”...MORE
I always thought it would be CATL coming up with the breakthroughs but maybe Charlie Munger was right when he convinced Warren to put 230 mil. USD into BYD at HK$8 back in the first part of the Great Financial Crisis, Sept. 27, 2008.
Now the stock is at HK$38, down from the 2017 high just north of HK$80 but still beating the bank.

If interested some of our prior posts via the 'search blog' box results page.

"How Australia defied global health authority on coronavirus"

Following up on the post immediately below, "‘Responsible and necessary’: China defends temporary travel ban on foreigners during pandemic".
From the Sydney Morning Herald, February 28:
Was Australia about to put the cash flow of its universities ahead of the peoples' health in the middle of a pandemic? Was the Morrison government about to bungle the coronavirus response as badly as it did the bushfires?
As MPs and senators returned to Canberra this week for a parliamentary sitting, it was a topic of lively concern. Government members knew that the universities had been agitating behind the scenes for the China travel ban to be relaxed as soon as possible. Some 100,000 of their Chinese students are caught by the ban and the unis want them back in Australia. Paying fees.

The Chinese government had been complaining about the ban for weeks, too. Australia had been "discriminatory", according to the Chinese embassy in Canberra. In multiple meetings across the government, every week with the politicians who have let them in, China's officials have been pressing their case hard.
Was the government about to cave in to the pressure? Quite a few government MPs and senators were anxious. They knew there was rising fear among their communities. They'd just seen their government announce a partial relaxation already, with about 760 high school students allowed to return from China to Australia.

They'd heard the federal Minister for Education, Dan Tehan, tell the media last week that "it is incredibly important that we get some normality back into the international student market".
"At this stage," Tehan had said, "we are looking at year 11 and 12 students but the medical advice has said in a week we could look at what would happen with tertiary education students."

So the moment that the Prime Minister and Deputy Prime Minister had finished their routine opening remarks to the Coalition party room on Tuesday morning, the smooth-faced Liberal senator from Victoria, James Paterson, took the floor to speak.

"With the ongoing China travel ban, I'm very sympathetic about the impact on tourism and farmers, but I'm much less so with the universities," he began. "Because they have been warned for years that they are over-reliant on the Chinese market, and for years they've reassured us that it was all fine, and that if anything happened they'd be able to withstand it. They rode the cycle up, now they can ride the cycle down."....
[that would be a double ditto for the U.S.]
....From there, the medical advice goes to the policymakers in the National Security Committee of the federal cabinet, and this is where the politicians get involved. The NSC is chaired by the Prime Minister. This is where decisions are made and action taken. Or not.

The medical officers' "pandemic" call was a big moment. For a start, they were way ahead of the UN body that is supposedly the lead global agency on international health emergencies, the Geneva-based World Health Organisation.

Why were the Australians ahead of the world? For a very simple reason. They don't trust the WHO. The information from multiple international sources is that the WHO is under intense pressure from the Chinese government, and succumbing to it.

The Australian Commonwealth Chief Medical Officer, Brendan Murphy, told the NSC that it was medically inexplicable that the WHO hadn't already declared a global pandemic. It's politics, in other words.

That's why Australia had earlier forged ahead of the WHO in declaring the China travel ban, on February 1. It was, again, on the unanimous advice of the AHPPC.

The travel ban was decided immediately after the US made the same call. Beijing instantly lashed both the US and Australia on that occasion – the Chinese Communist Party's official mouthpiece, People's Daily, calling it "racist"....

One of these days someone should ask the W.H.O. why it took them until MARCH 11 to declare coronavirus a pandemic. 

"‘Responsible and necessary’: China defends temporary travel ban on foreigners during pandemic"

Two from the South China Morning Post, March 30:
  • Beijing says it looked to other countries before formulating cross-border restrictions
  • Pledge to help mainlanders return home despite restricted flights
Beijing clarified its temporary ban on foreign travellers to China while defending its decision as “a responsible and necessary measure” to address risks of imported cases in the novel coronavirus pandemic
Liu Haitao, director general for border control and management for the National Immigration Administration, said on Monday that Beijing’s ban would affect foreigners holding Chinese visas or residence permits, but it would not affect those with diplomatic, service or C visas.

Foreigners seeking to enter China for epidemic prevention and control, scientific research, international collaboration or humanitarian needs could apply or reapply for visas at overseas embassies and consulates, Liu said.

“This has been a measure that we took after consulting the practices of many other countries and it is a temporary restrictive measure that we have no choice but to adopt,” Liu said.
“We believe that in the current situation we should minimise unnecessary cross-border activities to effectively protect the lives and health of every citizen, including foreign nationals, by preventing pandemic transmission through individual travel for global health and safety. It is a responsible and necessary measure.”...MORE
Don’t politicise coronavirus medical supply problems, China says
Call comes as the Netherlands launches inquiry after recall of 600,000 face masks.

Covid-19: When in Doubt - Innovate (for those you can't intubate)

From the Times of Israel, March 29:

Israeli doctor in Italy says innovative treatments offering hopes of recovery
Carmi Sheffer describes connecting patients to ventilators via scuba gear, placing them on stomachs, in battle with unpredictable virus which ‘spreads like wildfire’ among elderly

An Israeli doctor in northern Italy says a number of new treatments appear to be helping some COVID-19 patients, offering a rare glimmer of hope in the hard-hit epicenter of the global coronavirus pandemic.
Carmi Sheffer, a doctor at the University Hospital of Padua, told The Times of Israel’s Hebrew-language sister site, Zman Yisrael, that as recently as last week he had been pessimistic.

“We were in the height of the outbreak, emergency rooms filled up, and the condition of patients on respirators with danger to their lives simply didn’t improve. I felt despair,” said Sheffer. 

“But in the past few days, people have begun to recover, in part due to new medications and also as a result of the fact that it takes some two weeks to recover from the virus,” he added.
The city of Padua has fared better than other nearby cities, with 1,552 confirmed COVID-19 patients, of whom 136 of them were hospitalized and 13 have died. Sheffer said the region of Veneto had more time to prepare for the outbreak than the neighboring hard-hit Lombardy.

He attributed the high death rates in Italy to the long life expectancy in the country and high percentage of elderly, as well as the spread within geriatric hospitals. “The moment the virus arrives in a place where an elderly population is concentrated, it spreads like wildfire,” he said.

In Padua, the autoimmune medicine Tocilizumab has proven effective, but can only be used once it is established that no other viruses or bacteria are present in the patients’ bodies, he said. The hospital where he works has also seen positive results from the antiviral drug Remdesivir, he added.

He said medics have been forced to be creative, giving an example from the city of Parma where patients who couldn’t be put on a respirator using a tube were attached to it using a snorkeling mask, with a part that connects it to the machine being printed in a 3D printer....


"Coronavirus: Panic buying sparks surge in flexible storage demand"

Somebody's always making a buck. Or in this case a pound.
From CityAM:
Coronavirus panic buying has caused a 50 per cent jump in food production that has put pressure on UK supply chains, according to the latest research.

Providers of flexible industrial space have reported an uptick in demand as supermarkets urgently attempt to cope with a surge in customer orders due to the pandemic.

Grocers have seen a jump in demand for essential food and household items, creating shortages that have forced them to put restrictions on products such as toilet roll, pasta and canned goods.

Consumer stockpiling has caused an urgent need for more flexible storage space to keep up with the surges in demand, according to research by property advisory firm Colliers International.

Chris Evans, supply chain specialist at Colliers International said: “Supply chains for groceries, toiletries and medical items are strained but it is not that the items do not get to stores, but they do not get there fast enough....
June 6, 2019 
"It's About To Become A Hot Market For Cold Storage Facilities"—CBRE
June 2, 2019
Logistics: Big Money For Warehouses, Looking at Cold Storage.
...This next bit brings back some memories. My second stock to double was a cold storage company, actually a dairy with a cold storage operation that was valued at about one-quarter of comparables. I started chipping away at the float and before I got anywhere near enough stock, the management, who knew full well the value of the operation, did an LBO and took it private at 2x market and ended up generating cash-on-cash returns (for themselves) of around 40% per annum for a decade or so.
The stock in that post, Americold (COLD) is still up 9.3% since June of '19, despite the recent unpleasantness while kicking out a 2.5% divi.
Sometimes boring is beautiful.

Coronavirus and Homicide

YTD Covid-19 deaths in Cook county Illinois 40; Shot and killed 88.

Sadly, despite quarantines, lockdowns and social distancing Chicago homicides are actually up year to date, 88 this year vs 85 in 2019. Via Hey Jackass:


The shot and wounded number 430 YTD in 2020 vs 356 in 2019.
The fact the politicians have let this go on for over two decades is just fucking sick.

However, speaking of sick, the homicide rate in other locales may be about to skyrocket as bored stay-at-homes read inciting material like this:
How to Make Bagpipes Out of a Garbage Bag and Recorders

I am not kidding, if the FBI doesn't get in front of this I will take matters into my own hands. 
I'll leave dealing with Chicago's insane murder numbers to the mayor and city council.

Google Chief Economist: "Automation versus procreation (aka bots versus tots)"

From VoxEU
Hal Varian 30 March 2020
It is widely thought that we will see a reduction in demand for (human) labour due to technological improvements in robotics and artificial intelligence in the next few decades. Figure 1 depicts a simple model of the labour market where demand and supply interact to determine an equilibrium wage and employment level. Automation would shift the demand curve to the left. On the other hand, it is virtually certain that demographic forces – such as the retiring of the baby boomers – will shift the supply curve to the left as well. Both demand and supply suggest that there will be a decrease in employment. The effect on the equilibrium wage is ambiguous: it depends on which curve shifts the most.
Figure 1 Demand and supply of labour
There is a long history of concern about automation replacing human workers (see, for example, Frey and Osborne 2013 for a historical overview). However, the US economy has been able to absorb large changes in the supply and demand for labour during the 20th century. Figure 2 depicts births in the US from 1920 to 2010. Note the ‘baby dearth’ during the recession and WWII followed by the dramatic increase in the birth rate of the ‘baby boomers’ during the period 1946-1964.
Figure 2 Live births by year 
Millions of baby boomers entered the labour market during the period 1966-1986. At the same time, we saw a dramatic increase in women entering the labour market, as shown in Figure 3.
Figure 3 Civilian labour force by sex ....MUCH MORE

"Coronavirus: Belarus president refuses to cancel anything - and says vodka and saunas will ward off COVID-19"

From Sky News:
Professional football has ground to a halt around the world because of the coronavirus pandemic, with one notable exception.
Few measures have been enforced to curb coronavirus in Belarus - instead, people are being urged to drink vodka and go to saunas.

The country - specifically its president - has shrugged off concerns about the COVID-19 outbreak, starkly illustrated on Sunday with the nation's football matches continuing as normal.
As most countries enforce strict measures to curb the spread of the coronavirus, fans continued to shuffle into football grounds as they would any other weekend.
Few face masks were visible as FC Minsk fans watched their team play in Belarus
 Image: Few face masks were visible as FC Minsk fans watched their team play in Belarus


Mr Lukashenko is really the quintessential throwback commie dictator. Like something from the '50's, somewhere between Stalin and Kruschev.
The guys in the 'Stans got nothing on him.

"SoftBank-Backed Farming Startup Plenty Is In Talks to Raise Cash"

If you are like me, you look back fondly to the days when you woke up hoping to hear about ear rot or vomitoxin in the corn.
But no, it's coronavirus and Softbank for the foreseeable future.

From Bloomberg:
Indoor farming startup Plenty Inc. is in talks to raise $100 million or more in a fresh round of funding, according to people familiar with the matter.

SoftBank’s Vision Fund is in discussions to lead a new fundraising round for Plenty at or below the $1 billion valuation that was ascribed to it in its most recent round, said the people, who requested anonymity because the matter is private. They cautioned that no agreement has been reached, and that one may not be finalized.

“Plenty does not comment on financing proposals and has not committed to any new financing rounds,” a spokeswoman for the South San Francisco-based company said in an emailed statement. “We are not in need of new equity financing, and evaluate any proposals opportunistically,” she added.

A representative for the Vision Fund didn’t immediately respond to a request for comment.
Plenty has raised about $400 million in capital over the past four years, according to PitchBook. In addition to the $100 billion Vision Fund, other backers include Data Collective, DCM, and funds that invest on behalf of Amazon Chief Executive Officer Jeff Bezos and former Google CEO Eric Schmidt....MORE
Also at Bloomberg:

Previously on Plenty:
February 2020 
March 2019 
January 2018
December 2017
October 2017

"Russia’s Plan To Bankrupt U.S. Shale Could Send Oil To $60"

But first, CNBC, Mar 26 2020:

Pioneer Natural Resources CEO warns independent oil companies could go bankrupt if production continues amid coronavirus

Scott Sheffield, Pioneer Natural Resources CEO, joins ‘Fast Money’ to discuss the plunge of crude oil and the ongoing price war between Russia and Saudi Arabia. Sheffield also warns Trump could lose energy states if he doesn’t help the independent oil companies who are facing opposition from big energy companies like Marathon and Exxon to reduce production as the coronavirus pandemic continues.
At 3:36 on the vid Mr Sheffield makes the rather startling statement that of the 74 publicly traded independent oil & gas producers, only 10 will survive.

And the headline story from OilPrice, March 29:

Russia’s Plan To Bankrupt U.S. Shale Could Send Oil To $60
As soon as U.S. shale leaves the market, prices will rebound and could reach $60 a barrel, Rosneft’s Igor Sechin said recently. As fate would have it, in what many would have until recently considered an impossible scenario, a lot of U.S. shale might do just that. Breakeven prices for U.S. shale basins range between $39 and $48 a barrel, according to data compiled by Reuters. Meanwhile, West Texas Intermediate (WIT) is trading below $25 a barrel and has been for over a week now. 
The SCOOP/STACK play in Oklahoma has the highest average breakeven price at $48 a barrel. Surprisingly, the Permian is not the lowest-cost play but the second-lowest, at $40. The lowest-cost basin, on average, is the Delaware Basin, also in Texas.

On the face of it, these averages give no cause for optimism to an industry hit hard and fast by a perfect storm of radically lower demand and a sharp increase in supply. However, it’s worth noting the figures above are averages. They cover a range of breakeven costs that last year, according to the Dallas Fed, featured breakeven prices of as little as $23 a barrel in the Permian. In all fairness, these figures were reported last year. Since then, the lowest may have gone up or, in some locations, down.
Surviving the crisis seems to be a combination of luck with acreage, Wright’s Law, and size. The problem is that luck eventually runs out as does the oil from fracked wells—faster to start producing than conventional ones and faster to deplete—and that Wright’s Law does not hold to $0. Experience in performing an activity can only go as fast as improving productivity and efficiency.

What about size? 
The bigger the size of a company, the more room it has to cut operating costs (the day-to-day expenses related to running any business). Companies can trim these costs by asking suppliers to lower their prices, which some shale players have already done, asking for a sizeable discount, too--some as much as 25 percent....

WTI down $1.36 (6.32%) at $20.15
Brent down $2.27 (9.11%) at $22.66
Oil: Big Trader Vitol CEO Says Demand Is Down 15-20 Million Barrels Per Day

Questions America Wants Answered: Does Bill DeBlasio Have Pierced Nipples?

The tweeter, Gabrielle Bluestone, is an attorney and the producer of Fyre: The Greatest Party That Never Happened.

"Jeff Bezos sold $3.4bn of Amazon stock just before Covid-19 collapse" (AMZN)

Ha! Who says having all the computing power (and customer data) from Amazon Web Services doesn't have some unexplored perks?
From the Guardian, March 27:

As trillions of dollars were wiped off stock markets some of the world’s richest got lucky
Millions of people across the world have lost their jobs, and trillions of dollars have been wiped off the value of stock markets.

But not everyone has lost out. Jeff Bezos, the world’s wealthiest person, is $5.5bn (£4.3bn) richer today than he was at the start of the year. His paper fortune, held mostly in Amazon shares, rose by $3.9bn on Thursday alone to $120bn – enough to buy 188,000 standard gold bars (even taking into account the soaring price of gold).

Bezos, 56, benefited this week from the best three-day stock market rally since 1933 helping Amazon’s share price to recover almost all of its losses this month to trade at about $1,920, though that was slightly down on their peak of $2,170 in February. Bezos owns about 12% of Amazon’s shares.

He saved himself from larger losses by selling a big chunk of his Amazon shares in February, before the worldwide scale of the coronavirus crisis was fully acknowledged and before the stock market collapse.

Regulatory filings show that Bezos sold $3.4bn worth of Amazon shares in the first week of February, just before the stock price peaked.

There is no suggestion that Bezos acted improperly by selling the shares or that he was acting on non-public information about the impact of the pandemic. But his timing was near-perfect. The share sales, which represented about 3% of his total holding, were much greater than Bezos had made in previous months. The stock sold was as much as he had sold in the previous 12 months, according to analysis by the Wall Street Journal....MORE
Oddly enough, although numerous other outlets have the story I don't see it in the WaPo feed.

Also at the Guardian:
'Hell is coming': how Bill Ackman's TV interview tanked the markets and made him $2.6bn

Capital Markets: "Monday Blues"

Blues, hell.
In the U.S. death from all-causes  is dropping quite quickly as people stop doing dangerous things like, well, going outside. I bet deaths by lightning strike will approach record lows this spring.
Anyhoo, from Marc to Market:
Risk appetites remain in check as the spread of the coronavirus is leading to more and longer shutdowns.
Asia Pacific equities fell with Australia, the notable exception. Its benchmark rallied a record 7%, encouraged by additional stimulus measures. Led by financials, following new that the ECB is requesting banks hold off dividend payments until October (which frees up an estimated 30 bln euros), real estate, and consumer discretionary sectors, the Dow Jones Stoxx 600 is off by a little more than 0.5% in late morning turnover. US shares are flat to slightly higher. Benchmark 10-year yields are mostly lower, led here too by Australia's 14 bp decline (to about 75 bp). The UK Gilt market shows little response to the pre-weekend downgrade, and the 10-year yield is off eight basis points, the most in Europe. Core European yields are 3-6 bp lower, while Italy's 10-year yield is about nine basis points higher. The US benchmark yield is off four basis points near 0.63%. The dollar is firm against most major currencies, but the Japanese yen, and most emerging market currencies, but a small handful of Asian currencies, including the Chinese yuan. The South African rand is off a little more than 1%, and the 10-year yield is up about 12 bp (~11.70%) following the pre-weekend downgrade by Moody's to below investment grade. Now all three of the major rating agencies have taken away its investment-grade status. Gold is softer alongside equities, while May WTI briefly dipped below $20 a barrel.

Asia Pacific
Japan is putting together extra budget days after the budget for the new fiscal year, starting April 1, was approved. The news measures are expected by the middle of next week. It will be funded by as much as JPY16 trillion in new debt, on top of the JPY129 trillion in the FY20 budget. The new bond issuance will be across the maturities, except for the 40-year bond and inflation-protected securities.

The PBOC injected CNY50 bln (~$7 bln) into the banking system via what it calls seven-day reverse repos (which is an injection of cash for securities that will be unwound in seven days) at 20 bp lower rate to 2.2%. Many observers see this as a prelude to a substantial cut in the benchmark one-year Loan Prime Rate (set via a survey of banks on the 20th of every month). The PBOC defied expectations and left the LPR unchanged ten days ago. Separately, the PBOC continued to set the dollar's reference rate weaker than the bank models suggest. Today's reference rate was set at CNY7.0447, while the median bank model (according to Bloomberg) was CNY7.0522.

Singapore eased monetary policy, as it does through its exchange rate guidance. Earlier today, the Monetary Authority of Singapore lowered the midpoint of its currency band and brought the slope to zero. The clear implication is that MAS is accepting a weaker currency. The move was not unexpected following last week's news that the economy contracted more than 10% quarter-over-quarter in Q1, and the government unveiled a second stimulus package (SGD48 bln or ~$33.5 bln).

The dollar eased to around JPY107.10 in the Asian session after finishing last week just below JPY108.00. The JPY107.70 area corresponded to a (38.2%) retracement of the rally from the March 9 low near JPY101.20 to the recent high of about JPY111.70. The next retracement (50%) is found near JPY106.45. The session high was set in early Europe around JPY108.25. Resistance is seen by JPY109.00. The Australian dollar is trading in the upper end of its pre-weekend range and has not been bid through $0.6200, where the 20-day moving average is found. In both Asia and early Europe, support near $0.6115 held.

Reports suggest that 14 of the 19 eurozone members endorse a common intergovernmental bond to finance expenditures linked to the coronavirus. This is an issue that will not be decided by a majority or a qualified majority. It a decision that requires unanimity, and it will not be forthcoming.
Many of the same people, institutions, and countries that sought a joint bond in the sovereign debt crisis a decade ago are pushing for it again, but the creditors remain unconvinced. The European Stabilization Mechanism (ESM) and the European Investment Bank (EIB) issue bonds for which there is a shared responsibility. It is not clear what specific problem a new joint bond would address besides being seized upon as an opportunity to advance the federalist agenda. A compelling case would have to entail a demonstration, not merely an assertion that monetary union itself is at risk and that a joint bond is the only solution. It still seems to be a "nice-to-have" rather than a "must-have."

Fitch cut the UK's sovereign rating before the weekend to AA- with a negative outlook....

Sunday, March 29, 2020

John Prine "Paradise"

From Mr. Prine's family:
From Mr. Prine, 1971
And daddy won't you take me back to Muhlenberg County
Down by the Green River where
Paradise lay
Well, I'm sorry my son, but you're too late in asking
Mister Peabody's coal train has hauled it away....

"The rich are shaming themselves in a time of coronavirus crisis"

Homies don't shame, homies helicopter.
From the New York Post, March 26:
As the global economy craters, as the gap between the haves and have-nots is now one of life and death, the one percent is playing to type and doing what they do best: profiteering.

Just days after billionaire hedge funder Bill Ackman went on TV to tearfully declare “hell is coming” — thanks, but New York City already has one panic-stricken middle-aged excuse for a man in our feckless mayor Bill de Blasio — we learned that Ackman was, at that very moment, eyeballing his own bet against the markets, one that netted him $2.6 billion.

Now this may not technically, legally constitute market manipulation, but rational people can agree: It’s soulless and disgusting nonetheless.

The same thought occurs to me at least once a day now: The days and weeks and months after 9/11 brought out the best in people. This crisis is bringing out the worst, especially among people of means: smart, sophisticated, wealthy, connected. The ones perfectly positioned to do real acts of kindness, charity and philanthropy, to help those most afraid and in need.
The ones, in short, who should know better and do better.

Or at least, for propriety’s sake, fake it.

Instead, we have Treasury Secretary and human facsimile Steve Mnuchin (net worth $300 million) actually state that current unemployment numbers, a record 3.3 million and climbing, “are not relevant,” because three weeks from now, all those people will be getting $1,200 checks from the government.

Now we know the U.S. Treasury Secretary knows nothing, less than zero, of how most Americans live.

Then we have the four senators, including the legendary Dianne Feinstein, who in total offloaded hundreds of thousands in stocks after a Jan. 24 top-secret briefing on the coronavirus — three Republicans and one Democrat, proving nothing is as bipartisan as greed.
And as The Post exclusively reported, 84-year-old billionaire investor Carl Icahn bet $5 billion against U.S. malls — a bet made last summer, to be fair, but one that will pay off much more substantially solely due to this crisis.

But what is profiting off our nation’s pain if you can’t gloat about it? So Icahn, who lives on a private Miami island known as “the billionaire bunker,” went on CNBC to talk about his excitement over the grim fate of commercial real estate.

“You’re going to have this blow up, too, and nobody’s even looking at it,” Icahn said. He then predicted the coming collapse will be worse than the 2008 housing market crash — the kind of feeling that, for people like him, money just can’t buy....

By the same writer, March 19:
‘We should blow up the bridges’ — coronavirus leads to class warfare in Hamptons