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Commentary by Lou Barnes — 9/4/20

Written each week by Lou Barnes in Boulder, CO. Inconsistently available online. Reprinted with permission. Lou typically provides background and context to what's happening in the credit/bond world along with commentary on topical events that some readers appreciate.

Note: In the Subject Line, I have replaced Credit News with Commentary because I think it better describes the content of Lou's weekly missive.

     Fridays used to be so simple. Just recite economic data, note shifts from forecasts and in public policy, explain the implications for interest rates, credit, and housing, needle a few politicians in each party, and enjoy the weekend.
     Today, this Friday... a few meaningless financial notes, discuss the descent deeper into national craziness from politics to the virus to football, the virus intensifying all worries about everything. National media climate pornsters this weekend will seize on Colorado fires and record-high 96 degress (but will miss snow on Tuesday).
     The financial news is not entirely pointless, just not useful. First, the virus causes distortions in new data enormously larger than other shifts in data trend. Today’s reports of 1.4 million jobs gained and unemployment dropping to 8.4% in August from 10.2% in July (the peak 14.7% in shutdown April) are good news, but wild approximations muddied by new census workers, seasonal adjustments never designed for Covid, and the brave few returning to semi-safe jobs.
     Second, none of the important economic issues are changing or can change. Roughly 15,000,000 people, 10% of our workforce have been excluded from work by the virus. Work indoors or in close contact will not resume until a vaccine, or miraculous national discipline to mask and distance. The economy is moving pretty well, the twin ISM surveys in healthy mid-50s, but vulnerable to increasing layoffs from high-quality jobs. Stocks... ignore stocks.
     National lunacy... deepening? Sixty days to election day, every day more deranged than the one before. Will Joe talk himself out of the job, as always before? Can Trump win without Hillary? A confined, touchy, angry nation, political leanings presumably intensified, but how to predict in an unprecedented time?
     Deeper yet after the election. If Donald loses, and decides to leave, what will he do until noon on January 20? Four-and-a-half months... brace thyself. If he wins, half of the country will think about a warm tub and opening a vein.
     At a moment like this, better to let others do the talking.
     Covid. The CDC this week instructed the states to be ready by November 1st to distribute vaccines. HHS Secretary Azar: the date has “Nothing to do with elections.” Dr. Fauci on the odds of vaccine available by then: “Not impossible.” The CDC: “Very, very unlikely.”
     Good news: if we are unlucky and become infected while wearing a mask, the mask will dramatically reduce our degree of illness. Virologists say they have known for a hundred years that viral dosage works like poison, the bigger the snootfull, the sicker we get. Aside from preventive success, masks reducing dosage may be the reason that rates of death versus infection are today so low compared to spring.
     For fans of models... the IMHE at the University of Washington announced today that its model for mid-range virus deaths by the end of December now finds 400,000 total by then. Double in 90 days? From the March get-go I’ve tried to validate various modelers by comparing their Colorado data to actual CDPHE figures (new below). The IMHE version of us bears no resemblance to actual, and they do not answer phones or mail. IMHE is virus porn.
     Football is underway. Games are about to begin, but the sport has been operating since March, even in college conferences which will not play, and of course all other sports not allowed to play. All of these athletes train constantly and most must train in team groups with coaches and staff.
     One aspect of our nationally loony response to the virus has been our misunderstanding of risk. Some is intentional, preferring fear and enjoying how-bad-it-can be, or the denial alternative, but most people just struggle with contradictory advice.
     Most who oppose playing football seem to think the risk is in playing, obviously in very close contact and without masks. (There are those who oppose football, virus or no virus.) A college roster has 85 scholarship players and another 20 or so “walk-ons.” Fewer than half play in games. The virus risk is in training, not playing. A few teams had significant outbreaks early, LSU and ‘Bama, but the teams are so disciplined and supervised, and so well-tested that they are the safest places on campus. If team risk is zilch while training, playing has no risk at all.
     Trust the Experts. On Monday the physician who is Penn State’s Director of Athletic Medicine, responding to pressure for the Big10 to join the SEC, ACC, and Big12 and play games said this: "When we looked at our COVID-positive athletes, whether they were symptomatic or not, 30 to roughly 35 percent of their heart muscles are inflamed.”
     Penn State “clarified” yesterday -- a university spokesperson, not Monday’s physician:  “At this time, there have been no cases of myocarditis in COVID-19 positive student-athletes at Penn State." Zero.
     All professions avoid conflict among colleagues, even ones committing malpractice or misinforming the public. Be a skeptic. Trust but verify.
     Let others do the talking... Ask an oldster about 1968. Cities on fire. The Vietnam army a wreck internally, struggling to find units to send to cities. Martin King and Robert Kennedy murdered. In the inequitable army of the day, combat infantry were Black at twice the portion of population, and many wondered why returning vets did not begin urban guerilla resistance.
     This week we have a right-wing militia man shot by a left-wing militia man, himself now shot dead resisting arrest.
     The civil rights movement in the ‘50s and ‘60s would have foundered if it became violent. The sight of well-dressed Black Americans marching, crossing color lines, arrested, beaten, fire-hosed, and assaulted by dogs but maintaining non-violent dignity... that’s why the movement worked, and in good part how we made it through 1968.
     Today both presidential candidates, and candidate for anything else would do well to speak Dr. King’s words. He and his followers risked their lives in non-violence while others said he was timid and a fool, and argued for violence.
     King’s six principles: Nonviolence is a way of life for courageous people and active resistance to evil; nonviolence seeks friendship and understanding; nonviolence seeks to defeat injustice not people, as evildoers are also victims and not evil people; nonviolence accepts suffering without retaliation; nonviolence chooses love instead of hate; nonviolence believes that the universe is on the side of justice.

 

The Colorado Covid pattern is spreading across the country. We detect here a couple of hundred new cases daily, undoubtedly an undercount of the asymptomatic, but roughly 10,500 total new cases found in August resulted in only 104 deaths, and dwindling.

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