Letter to the Future XVII - The Sweet Quiet of Negative Success

"If you need to be right before you move, you will never win."

Dr. Michael Ryan, Exec Director, WHO
on the lessons from Ebola

15 March 2020

Dear Future -

Today, New York City announced an 80% increase in cases, in 24 hours. The curve of our detection capacity is, finally, starting to chase the curve of contagion. At 3,000 or so confirmed cases today, we have every reason to expect 10,000 by next weekend, as our national testing capacity comes online. Settling down to a 25% day over day increase for 31 days would mean an increase of a factor of 1,000 a month from now. The unofficial national motto has become 'flatten the curve.'

The Socialization of Risk

March 16, 2020

Let's talk about socialism - specifically, the socialization of risk. 

We're likely about to be asked to bail out the riskiest elements of the American energy sector. Others - like airlines and cruises - will line up after it.

A lot of human beings are looking down the barrel of job loss because of what's unfolding in markets. In energy, it's already savage. Oil sells for less than break-even production prices for a majority of the American energy market and Saudi Arabia is peacocking, saying it can knuckle-by at these levels for years. From Bloomberg:

COVID-19: A New Paradigm

5 March 2020

When asked on Monday whether he would declare a federal state of emergency in response to SARS-CoV-2, the virus causing the COVID-19 disease, which would free up federal funding to try to head off a national contagion, President Trump said no. It hadn't risen to that.

At a press conference Monday, it was unclear as to whether Medicare and Medicaid would cover medical services intended to detect and treat the coronavirus. Didn't rise to an emergency declaration of support there either.

Before all that, though, Monday morning Trump was pushing Fed Chairman Jay Powell to cut interest rates to allay markets. The President, as always, had an eye on stocks.

This morning, the Fed appeared to fold. It made an emergency cut to the fed funds rate of 0.50% from 1.75%.  The rate cut may have tickled the President, as he is in service to capital markets. But the Fed sees something brewing.