Thread by @Darky999

US has 11 deaths from #Coronavirus this is far higher than 154 cases would suggest (Korea 35 deaths from 5,600 cases. FR+DE+SP = 6 deaths from c. 800 cases)

I am using 50m+ pop countries with great healthcare to compare

@Barton_options @GlennLuk @Bovell_GM

1/N

This reminds me of...

Iran 2 weeks ago...

There were about 10 deaths in Iran and apparently 50 cases. ViruTwit correctly said 'no way is that possible unless virus has mutated to a far more lethal strain'.

There is zero evidence the virus has mutated in Iran.

2/N

ViruTwit knew the number in cases in Iran was far (far far) higher, and of course we know what happened next.

Case numbers exploded, and they are still most likely hugely underestimating the numbers as they are unfortunately overwhelmed :/

3/N

Now lets add to the US picture. It's a fact (beyond any doubt) that US has not been testing enough people.

Even POTUS & VP says this (and they are politicians who like to spin things!).

And to coin @EpsilonTheory and @ErikSTownsend #DontTestDontTell

4/N

Korea tested over 100,000 people, US doesn't even say the number (@CDCgov removed that from website...), but it's c. 1,000 people (which is 3-4000 tests) according to officials on 4th March

And US is now ramping up testing capacity to c. 10,000 / week (by end of this week)

5/N

US has seen already sustained community transmission in 3 States (Wash, Cali, NY) <----- this is important

And cases in a further 11 States (14 in total).

6/N

So what will happen next in US over next 1-2 weeks?

As the number of tests increases by at least 10x capacity / day, number of detected cases will ROCKET and catch up (note the word 'detected').

To normalise the deaths data, US likely already has c. 2,000 infected

7/N

To be clear, this isn't counting new infections (which are ongoing), this is just the ability to test playing 'catch up' with existing cases.

There will be new infections too...

8/N

@remindmetweets in 2 weeks

US will have several thousand cases, and a more normalised number of deaths vs other developed large countries

9/N

Does the 'market' (stocks, bonds, commodities etc) get this?

Partially.

The Fed's action means people are watching.

But I speculate that the 'market' (and so Fed) are not thinking US being like Iran (or Italy) is the base case.

10/N

But the base case, using available data, using knowledge we have gained from several large countries who are ahead of the US in terms of the progression of #coronavirus is just this @chrismartenson

Sure, the US could contain this better (unlikely as not testing enough)

11/N

And sure, the US could contain this worse (unlikely worse than Iran, as US health system is excellent, even tho slow and bureaucratic) @ScottGottliebMD

But base case should be for 1,000's US cases (and 100s new cases per day) by mid-March.

Perhaps earlier.

12/N

Italy just shut schools, banned all spectators from sports matches for a month.

This will happen in US, but on a State by State, or even County by County basis.

It's just a matter of time...

This causes secondary effects, you can't work if you don't have childcare etc...

13/N

So if u r an investor/speculator, then ask yourself if u think the 'market' has the base case correct or not.

If you believe the market is factoring the above base case into its thinking then maybe the fireworks are over, and lower volatility is coming... @KeithMcCullough

14/N

If you believe the market is not factoring the above base case into its thinking then the fireworks (i.e. volatility) haven't even got started.

And stock markets go down far (far far) faster than they go up. This is always the case when volatility spikes.

#volatility #vol

15/N

If this base case happens in next 1-2 weeks, the Fed will cut another 50bps (or more).

Stocks will likely fall as the Service economy will get crushed (sorry but it will, people will go out much less, and spend less)

Bonds will likely continue to have lower yields.

16/N

Gold will likely remain volatile (normal vol = c. 12, current vol c. 20). As it's a store of value / hedge, but it also has a tendency to dump when markets crash (whether due to margin calls is a hotly debated subject, but it does have this tendency)

17/N

#bitcoin acting more like a 'risk-on' asset recently (e.g. minute Fed cut rates, $BTC spiked like stocks did, there are several other eg's)

On longer timeframe it is simply not correlated with anything <---- wonderful for a portfolio

@RaoulGMI @DTAPCAP @KrownCryptoCave

18/N

Commodities are complex beasts, USD strength/weakness matters as does supply/demand. But if base case happens, there will be less demand (and probs less supply too). So if you want to roll the dice here please do if you are an expert (like @ErikSTownsend)

19/N

Summary

I do not think market factoring in the base case for US infections

There are many data points that strengthen conviction on this statement

Volatility remains high across all markets

Having 'insurance' in your portfolio is very wise

Stay safe out there

FIN

20/20

@threadreaderapp please #unroll