Just Relax, Abigail Disney

Abigail Disney is screaming about how Disney furloughed 43,000 employees from their parks. 

Abigail, relax. 

First off, because of the CARES stimulus package, all of these employees will get $600 added to their unemployment insurance, so they will be making about $1,100 a week. Much more than  the average Disney Parks employee makes. The parks will be reopened by the time the 39 weeks (almost 10 months) of unemployment insurance runs out. 

Secondly, you complained about how much Bob Iger makes. Iger is the chairman of the company, who under his tenure as CEO helped Disney go up 700%, presumably making billions for the Disney family. Bob Iger makes $0 right now since the shutdown began.

Third, this is how business and government work together. The government asked businesses to shut down. Do you think Disney, started by your grandfather, wanted to shut down the parks? Instead, the government told Disney to shut down, they complied, and the government is directly compensating those employees through the one-time stimulus checks, plus the unemployment. You can’t expect companies to stay in business forever without producing goods and services. If you want to help the millions of employees who benefit from the Disney ecosystem, then just let the government and the guy who increases your wealth 7x do their jobs. 

The employees will be fine. Once the parks reopen in a month or so (hopefully), they will be rehired. IF THEY WANT TO BE. Or maybe they will change careers or explore other interests while they are making $1,100 a week on unemployment. Don’t dictate their lives for them. 

Fourth, who are you? 

Your grandfather’s first film production business went bankrupt in 1923. He started it in 1920, created some characters, made some ads, and then went bankrupt. He had to fire people and he couldn’t pay people back. That sucks. But that’s business. He then borrowed from his parents (your great-grandparents), who took a risk on this bankrupt cartoonist and started his new company, Disney, from scratch. 

And, guess what? His business still sucked. Then the Great Depression started. Horrible. Walt Disney was praying for a miracle. His movies were barely breaking even. And a miracle came around 1935. 

A man named Kay Kamen took a two-day bus ride across the country to convince Walt Disney that the movies were just a giant focus group for toys. If kids liked a movie, that meant kids would like the merchandise, which would be even more profitable. 

He convinced Walt to try one thing. An experiment. Put that mouse, that rodent, drawn by Ub Iwerks (the smartest man in the room that Walt had been standing in), on a watch. C’mon, just try it. 

Walt did it. In 1935 they sold two million watches. Phew! 

He never looked back. And that’s why your family is worth about $10 billion. Maybe more. Who knows? 

It took 15 years of blood, guts, tears, and fears. One bankruptcy. Begging his parents to take a chance. Building a business through the worst part of the Great Depression. And then taking a chance on putting his beloved characters on toothbrushes. Man, 15 years. That’s difficult. You try it. 

Fifth, I get it – you want a wealth tax. People who make $50 million a year maybe should get taxed more. I’m not one to say. But let’s be realistic. YOU AREN’T GOING TO BE TAXED. You moved all of your money into trusts, charitable trusts, family trusts, etc. You can’t be taxed. You can’t be touched. I appreciate that. You did smart things with your money. Billions? Who knows. But you were smart. But, you think, everyone else should be taxed. 

Why didn’t you take some money and help out the furloughed workers? Maybe you did. I hope so. 

All of this is to say: 

Walt Disney always stood next to the smartest person in the room. And he walked from room to room:

• Animation: Ub Iwerks made Mickey Mouse
• Movies: Winsor McCay made a lot of the initial animations for the movies
• Business: Roy Disney, his brother, helped him with the business aspects so Walt could focus on the art 
• Merchandising: Kay Kamen
• Bought his first movie: Margaret Winkler had the insight to buy his first movie, “Alice in Wonderland”
• Named the little rodent Ub drew: Lillian Bounds
• Married him (the most important decision a person in business can make): Lillian Bounds. 

So just relax. Enjoy the ride.

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The Problem Is How We Deal With Problems

“Wake up, you idiots!” shouted John McAfee, founder of McAfee, the virus software company, and now billionaire-on-the-run as he hops from country to country after being charged with tax evasion. 

Earlier he told me, “I went to the Bahamas, but then the U.S. tried to get me there… Cuba… the Dominican Republic… and now I can’t tell you where I am.” 

And then we were off to the races! 

I’ll skip the part about his tax evasion (podcast out next week or maybe this Thursday. We’ll see) and get right into coronavirus. 

“Everyone listened to the media,” he said, “like a bunch of sheep! And who is the biggest beneficiary of this virus? The media! 

“You used to go to work and commute 9–10 hours a day. Now, everyone sits at home and reads the media that tries to scare you. 

“‘MILLIONS OF DEATHS!’ they said. We never even got close to those numbers… Sweden, which did zero lock down, was out partying the whole time, and they’ve hardly had any deaths. I’m over 70… I’m in the most susceptible population; do you think I care? Of course not! There’s a 2-in-100,000 chance I die. I’ll take those odds any day. Two million people a year die from diarrhea. What are we doing about that?”

“But John,” I said. And I was about to agree about the media but he kept going. 

“Your dollar will be worth pennies in two months, trust me.” 

“But what other currency will people put their money in?” 

He broke out laughing. “Who is going to trust the dollar?” 

“I don’t know! John! Give me something positive here!” 

He laughed again. “There’s nothing positive. You’re on a plane that’s crashing. What sort of positive news do you want to hear? That the plane will crash more quickly?” 

He said, “The only way people will value the dollar is if they can use it to BUY goods and services. But you guys aren’t producing shit! You’ve shut down! You think the economy is a light switch?” 

I kind of wanted to defend everything because I felt like he was accusing me. 

“OK, but what if we reopen today?!” And I have to put an exclamation point because he got me revved up. 

“Well,” he said, “then there is a slight chance the economy can come back strong. You have to get back right away. Will the media let you? They don’t want people going back to work. Who is going to pay the media bills then?” 

“OK,” he said, “I’ve gotta go.” 

We spoke about his adventures evading the law, coronavirus, guns, the Wild West, the Constitution, N.Y.C., and on and on, but I said, “But I wanted to talk about bitcoin.” 

“Next time,” he said and logged off. 

I get it. I didn’t agree with everything he was saying (he’s INTENSE). 

But I get it about the media. And I get it on the constant analysis and reanalysis of every number and then policy changing based on whatever the latest math-driven model is in the media, even though, as I’ve pointed out here every single day, all of the numbers are clearly off, the assumptions are off, the worst-case scenario is ridiculous, the best-case scenarios are also ridiculous…

The media has been scaring us since day one. Summary of headlines I’ve read since January: 

• This virus is biological warfare
• 140 million people could die
• It has a mortality rate of up to 10% AND it’s very contagious
• Everyone in the world will get it (combined with a high mortality rate).

Right now, all over the U.S. (other than N.Y.C. but N.Y.C. has successfully flattened the curve) hospitals are empty when they were supposedly going to be overflowing. 

Of course, deaths are horrible, but nobody should feel obligated to say that. Of course they are. Nobody questions that. 

But there are “collateral fatalities” from shutting down the economy: 

• Domestic abuse / child abuse on the rise (calls in the Bronx about child abuse have gone up 6x)
• Depression, mental health is up (Indiana’s mental health hotline has gone from 1,000 calls a day pre-virus to 25,000 calls a day)
• “Elective procedures” (including certain cancer treatments, heart treatments, etc.) aren’t happening, which will cause future deaths that could potentially dwarf this virus. 

Running a country (every branch) relies on our leaders taking a complex situation with many variables and making the right decision. 

Variables here were:

• Understanding more deeply (deeper than the media) the cost in lives of COVID-19
• Understanding more deeply the cost in lives from shutting down the economy
• And understanding more deeply the long-term suffering of 128 million workers and the 100 million family members who depend on them.

The average American has $400 in the bank; $1,200 isn’t going to help. The average restaurant had 16 days of cash in the bank (before the shutdown). Yes, many loans were approved. But there are 30 million small businesses in the U.S. Even with $700 billion going to small businesses, that averages out to $25,000 per business. I can tell you that won’t save most businesses. 

What are the agendas? What is the media’s agenda? What are the agendas  of the experts? What are the agendas of Congress and the president? 

I don’t really know. Clearly the economic shutdown is a horrible thing. And clearly anyone dying from the virus is a horrible thing. But what will happen in a second wave, or next year, or the year after, now that this is a part of our lives?

How will we react the next time the media tries to scare us? I don’t know. Will we react worse? 

That said: 

Georgia is opening up part of its economy today. Texas is opening up quickly. And other states will race to open up to not be the last one with zero economy and then blamed by their citizens for opening up too late. 

I do think John is wrong. 

I do think if we open up quickly enough that, although all businesses won’t survive, many will, and some of our supply chain will move back to the U.S., and the rest of the world will continue buying our goods, services, and dollars. 

Maybe I’m too optimistic. But in early March I was on my podcast (the episode with Dr. Marty Makary) suggesting that April 15 will be the peak in the US and the number of cases and new deaths would be minimal (but still sad!) and start going down. 

This came true. I haven’t been buying stocks right now because there’s still a lot of uncertainty. There’s still crazy stuff going on. I can write a whole article no why this oil thing is stupid to worry about and yet, the fact that this oil thing even happened makes me nervous about the insanity of the situation now. 

So I am not always optimistic. I want to be realistic. But I see how the U.S. is going to reopen and I realize the uncertainty and I do think we’ll come out the other side. The world, at the moment, has nowhere else to put money. But it requires action on our parts. 

I was accused of being too optimistic when I was on CNBC during the financial crisis. My friend Larry, a hedge fund manager, told me, “Dude, maybe you need to tone it down. Everyone thinks you’re an idiot. The market is not going up from here.” At the time the S&P 500 was at 700. Now, 2,700.

Even my mom called me when I was leaving the CNBC studio one time in 2009 and said, “Maybe you shouldn’t smile so much when you are being optimistic.” 

“But why?” I asked her. “Things are going to be great.” 

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Always Be Skeptical of the Experts

We have shut down the economy because of the experts. First the mathematical models said there could be up to 140 million deaths worldwide. 

Then they said fewer, and fewer, and fewer, and we shut down the economy, and fewer, and they were wrong about the effect of the shutdown, and fewer…

There is no such thing as an expert.

First, a couple of stories.

In 1799, George Washington caught a cold. He was coughing and he had a fever.

This was considered an emergency. The greatest American alive was sick!

Blood was considered the dominant force in the body for about 2,000 years before this. So if someone was sick, something in the blood needed to be purged.

Hence, bloodletting. I don’t know if leeches were involved.

George Washington died the next day. Not from a cold. From shock. Too much bloodloss.

In 1981, just 33 years ago, Bill Gates said, “There is no need for anyone to have a computer in their home.”

Nobody knows what 97% of the universe is made of (physicists call it either “dark energy” or “dark matter” but there is not a single testable theory of what that is).

Here’s an important story for investors. About a decade ago, a company called Odeo was started in order to build a platform for podcasting.

Two of the programmers developed a side project. The side project showed a tiny bit of traction. 10,000 people signed up.

The CEO was getting frustrated with the podcasting platform. Nobody was signing up.

So he made an offer to all of the investors. The investors were some of the most prestigious and sophisticated investors in Silicon Valley and the CEO was a seasoned professional.

He said they were going to focus on the side project BUT if anybody wanted their money back, he would personally buy their investment back at cost. Nobody would make any money but nobody would lose any money.

100% of the professional investors asked for their money back.

Then the CEO renamed the company to Twitter.

Larry Page and Sergey Brin wanted to be academics. They tried to sell their company to Yahoo! for $1 million. They were rejected. Then they tried to sell to Excite for $1 million. Rejection. They lowered their price to $750,000. Rejection.

So they figured, ‘OK, let’s go for it.’

In 2001, I had a chance to buy half of a company called Oingo. They were running out of cash and my VC firm was giving a look. Someone came into my office and said, “We can probably pick this up for nothing.”

Oingo was basically an auction system for people to buy words on search engines.

I said, “Are you kidding me? The entire search engine business is dead.”

I was an expert. I had a $120 million venture capital fund. I’ve since written 13 “expert” books.

Oingo changed its name to Applied Semantics. Google paid 1% of the company to buy it and Applied Semantics became AdSense, which is 99% of Google’s revenues. Half the company might be worth around $500 million now or more.

I once made a bunch of websites. I wanted to build a business out of each of them. I showed one of them to my 6-year-old daughter. I was very excited about it. I won’t describe what it was but she basically said, “I don’t know. It seems a bit mean to people.”

She was right. It got no traction. Nobody signed up. In fact, nobody wanted to sign up for any of my websites that I had built.

I decided to try one more but I had my doubts. Millions of people signed up and I sold it eight months later for $10 million.

If you were to divide the world between experts and non-experts, who would be the experts who decide? Who watches the watchmen?

Academia can’t be the criteria. How do you know that 200 years from now you didn’t just pick this year’s version of George Washington’s bloodletters, or last decade’s version of everyone who bailed out of Twitter?

Professional experience can’t be a criteria. Bernie Madoff was head of the Nasdaq for a while and a “successful” hedge fund manager for decades. Enron, Worldcom, and AIG were three of the most respected companies in the world before they went bankrupt or got bailed out.

Does net worth make someone an expert? This is all anecdotal but I’m sure you can find people in every single field of life that are experts who don’t necessarily have a lot of money but have a lot of passion for their field.

A great example is Bill James essentially using statistics to create a world-dominating baseball team. Or Nate Silver predicting the electoral outcome in every congressional district despite having almost zero political experience and despite all the professional talking heads disagreeing with him.

Does this mean we are all idiots? I don’t know. I’m not smart enough to answer that.

But it does mean that all of us have a voice.

And then anyone can choose to listen.

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My Twitter Class on the Real Causes and Solutions of the Great Recession

1994 – Clinton used an executive order to create the National Homeownership Strategy, with the very good intention that everyone should be able to afford a home. This began reducing borrowing standards so more people could get loans.

1995 – Presidential executive orders forced banks to establish a lending quota of up to $6 trillion to people who were not able to afford a home. Again, very good intentions. I don’t blame Clinton. Owning a home was considered a source of pride. But good intentions often lead to very BAD outcomes.

Seemingly unrelated… 1998 – The hedge fund Long-Term Capital Management (LTCM), set up by top investor John Merriweather and two Nobel Prize winners, was hit by disaster. It was so leveraged that it almost tanked the world, until all of the major banks joined together to bail out LTCM and save the financial system. Well… all of the banks except two: Lehman Brothers and Bear Stearns (this is relevant later).

1999 – The Glass-Steagall Act was passed, deregulating banks, and also allowing banks to form hedge funds that could invest more aggressively than the bank normally would. This also allowed banks to lend more. Good intentions again… 

2000–2001 – The internet bust and recession. 9/11. The market collapsed. Interest rates were deeply cut to restimulate the economy, allowing more subprime borrowers to take out no-money-down, interest-only loans. Again, good intentions. Until… 

2002–2006 – Low interest rates + more lending + more investors allowed banks to lend to make interest-only, no-money-down loans to subprime borrowers. Many subprime borrowers bought homes. Anyone who wanted to could own a home. Good intentions… 

1999–2006 – The government promised to backstop the loans (reduce risk for the banks so they could lend more): Fannie Mae would “buy” the loans as soon as they were made and the banks were simply paid to collect the money (exactly like PPP loans today, with the Federal Reserve buying the loans). 

2000–2006 – As a result of the above, banks had zero risk in lending. So they lent as much as possible, would resell loans to the government, service the loans, take a fee. EXACTLY how the PPP loans today will work. But then derivatives…

2000–2005 – Hedge funds (often run by the banks) started buying the loans, since the mathematical models showed that risk of default in a diversified portfolio of mortgages had never failed. Then mortgages were bundled together to create “mortgage-backed securities.”

Note: The mathematical models hedge funds and banks were using never considered subprime borrowers. Hedge funds were borrowing at 1% and buying as many mortgage-backed securities as they could at 4%. Banks, funds, brokers… making money. People buying homes, homes going up in value… 

As a result, the economy heated up. So the Fed started raising interest rates, from 1% to 5%. Now people who borrowed “interest-only” loans at 1% had to pay 5x more per month in payments. Subprimes started to default… 

2006–2007 – Housing actually bottomed. It would’ve come back quickly — but nobody counted on the disaster of mortgage-backed securities, and a small unnoticed change in the banking laws… 

2006–2007 – Hedge funds started to crack. The mortgage-backed securities started to default. If a hedge fund were leveraged 100:1 (as some bank hedge funds were), then a 1% drop in MBS meant the hedge fund had a 100% (!) loss (because of the 100:1 leverage). But it gets worse… 

2005–2007 – Credit default swaps were created. If a lender was nervous that a borrower would default, a credit default swap acted as “insurance” that the lender would get paid in full. The lender would have to BUY the credit default swap from someone.

Hedge funds got involved… They would SELL the credit default swaps). It was free money for the hedge funds since, up until then were, defaults basically zero if you sold a basket of diversified credit default swaps. This was a ton of free money for the hedge funds. But HUGE, HUGE leverage…

2006 – A few hedge funds (John Paulson, Michael Burry) got smart and started buying tons of credit default swaps from hedge funds. The sellers (the hedge funds acting like insurance companies on subprime loans) were laughing all the way to the bank until…

The hedge funds that were buying the insurance (John Paulson, Michael Burry) were losing money every month. Their long-term bet was that the system would collapse. John Paulson pitched me on his fund and I left his office thinking, “Holy fuck, we are screwed.”

Paulson only had one worry… He told me in 2006 (way before the top of the market) that he was afraid the banks would go out of business before he could get his money out. Two years later, this almost came true.

2007–2008 – Higher interest rates, plus more defaults from subprime borrowers, caused credit default swaps to trigger. The hedge funds that sold these had to start paying up. The system was cracking. But the banks were able to hold on UNTIL the worst happened.

2007 (critical moment) – FASB 157 was passed. This was a new rule that required banks to “mark to market” their assets in order for regulators and customers to determine the financial health of a bank. Again, good intentions. BUT this is what it meant…

For 70 YEARS, banks had “marked to value.”

Example: Your house is worth $200,000. You know this because of the history of house sales in your area. You paid $170,000 a few years ago, etc. Normal house appreciation.

But what if your neighbors are getting divorced and fire-sell their house? They live next door to you and their house is exactly like yours. They sell for $125,000 but you think, “No big deal. That was a weird situation.” That’s “mark to value.”

“Mark to market” turns it upside down… It forces you to use the last comparable house sale and NOW that’s what your house is worth: $125,000. Not $200,000. You don’t care because you know it will bounce back. And banks are now more transparent. Good intentions again…

But a bank that switches from “mark to value” to “mark to market” — RIGHT IN THE MIDDLE OF SUBPRIME DEFAULTS — it suddenly has to mark down its entire portfolio. Still, not quite a disaster yet. BUT… what if the banks borrowed too much?

If a bank or fund used 100:1 leverage, then even if 1% down (caused by the defaults ,plus some manipulation) will wipe out an entire trillion-dollar bank (Lehman Brothers) or insurance company (AIG) or dozens of hedge funds and basically every bank on Wall Street.

Lehman Brothers collapsed. Lehman was one of the only banks that didn’t help in the bailout of the highly leveraged Long-Term Capital Management hedge fund (LTCM) in 1998. The decision-maker, Treas Secy Hank Paulson, former CEO of Goldman Sachs, had a 10-year grudge.

One day later… Paulson saved Merrill Lynch by arranging a sweetheart deal with Bank of America.

Because of FASB 157, nobody could lend to the banks anymore (they had to mark their assets to less than zero)… which meant banks couldn’t loan to companies to make payroll….

The American system collapsed. The Great Recession began. Nobody could get cash into the system. Paulson arranged TARP (semi-nationalizing the banks) and the bailout (same as now — exact same playbook). But some important notes…

November 2007, when FASB 157 passed, was the top of the stock market. Mark to market was the law in the early 20th century but outlawed by FDR in 1938, which probably led to the end of the Great Depression as banks were able to lend more. So how did Recession end?

In early 2009, FASB 157 was a huge debate. On March 12, Congress met to discuss, and eventually new rules were passed to allow “mark to value” again. On March 9, the market started going straight up, until February 2020 (coronavirus)… similar to the Great Depression.

From 1938–2007, because of “mark to value,” there was no depression. Without TARP, and then the bank bailout in early 2009, then the repeat of FASB 157, we would’ve had a depression.

BUT “mark to value” is often called “mark to myth.” Who benefited? And who is benefiting now?

John Paulson turned $100 million into $6 BILLION (I wish I had invested when he asked me to).

Bill Ackman turned a $27 million investment last month into $2.6 BILLION. He went on CNBC saying the world was going to hell. He sold his investment right after. BUT…

The point is: We have to be careful of good intentions. Nobody is to blame. Should we blame Clinton for loosening borrowing requirements? Blame FASB 157? Blame hedge funds for speculating? Blame Glass-Steagall for deregulating banks?

Blame mortgage brokers for convincing subprime borrowers to buy houses? Blame banks for lending the money? Blame hedge funds for manipulating the market of MBS? Blame Bush for not seeing this coming? Blame Paulson for the bailouts?

The point is….

Government, leaders, voters often have the best intentions but don’t realize consequences that could come years later. Watch out for student loans and watch out for future bubbles in this bailout. There WILL be a crisis two to five years down the road created by current good intentions.

I’m not sure why I did this. I wanted to show how, when you connect the dots, something complicated can be presented in a simple fashion. I also wanted to underline future unknowns in what is happening now by looking at the past. AND see if Twitter is a good place to “teach.” THANKS!

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13 Myths COVID-19 Is Shining Its Light On

COVID-19 has shown us what the myths of society are and now they are quickly unraveling. Here are 13 myths that COVID-19 is shining its light on:

MYTH: Owning a home will give you “roots.”

Many people have left their homes, or stopped paying their mortgage, taxes or rent. We’ll see who truly “owns” these houses afterward and who even wants to return.

MYTH: College is the best way to get learning and then a job.

Well, colleges have sent kids home, refused to return tuition and rent, and online college courses are worse than the online schools. Good bye college, we hardly knew ya.

MYTH: Getting married means you aren’t alone.

During this time of quarantine, calls to divorce lawyers have surged 50–100%. “In sickness and health” didn’t take into account that sickness might mean forced isolation with each other.

MYTH: Having kids is the purpose of life.

I love my kids. But rise in child abuse during this lockdown is a horrific thing. Doctors are reporting they have never seen this many calls about child abuse. I hope this HORRIBLE thing is factored in when we look back at this. 

MYTH: My family is “my family.”

Tell that to many of the people locked in with their family for many weeks now. I’m sure many wish they had a different family. And, again, domestic abuse is on the rise. Stop hanging around toxic people after this is over. Life is short.

MYTH: You have to be dishonest to be successful.

“Success” in today’s environment doesn’t mean money. It means ability to deal with increasing uncertainty. How one measures success after this is over is how one was able to master this uncertainty.

MYTH: Giving to “charity” means you are charitable.

There are hundreds of ways to help others. Volunteering has gone up. And donations to GoFundMes for people who are struggling. Service to others is the best way to reduce the stress of isolation. Give as an instinct.

MYTH: We need to vote to change the world.

People arguing all day on social media in the foolish hope that a mind will be changed show that most only care about being heard and not real change. BE the change you want to see in the world and that is worth more than a vote.

MYTH: Procrastination is bad.

Time is on our side during this lockdown. Maybe procrastination means you need time to find other interests that you can develop and eventually monetize rather than going back to a cubicle job (human domestication program) that fired you. 

MYTH: Needing little sleep is good for productivity.

Some productivity gurus have claimed this for years. Clearly sleep is one of the main boosters of the immune system, which is so desperately needed right now.

MYTH: Humans are smarter NOW than 40,000 years ago.

Compare: 40,000 years ago, a human knew EVERY fruit, animal, predator, and plant within a five-mile radius. Today, people call each other “libtards” and “fascists” on Twitter all day long. Then they watch “Tiger King.”

MYTH: Experts are always right.

Scientists at Harvard initially thought worldwide deaths could be as high as 140 million. What?? So clearly wrong and yet we shut down the entire world economy, which has led to tragic situations for tens of millions of people.

MYTH: Money solves all of your money problems.

Money is useless now. What does exist is your internal strength, your ability to be a beacon for those stuck in the fog. Your ability to rise above and spread common sense to those who are struggling to understand.

Any others?

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I Like the Market. Plus: the New Normal, Robots, Biden, Trump, and More!

I like that the market went down 1.5%. 

In other words, a normal day. To me, this is MUCH more bullish than the market GOING UP 10% in a day. 

It shows me that the general population thinks that the market is fairly valued around here (it might be, it might not be, but that seldom reflects what people think). It also shows me that the market is not anticipating any CRUSHING news that could send things spiraling down. 

Does this mean that things are OK? 

I don’t know. If you want things to worry about, there are plenty: 

• Uncertainty (still) about the economy reopening and how it will happen
• Uncertainty about whether there will be a second wave of COVID-19
• The “new normal” is very unclear. Will restaurants reopen? Will commercial real estate have a crisis? Will there be eventual inflation?

I have pretty pronounced opinions on the above but there still is some uncertainty. 

Does this mean one should buy the market? 

There are two answers: 

YES: If you think there are companies that are very, very undervalued, OR if you can find companies that you think, with good reason, will do well in the new economy. 

NO: If you can’t handle the fact that there will inevitably be volatility that could even take us down to the lows before going up again. 

In my book, “The Forever Portfolio,” which came out during the LAST crisis in December 2008, I recommended IRBT, which makes robots. 

The stock was around $11 then. It went up to as high as $140 a year ago. And now it’s at $47. So down from the highs since the virus started. This is, for me, a “forever” stock. But even more, robotics will be a HUGE beneficiary, wherever the world is heading. 

Remote medicine will require heavy use of robots (doctors would rather not touch contagious patients).

Remote disinfecting: Robots are being used now to disinfect surfaces at shopping centers and hospitals. 

There will be thousands of uses of robots in the years ahead. I would not be surprised if IRBT heads back to all-time highs above $140. This is not a recommendation. Just a guess. I already recommended it in December 2008 and it’s doing well and will continue to do well. 

Warren Buffett once said, “If a company will still exist in 20 years, it’s a good investment now.” 

Will IRBT exist? Well, it is profitable so that’s a good sign. But also, it has $256 MILLION cash in the bank. And about $60 million in debt. So $200 million in cash when it pays down its debts. And increasing cash every quarter. 

My guess is: It WON’T be around in 20 years because someone will buy it beforehand. 

But that means it is probably a good investment now. 

Again, not a recommendation. Just the way I am starting to look at things now.

---

By the way, the above example underlines the two main themes I am looking at for the “new normal.”

• Theme #1: REMOTE
• Theme #2: ACCELERATED

Anything that can be remote… WILL BE remote. 

Even when the economy reopens: 

• More people will work remotely
• More people will learn remotely
• More people will shop for groceries remotely
• More ecommerce will offer remote delivery
• Healthcare will be remote (telemedicine, teletherapy, robots, etc.)
• Sports events will be viewed remotely (even more). 

And everything that was going to happen eventually in society… will start to happen NOW because everything is accelerated. 

• If a restaurant would have gone out of business in three years, it will go out of business within a year or less
• If a couple would have gotten divorced in five years, they will probably get divorced now
• If AI would have replaced worker jobs in 10 years, that trend will be greatly accelerated now
• If colleges were going to play a less important role in society eventually, then that trend will begin much more quickly now. 

And so on. 

REMOTE and ACCELERATED. Use those two words to see if they apply to your thoughts on what \the “new normal” will look like. 

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Some random but important notes. 

When Will the Economy Reopen?

Finally, the PEOPLE are starting to push it. Over 2.6% of the entire state of Michigan has created and joined a Facebook group dedicated to convincing the governor to reopen.  

The governor of Texas has already pledged to reopen. 

This is starting to happen in every state. 

If I were to guess, this is what will happen: 

• Trump will lift federal guidelines and it will become state by state
• Some states will immediately reopen, pressuring remaining states to join in
• Some states will do it region by region and age group by age group
• Social distancing guidelines, masks, etc. will remain in place
• Schools will reopen because parents can’t stay home to watch kids
• Large events might still be limited for awhile. 

BUT… BUT… what if deaths come back? 

Yes, that’s horrible. 

But, remember. THE ENTIRE PURPOSE of “flattening the curve” was NEVER to eliminate all cases or deaths. 

The entire purpose was to make sure the healthcare system was not overwhelmed. 

Well, on Saturday, there were only 53 new hospitalizations in N.Y. 53!! Down from over 1,000 15 days earlier. 

The healthcare system did not get overwhelmed. And N.Y.C. represents almost all the hospitalizations in the country. 

So, mission accomplished — flattening the curve either worked or we simply got lucky (without a scientific look at this, there is no way to know which policies worked and what was useless). 

So if there are new deaths, enough to threaten the system, then there will be new restrictions. But my guess is we will never lockdown the economy again. 

---

One more thought. I wrote about Predictit.org a few months ago and I mentioned how I was betting on it. I’m up about 30% in the past six months. Which means nothing (I started with $1,000, now I have $1,300 there). 

But I wanted to share my latest best and why. 

Remember: A bet doesn’t imply an opinion about a candidate. I might think Snoop Dogg would be the best president of the U.S. but I would never make a bet that he WILL be president. 

Also, this is important: A prediction doesn’t have to come true in order for a bet to make me money. It just has to have an uptick enough to take off a profit. 

There’s a bet right now on Predictit: “Will Andrew Cuomo Win the Democratic Nomination?” 

A few weeks ago, “shares” of this were trading for $0.07. When he started getting more popular after Trump mentioned him in a press conference, shares shot up to $0.15. One could’ve taken the trade off there. Now it’s back down to $0.07. 

I made a few bets: 

A) TRUMP WILL WIN THE POPULAR VOTE 

$0.32 (the way this works is, if he does win the popular vote, the people who bet on this will get $1. So, the market right now is giving you 2:1 odds that he won’t win the popular vote). 

I have no idea if he will win the popular vote. But I do think several things could happen: 

• Once the economy reopens, he might spike up to $0.40. Then maybe I’m a seller and I wait to see which direction the bet drifts.
• Biden might fall apart because of what appears to be dementia or because of this recent sexual assault allegation (again, not having an opinion but rationally looking at the scenario). If this happens, the Trump bet might spike to $0.40–0.50 and then I’m a seller.
• The Republican National Convention. All conventions in history give a little boost to the candidate. So at the RNC, shares of this might spike to $0.40, and then I’m a seller and will wait. 

Given that the popular vote was almost 50:50 in 2016, I do think 2:1 odds are reasonable for me to place this bet. 

I also bet that: 

B) BIDEN WILL NOT WIN THE DEMOCRATIC NOMINATION 

I have to keep reminding people: This is not a political opinion, but a calculated one. 

I’m hearing from people inside the Democratic party that they are basically s***ting in their pants that Biden is going to be their nominee. That out of 60 million Democrats, the people have selected Biden, who quite likely has dementia and has other baggage (recent sexual allegations, Hunter Biden, etc.). The bet is that perhaps Biden will be persuaded to not run. 

It’s unlikely. If this bet were 50:50, I would not make it. 

But I bought the bet for $0.15 cents (currently at $0.17) and I figured, at roughly 6:1, those were reasonable odds. 

All it takes is for one major newspaper to hone in on the sexual allegations (whether they are true or not) or one more major gaffe, or an uptick of Trump in the polls when economy reopens… and my bet can easily go to $0.30 cents, which is a double and I’ll take it. 

I don’t need to wait around and see if he gets the nomination or not. That’s the beauty of these prediction markets. I am betting more on direction than result. 

In any case, I find these prediction markets fascinating and it’s a way for me to have skin in the game. 

---

I talk about these topics and more on my Instagram Live Q&As that I’ve been doing every day at 2 p.m. EDT. Follow me @altucher on Instagram, tune in to my Live session, feel free to ask any questions, and I usually get around to answering all of them. 

 See you tomorrow. 

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Death and Deflation — Will We Survive?

SUMMARY: Don’t read the headlines tomorrow on the virus and unemployment. 

• There’s been a peak in N.Y.C. cases as evidenced by several days in a row of fewer hospitalizations.
• California, Washington, Oregon, and possibly N.Y.C. are now RETURNING ventilators, saying they have enough. 
• Unemployment is obviously not good. But not as bad the newspapers will say tomorrow. 

Daily Growth Rate of New Cases

We are doing more testing than ever, so there should be more growth in cases, right? 

Here’s an overview of new cases growth rates over the past 10 days: 

• March 26 – 24.9% more cases than the day before
• March 30 – 15.4% more cases than the day before
• April 4 – 12.4% more cases than the day before
• April 6 – 8.7% more cases than the day before.

I haven’t checked the past few days. There’s no reason to obsessively check every piece of data all the time.  

As I’ve been writing here for the past two months, everything is on track for an April 15 peak in the U.S., and then a decline.

Now… next step: economy. 

Some Interesting Observations on the Data

New York and New Jersey represent 54% of total coronavirus deaths in the U.S. 

The top eight states  (NY, NJ, MI, LA, WA, CA, GA, IL) have 9,447 deaths total. 

These are the ONLY states with more than 300 deaths. 

32 states have fewer than 85 deaths. A dozen states have 25 or fewer. 

Obviously every death is sad, scary, etc. 

But those 32 states have over 200 million people in them. 

We don’t know the full damage or total deaths, etc. We might never know.

But factor in also what are called “collateral fatalities.”

People who had regular cancer checkups, or hospital visits for heart trouble or a stroke, etc. Those people are not currently getting treatments and there will be/have been deaths. 

And the economic chaos has caused deaths from suicide, drug addiction, domestic violence, etc. 

At some point, I hope that the partisanship goes away (unlikely) and we take a step back and really determine what the best policy should have been for the country. 

Unemployment and Inflation

Well, it sucks. Another six million-plus people filed for new unemployment claims. 

BUT… what does that mean? 

Tomorrow morning, the headlines will say: “Worst unemployment in history!!!!” and everyone will get scared and the newspapers will never explain the nuances. 

Here they are: 

A) Unemployment is not the same as “unemployment” 

The rules changed. In the just-passed stimulus package, there are two major chances: 

1) DEFINITION – The term “unemployed” was expanded. It now includes part-time workers, self-employed workers, and furloughed workers (who, in many cases, will be rehired when this is over). 

2) TERM – The number of weeks you can get unemployment insurance is now 39 (almost 10 months!) instead of 26. 

3) MONEY – In every state, you get a different amount per week and it depends on what you did for a living. In NY, the average unemployed person used to get $504/week for 26 weeks. 

NOW… the U.S. government is adding $600. So someone who is unemployed in the state of NY will now get $1,104 per week. The extra $600 might stop July 31 (or it might not) but this is for 39 weeks now. 

So someone recently unemployed (or part-time employed or self-employed) will make MORE than the average school teacher (which is sad but there it is) and still might make money from other jobs. 

In other words, don’t cry just yet for the unemployed. This is a new situation. 

B) Will there be inflation? 

When so much money is just airdropped onto the economy, the potential for inflation exists. 

For instance, if the U.S. gave everyone $1 million, then Apple would charge at least $1 million for the next iPhone. That’s called hyperinflation and has happened many times in world history. 

Will it happen in the U.S.? 

I don’t know. 

But a couple of thoughts: 

Currently (and the newspapers and the government won’t tell you this), there is DEFLATION

I’m looking at my emails now. “20% OFF!” is a common headline. Or, “Get these 50 Amazon books for $0.99!” or “One-time sale only! 30-40% off shirts!!” 

 

Those aren’t sales and they aren’t discounts. This is deflation at work. There is ZERO demand right now. Nobody is spending money. So companies are slashing prices until they “find” demand. 

That happens when there is deflation. Deflation is ugly and scary because nobody wants to buy anything because they think prices will go lower (the reverse of hyperinflation when you rush to the store to buy toilet paper). 

But this deflation is artificial. It’s caused by the government enforcing these lockdowns. It will end. 

The U.S. dollar is strong

If the world were worried about the U.S. experiencing hyperinflation, it wouldn’t lend us money. 

 

And yet, the world is buying our debt to the point that we don’t even have to pay interest on it. So, I’m not worried yet. Worry when interest rates start to tick up and nobody wants to lend us money. 

2009

We’re experiencing deflation now (despite what the government says). We’ve only experienced this twice before: 2009 and during the Great Depression. 

 

In 2009, we did exactly what we are doing now in terms of stimulus, and we experienced an 11-year boom — without inflation. 

In 1929 we did the OPPOSITE of what we are doing now and experienced WORSE deflation and the market didn’t come back until 1962 (inflation adjusted). As an example, Herbert Hoover’s government RAISED interest rates rather than lowering them. 

Now, this situation is 10 times 2009. So we’re in unknown territory. But 2021 will see a MASSIVE, MASSIVE surge in the economy (probably starting in August of this year). And I would keep an eye out for inflation in 2022 or beyond. But who knows? 

Productivity

Another force against inflation is productivity. 

 

The reason inflation happens in a “normal” economy is because we reach full employment (as we had in February 2020 coincidentally). 

At that point, the only way companies can hire new people is if they pay them more. But if you pay them more, you have to charge more for products to pay for those new employees. And so on. Inflation. 

Combine that with the Fed printing money and you get hyperinflation (VERY BAD).

But, we have MASSIVE unemployment now, so that is not an issue. Demand will be low for quite some time, so prices cannot go up no matter how much stimulus. 

And, most importantly, productivity is up. Robots are stacking shelves at Walmart. AI is reading X-ray scans of lung cancer patients. Amazon stores have no employees in them. Self-driving cars are in the near future. On and on I could talk about what will happen with automation. 

But productivity keeps employment from getting too heated, even with all this stimulus. Hence, productivity keeps a lid on inflation. 

These four things together will prevent hyperinflation. What we should be worried about is whether, one or two months after the economy reopens, there will still be deflation. My guess is no, because of the stimulus package but who knows how much societal PTSD we’ll see that forces people to stuff their mattresses with cash?

Again, my guess is that won’t happen. Americans have a tendency to not save money. But we are in a new normal. That said, I do think we will see this happen: 

• Horrible data for Q2
• Beginning of surge in Q3
• BOOM for Q4 and all of 2021, with Dow going above 40,000 in 2021. 

THEN… be careful in 2022 and beyond. 

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Another Boring 7% Up Day

It’s too much. I don’t like getting in front of a speeding train in either direction. 

One thing to keep reminding people of are these theories of investing: 

• It’s OK to (probable you will) miss the bottom. Bernard Baruch said, “I always bought too late and sold too soon.” Well, he died with $100 million in the bank, all made from investing. 
• There are going to be opportunities for the next six months at least. Don’t worry. 
• Volatility is not your friend unless you are a daytrader. Yes, buy when there’s blood in the streets. Sometimes. But don’t think we can call a bottom or a top. 

Basically, find good companies that are undervalued and invest in them. That’s the only rule. There are 8,000 public companies. Even if a few of them go back to highs quickly, most of them won’t. 

There will also be many companies that have done surprisingly well during this time that we currently have no clue about. 

Why is the  market up today? Because the world is finally seeing what we’ve been talking about in this letter for the past three weeks. Everything is starting to happen:

• Hospitalizations in N.Y.C. (the bulk of US cases) are down, down, down. 
• The virus is contagious when you are around people A LOT who have it. This calls into question some of the more stringent social distancing guidelines, which might lead to better future policy that doesn’t lead to economic shutdown.
• Cases are down in Italy and Spain.
• California and Washington, two big hotspots for the virus, are RETURNING ventilators. They don’t need them! I thought the ICUs would be overflowing. Well, they aren’t. 

So the market is up. 

Go take a walk outside and get some sunshine. 

By the way, guess which stock went up the most after EVERY single hurricane in the past 30 years (and will probably do well after this crisis as well)?

Campbell’s Soup (CPB).

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How to Spot a Second Wave or New Pandemic in the Future

A few weeks ago, I asked if anyone had COVID-19. A bunch of people responded and said they thought they ALREADY had it in January/February.

My guess is this pandemic started in N.Y.C. in late January.

The attached graphic shows people who showed up at the ER in NY hospitals over the past few months with “flu symptoms” but were never tested for the flu.

See how the line veers down at the end of the normal flu season and then SPIKES up in early February.

Given that we already knew of the existence of COVID-19 in Wuhan, this could have maybe provoked a public policy response (or could in the future.)

I say late January because it takes about 10 days after infection for severe symptoms to show up.

What does this mean?

If true, it means N.Y.C. acted a bit too late on social distancing (nobody at fault. Everyone thought this was the flu). Which means we probably didn’t flatten the curve as much as other cities might.

Which means using data like this in the future might lead to more testing, mask wearing, and quarantining early on to avoid pressing on the limits of the hospital system in N.Y.C. (and other cities).

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My Take on the Unemployment Numbers

The news is bad, but never as bad as they want you to believe. 

I try not to put any spin. But often people (usually reporters) think I’m trying to be “contrarian” or “positive” for the heck of it. 

That’s not it at all. There are some things I’m quite pessimistic about (my ability to be a male model, for instance). 

The reality is: If you look at the worst-case scenario of every major crisis over the past 20 years (or even much further back), none of them ever came true. 

But we obsess about them. We watch the news. We talk to our friends about it. We argue with people on Twitter, etc. 

They love it! Twitter makes a dime for every argument you get into. You get nothing except aggravated. 

That said, I do find that we often only hear the bad news and not the ACCURATE news. 

Let’s use today’s unemployment as an example. 

6.6 MILLION new unemployment claims. Horrible! 10 million new claims since the lockdown started. 

The prior record for one week was 695,000 (in 1982). So this week we “broke” the record by a multiple of ten. Tons of headlines, etc. 

And I hate that. Because it’s not a surprise. We knew this would happen. Hence the stimulus package. Not only that, the stimulus package changed the rules completely about unemployment in anticipation of this. It’s not that the economy was bad (like every other prior time unemployment spiked) — it’s that the government asked us to stay home and not go to work. 

For all the right reasons. But we’ll see how the government navigates the economy back. First, some thoughts on this number that I don’t really see being covered by the media. 

A) During the Great Recession (2008–2009), unemployment reached 15 million.

We aren’t there yet but we’ll get there.

But important note: With just 1/3 the stimulus THEN compared to now, the U.S. survived the Great Recession and boomed for 11 years until this virus.

B) The unemployment rate in the fall of 2008 was 3% higher (at 6.5%) than it is now.

In other words, there were 3.6 million fewer jobs in 2008 than last month. Thankfully we had some buffer this time compared with the Great Recession.

Before this virus hit our shores, the U.S. had more people employed than any other time in history. So while it’s not great to say we’re better than 2008 (no matter what, there is anguish for every person who got laid off in the past two weeks), it’s good to know that the economy as a whole can handle a hit like this (for the moment).

C) Unemployment benefits have been increased.

The average person will get $1,000 a week for TEN MONTHS. This is part of the stimulus package. It was previously much less and for not as long. You get unemployment benefits now for 39 weeks. You get an extra $600 from the federal government. On average, again, $1,000 a week for 39 weeks.

Many people will make more money unemployed than employed. This is not a permanent solution but will buffer as employment slowly comes back while the stimulus takes effect.

D) $350 BILLION in small business loans.

You can get a loan to bolster your payroll for 2.5x months. There is incentive to not lay anyone off because the loan is forgiven. If you were a bar paying $100k a month but breaking even, you’re going to get a loan THIS WEEK for $250k.

The window for these loans opens up on April 3 (tomorrow). That should start to slow down layoffs. 

E) The definition of “unemployed” has changed because of the stimulus package. 

Previously, you had to be fired from a job to apply for unemployment. 

Now, the definition of “unemployed” includes many people who are self-employed and some part-time workers as well. So while 6.6 million people is a horrible number, it’s not as bad as saying “6.6 million people were fired. 

Adding to that, many of the people were fired by companies that did not want to fire anyone but had to. Because of the lockdown some industries are making $0. 

So those companies have furloughed employees: meaning those employees can collect unemployment benefits and then when the lockdowns are over, if they want, employees in most cases can just go back to work. 

Summary: 

A) Part of the stimulus package will transfer hundreds of billions of dollars from the government directly to the people who need it the most: the unemployed. 

The money then goes into the economy (once the economy “opens”). 

Money has been added to the weekly check.

The time of being eligible for benefits has been extended to 39 weeks. 

And with social distancing continuing, there’s going to be much less demand for products even as the economy slowly reopens. 

So while this is bad, it’s not a disaster for many people. 

B) The universe of “unemployed” has expanded to include self-employed, many part-time employees, and furloughed employees. 

All of these groups (and the furloughed can easily number in the millions) will be back to work when the economy fully reopens. 

I’m not trying to be “positive.” All of the above are facts. It’s not pleasant. But these facts need to be included with the articles that just yell, “THE SKY IS FALLING!!!”

The real key is: when will the economy reopen? 

Some people seem to think it’s a question of “economy” vs. “deaths.” 

That is ridiculous. The economy is society. 320 million people in America are affected by it. People die from depression, drug-related deaths, domestic violence, etc. when the economy is down. 

And, in fact, there were less overall deaths this year worldwide than this time last year. How come? People are inside, not outside getting into car accidents or killing each other. 

This is what will happen within the next month (I hope) to get things back open and also protect people against this ugly virus:

• Social distancing will become the norm, at least until “new cases” or “new deaths” go down to zero
• Quarantining positive cases or people with symptoms (which is similar to what happens anyway in flu season)
• Large gatherings will probably still be limited
• 99% of businesses will fully reopen in most states, but some states will do it more slowly, depending on the number of cases in each state.
• The economy will reopen into a somewhat bleak “new normal.” Some industries are changed forever. Some will be shy about coming back (e.g., restaurants). But still it will reopen and THIS is when the stimulus package will shine. 

Yes, $2.1 trillion in stimulus was passed. But you need something to stimulate. You can’t stimulate a dead body. The economy has to be alive.

When the U.S. economy reopens, that is when we will start to really see the stimulus in action. It will feel slow at first, although buffered by short-term loans to small businesses, higher unemployment benefits, deferral of taxes, and direct payments to every family. 

Then after a few months, or sooner, we will start to really feel the effects. The market will return to its old levels (with some volatility if there is a second wave of COVID-19). People will have more money as a society… that money will be spent in the economy… and by the end of the year, the economy will probably surpass the level we are now at. 

Who am I to predict this? I’m just like you. We all lived through 9/11, the 2008 financial crisis, etc.

I was also a hedge fund manager, have written books about the economy, and have spent the past three decades studying data on trends, the economy, investing, etc. I’ve made a living from investing in trends for the future. 

Am I always right? Of course not. And there are still a lot of variables here. The biggest one: Can Republicans and Democrats get along enough to revitalize the economy in time before it needs emergency care that we might not be able to provide?

My guess is yes. Constituents will demand it.

If the peak of the virus in the U.S. is around April 15 and cases start to subside… If the end of the virus is June… then the hope is that by late April/early May, some or all parts of the economy will start to slowly open. 

And, as mentioned above, people will be rehired, the stimulus will start to take action, and people will slowly start to leave their houses and spend. 

This is also a chance for many of those getting $1,000 a week on unemployment to take a step back and ask: Is this what I truly want to do with my life?

Lives will change. But fear is also a contagion. And so is kindness. And so is hope. And so is our creativity. 

If you like these daily updates on the data and a different perspective than we usually see in the media, then let me know and I will keep doing them. Find me on Twitter @jaltucher or follow me on Instagram (where I do daily live events at 2 p.m. EST) @altucher. 

We’ll get through this.

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When Will This End?

There’s been data flying back and forth. 

Every university has a “model.” Every health official. Everybody on Twitter who in their spare time became a pandemic expert. 

Let’s look at some of the models out there. 

The below model was considered by many to be the standard. Six days ago it projected that in New York there would be 50,000 hospitalizations by April 1 (see below graphic). 

Instead, there are 12,000. It was off by a factor of four in only six days. I can understand a bunch of PhDs being off by 10–20% in six days but there are 1/4 the number of hospitalizations they projected. What went wrong?

I hope “What went wrong?” is a question a lot of people ask when this is over. What went wrong with not only U.S. preparation but the entire Western world? What went wrong with the CDC, which was aware in 2005 that chloroquine could be a possible remedy for SARS and other coronaviruses?

But most of all, what went wrong with almost EVERY single model that predicted exponential growth and millions and millions of deaths by now? Imperial College, Harvard, University of Washington, The New York Times, on and on and on. 

The answer is straightforward. They all assumed exponential growth. They used sixth grade math to make predictions rather than take into account that this virus, like every virus in world history, does not have exponential growth. Something only has exponential growth when there are no boundaries. Eventually, if there are boundaries, then the growth stops being exponential, starts to flatten, and then starts to go down. 

What are the boundaries to this virus? Population, demographics, immune populations, the amount of exposure different groups have to the virus, possible mutations, possible weather effects, we don’t really know. 

There’s one paper I found that takes all of this into account. It looks at each country, and even each state, where the virus hit. It looks at how many times the virus doubled (i.e., how long was it still exponential?)… and then how long it took for the “second derivative” to go negative (i.e., how long it took before the acceleration of the virus’s growth started to go down, even though new cases/deaths were still rising)… and then how long it took for the virus to get under control (i.e., the number of cases/deaths started going down to the point where they quickly became negligible.)

The paper is by Gerard Tellis of USC, and is titled: “How Long Will Social Distancing Last?” 

He looks at the ONLY important math: How many doubles does the virus make? And when does the growth rate (the second derivative of the growth in cases/deaths) start to go negative?

This is what you need to know to determine the peak of the virus and when it will end. No other paper that I have looked at has done this. In part because, until now, the data wasn’t there. It was possible to make a guess based on China, South Korea, Singapore, Taiwan, Sweden, and even Italy and now Spain. But guesswork is not good enough for an academic paper. 

Here is the main table to focus on. 

The curve in every location basically remains the same. So based on prior curves, and based on the data so far in locations that are still “pending,” it can extrapolate and figure out roughly when a location will hit its peak and when the virus cases will start going down quickly. 

In Spain, for instance, it forecast a peak yesterday. 

Just eyeing the data…

You can maybe guess that Spain’s growth ended about a week ago but it’s still been volatile. The model predicts yesterday as the peak and April 14 the date the virus will be fully under control. 

In New York, it estimates April 5, with the virus fully under control around April 22. These are only estimates and can vary a little bit. 

This is the first paper that seems to take into account the inevitable slowdown in exponential growth. 

What does this all mean? 

I hope it means that the government is able to take this seriously when the data fully reveals itself, and, as cases lessen, as fewer hospital beds are needed, as the country gets on the road to health recovery (even though there will still be cases), that a plan is put into place to fully reopen the economy. 

The stimulus is going to be great. But the stimulus only works if the economy is OPEN. Else, you are giving electric shock to a patient who’s already dead. It’s useless. The economy needs to come to life.

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