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Credit News by Lou Barnes 6/19/20

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

     This week the struggle to find good information intensified, from time to time doubtful if there is any.
     We suffer from intentional distortions by both political wings and their captive media. Distortion is the rule on Wall Street, but not typically in medical science. Every White House suppresses negative information, but it is unusual to stop all information.
     Unprecedented duty falls upon each of us. Maintain skepticism, for sure, but if forced into too much suspicion then nothing is true and we can’t think at all. So qualify sources, dismiss altogether those found deceitful even once, and spread outward from good ones, cross-referencing to other reliable guideposts. Today, outposts.
     And the ultimate refuge: raw data, analyzing on our own. When accused of inadequate credentials, stand your ground. This moment is the all-time test of common sense, not the doctorate which you may not have.
     First the economy and money, then viral politics. On balance the economy is rebounding far faster than expected by most, but still a long and uncertain way to go. The shape of recovery has no precedent: the Fed has saved us before, but the key is the uniquely American, disorderly grass roots reopening, tens of millions of people every day pushing the limits of virus risk and reward.
     The National Association of Home Builders index, expected to bounce to 44 from 37 in May jumped to near-normal 58. Housing is the brightest of all spots, the urban and near-urban shortage just as deep as it was, and the core demand -- IT people -- largely untouched.
     Normal spring-summer hotel occupancy is close to 70%. In damaged 2009 it limped at 55%. During the shutdown it crashed to 20% (that’s why we called it shut down), but is already back near 40%. Restaurant activity has large regional disparity, but from zero has climbed back to 40%-60% of normal, a stall likely due to distanced seating. Airlines are crippled by unjustified fear, barely 20% of normal. (For the most reliable and clear recovery data, www.calculatedriskblog.com and its “high-frequency” recovery series, the publisher Bill McBride at last made a star by NPR this week.)
     Then there is the mass of useless information below big headlines. Disastrous 2nd quarter GDP is irrelevant and over. The same for all reports of conditions before June, June data a month or two away.
     Mortgages: headlines shrieked at Freddie’s survey yesterday, “New All-Time Low!!!” Well, sorta... by 0.08% to 3.13%, but the average fee rose to .8%, the actual cost of money just under 3.50% where it’s been for four months. The Fed is buying more mortgages than it did in 2009, but the market cannot absorb volume, frightened of future defaults and forbearance -- which has begun ever-so-slight decline from the 8.7% top.
     Truly stupid stuff... today’s NYT blares the death of 30-fixed mortgages because of rising sea level. The climate people might consider a few months off. Most civilians have become wary of virus hysterics, which may generate an immune response to climate exaggeration. On the other political side, the WSJ is having fun with the agony of blue cities, announcing migration away. Some people will move to places they see as safer, but it ain’t gonna be mid-Kansas, and moving to New Jersey suburbs is not a demographic revolution.
     Everything else is caught in viral politics. We can with our own eyes watch the US economy revive, but the next steps and events depend on public policy, and they in turn on good information. The standouts at risk: schools and colleges, sports events, offices and stores and restaurants, and travel and tourism and lodging. That whole shebang is up for grabs in the next 60 days and the economy with it.
     For the first time in US history we have neither public policy nor information because the president will not allow either. Donald Trump was elected to serve as a thumb in the eye of opponents of the Tea Party. For three years he served very well. Were it not for the virus and a new social revolutionette, the thumb might have continued in fine form.
     But the thumb does not work any more. Its supporters still support, but eye-poinking has not made a new friend in three years and has now driven away the center. Johnny one-thumb has nothing else to offer except more thumb. A one-thumb pony with no other trick.
     We need a clear voice of policy. The economy has been saved (again) by the Fed, but the White House hates Chair Powell for describing the economic peril which justifies the Fed’s actions. The virus is not going to “fade away.” We should months ago have had a disciplined medical-military-commercial team in action and speaking to us every day with quality information. Instead, everyone at the FDA, CDC, and every other branch of government has been silenced by the thumb. No one else may speak or act.
     Daily testing has stalled near 500,000, half of the target by the White House virus task force before it stopped meeting. We are left with Ouchy Fauci, a nice man but not the Ben Bernanke of virus-fighting. He says he hasn’t spoken with the thumb in a couple of weeks. I wouldn’t talk with Ouchy, either. A nation struggling for morale does not need to hear how bad it might be in October, or warned of no football.
     We are left with grandstanding researchers. Some have blown themselves up, this week the aerosolers by announcing death by flushing. If Covid were an aerosol risk like measles or TB, as opposed to droplets, we would know by now. Instead of intensive experiments with treatment and sharing information, we fiddled until the UK NHS quietly announced a cheap and common steroid saving as many as half of those on ventilators. Some US hospitals have said since, we knew that. New York didn’t. Malaria? We’re ready.
     The worst professional behavior? Those pleased to increase fear by asserting no natural immunity, or short-transient immunity, or intentionally confusing antibodies with immune response, while innate resistance among many is obvious, as well as fantastic variance of illness. Covid is not a Russian nerve agent smeared on doorknobs and killing everybody. Almost as bad, the game of asymptomatic footsie. How many? Contagious or not?
     The problem is indoors. Not outdoors. The contagion results from mass protests in Minneapolis: nada, zilch. Apple stores, NSG.
     Some people are at work on the indoors problem -- isolated, un-funded, battered by the frightful and deniers. We have three months before we must have indoor spaces. We have some pleasant data: not one report of a contagion on an airplane despite many passengers still mask-resistant, on-board air replaced and filtered every two minutes, ventilation ceiling down to floor. AMC is determined to reopen its theaters, limited capacity at first, and these technical fixes worked up by partnering with Harvard and Clorox: electrostatic sprayers, HEPA vacuums, and upgraded MERV 13 ventilation filters. I don’t know what those are, but I’m going to find out.
     Tomorrow... the great thumb experiment in the land of my forebears. A win-win deal (except for Tulsa’s 1921 memories, and potential violence). Is suicide possible by thumb? If not, and 20,000 people can safely carry on for hours in an arena, bring on the games!
     Masks work. Get over it. Across the thumb divide, ask Dr. John Barrasso, Republican senator from Wyoming, 18 total Covid deaths. “Wear a mask.” If nothing else, a reminder to self to be careful and a signal to others that we are doing so.

 

The Colorado data continue to improve, although we still have community spread. Even a hot spot in uber-masked Boulder (from unmasked parties), responsible for the minor uptick in the last week:

 

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The National picture is an embarrassment, chart from wonderful Calculatedriskblog, updated constantly. The number of tests has stalled, the uptick in positives a precursor to geometric increase in previously spared but mask-resistant places:

 

5 Replies
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Frequent Contributor

Re: Credit News by Lou Barnes 6/19/20

@RyanM 

GASP!  This amusing piece is almost all politics!  As is his habit, Barnes infuses this article with anti-Trump rhetoric, though he has other targets also.

HORROR! The piece is largely about Covid-19!

Before I spend time composing a reply, I want to know if you're planning to censor or lock the thread. (Don't want to waste my time again, you understand.)

God forbid that we should debate the stuff that really matters. 

Thanks in advance.

N.

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Explorer ○○○

Re: Credit News by Lou Barnes 6/19/20

Most of the stuff makes sense.

Except this little bit: "We are left with Ouchy Fauci, a nice man but not the Ben Bernanke of virus-fighting. He says he hasn’t spoken with the thumb in a couple of weeks. I wouldn’t talk with Ouchy, either. A nation struggling for morale does not need to hear how bad it might be in October, or warned of no football."

On one hand they want us to get quality information at the same time, they are willing to kill the messenger. Fauci was held up as a great guy, until the president got pissed off and now the president's supporters suddenly think the same person is horrible. It's ridiculous!

Fauci hasn't changed, it's the listeners who have, and shame on you!

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Explorer ○○○

Re: Credit News by Lou Barnes 6/19/20

Most of the Covid-19 they write about is not worth reading!

We don't know if airline travel is spreading the problem - We don't have enough testing to figure it out. Nor do we have contact tracing.

Researchers can't carry out tests on people with masks or without mask, in indoor and outdoor settings. It's UNETHICAL.

We don't know about immunity, because the problem is so new. We can't test for it because it would be UNETHICAL, to knowingly give novel coronavirus to someone who has just recovered from it.

The reason why a lot of information is changing is because the damned problem is so NEW.

First principle should be - do no harm, so use your head and make sure to take care of yourself and everyone around you the best you can.

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Frequent Contributor

Re: Credit News by Lou Barnes 6/19/20

"Masks work. If nothing else, a reminder to self to be careful and a signal to others that we are doing so."

Agreed, nothing political about it.

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Frequent Contributor

Re: Credit News by Lou Barnes 6/19/20

Thanks, W.O.W., I enjoy Barnes' weekly missive. Take care, rm

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