COVID 19 De-Risking - 5/25/20
Our favorite forecasting model for COVID19, and thus far highly accurate, Y.Y.G. (MIT Data Scientist), forecasting of US Deaths for the first week of August has fallen materially from near 200,000 to 177,000. Also, according to CDC (5/22), based on death certificate data, the percentage of deaths attributed to pneumonia, influenza or COVID-19 (PIC) decreased from 18.5% during week 19 to 12.0% during week 20 but remained above baseline. This is the fourth week of a declining percentage of deaths due to PIC.
Our Attention now Focuses on:
Hot Spots in the U.S.
Isolated Outbreaks at places such as: Work, Nursing Homes, Restaurants, Theme Parks, Sporting Events (future), Religious Services, Gyms, Hotels, Casinos and Grocery Stores.
Any growth after lock-downs lift
PIC '20-'21 Season (pneumonia, influenza, and covid19) and prospects of a higher amplitude Wave II
New outbreaks and lock-downs in China
Vaccine development (e.g. $MRNA)
Contact Tracing discussion - voluntary Contact Tracing App usage in the U.S.
Unemployment (both new layoffs, and also new hirings, re-hirings)
Uptake of Consumption in the U.S.
Antibodies in group data-sets (e.g. NYC)
Overreaction in lock-downs (e.g. CA)
Each of the aforementioned was on our radar previously; and, admittedly, we do feel, for the time being that Covid risks have declined. This is the first week since mid-February that my view on Risk has improved - though not without significant headwinds ahead for a long period of time - De-Risking Risk, or Re-risking takes a long time - and still have to absorb unemployment, lower consumption trends, changed consumer and business behaviors and see bankruptcies and credit losses work their way through the system - while earnings for 2Q20 and forward guidance then and thereafter are still historically horrific. Speaking professionally and personally, there is very little I am doing in my day-to-day life that is different from January 2020: my work is 100% mobile (for the last five years now), as purpose designed, when starting H-Fin Capital Advisors, now closed in favor of H-Fin Capital Partners. Now that the gyms have reopened, I go to the gym, nearly daily, which remains extraordinarily empty (including on the previously very busy weekend) during the first week of being reopened. I am still training for USATF Masters 400m/800m track (though track is closed), and not consuming much alcohol or dining out in the evenings since December 2019. Candidly, good hygiene (extra these days in regards to bacterial disinfectants), good health and diet (literally the easiest thing one can do is take Zinc daily) are most of what is reasonable to do in the face of COVID19. With Consumption such a large part of the economy, it would be prudent for policy to encourage: (a) re-hiring - but - to avoid 'zombification' of companies - so, perhaps tie to profitability; (b) hiring, perhaps to non-profitable VC funded growth-oriented companies - as the best way to quickly (as quickly as possible) emerge from the Recession.