MidWeek Commentary

HI Market View Commentary 11-09-2020

HI Market View Commentary 11-09-2020


Market Recap
The S&P 500 index climbed 7.3% last week in a strong reversal as investors looked forward to the end of a contentious election that has been weighing on US stocks in recent weeks. The S&P 500 ended the first week of November at 3,509.44, up from last week’s closing level of 3,269.96. This more than makes up for last week’s 5.6% fall and marks the index’s biggest weekly advance since April. The market benchmark is now up 8.6% for the year to date. All of the index’s 11 sectors rose this week, with the largest gains posted by the technology sector, up 9.7%, followed by an 8.2% climb in health care, gains of 7.6% each in materials and communication services, and a 6.9% boost in consumer discretionary. The broad advance came as the US presidential election finally neared a conclusion after days of vote counting and weeks and months of speculation. As of Friday afternoon, former Vice President Biden appeared closer to securing the US presidency as Biden led President Donald Trump in Pennsylvania and Georgia on the fourth day of vote counting. A win in Pennsylvania would give Biden enough electoral votes to win the presidency. The week’s climb in US stocks came despite a continued rise in COVID-19 cases, with new daily infections in the US setting new records several times this week. Also Friday, monthly jobs data from the Labor Department showed employment growth slowed in October but came in ahead of expectations as private payrolls climbed and the jobless rate decreased. Non-farm payrolls rose by 638,000 last month while the unemployment rate dropped by one percentage point to 6.9%. The technology sector’s gainers included Arista Networks (ANET), whose shares jumped 26% this week as the cloud networking company reported forecast-beating Q3 results and revenue guidance. The performance prompted a slew of price target increases and an investment rating upgrade to buy from neutral from BofA Securities. In health care, shares of Biogen (BIIB) soared 30% as a Food & Drug Administration document appeared to indicate support for its aducanumab Alzheimer’s drug candidate ahead of a committee meeting Friday to review its marketing application. Albemarle (ALB) boosted the materials sector with a report of Q3 adjusted earnings and revenue that were above analysts’ expectations while the company also forecast 2020 results above Street views. Shares climbed 20%. In communication services, shares of Alphabet (GOOGL) rose 8.9% as many analysts raised their price targets on the Google parent’s stock following its report last week of stronger-than-expected Q3 results. The consumer discretionary sector was boosted by Mohawk Industries (MHK), whose shares were also surging this week amid a number of positive analyst actions following better-than-expected Q3 results and Q4 guidance last week. Shares of the flooring manufacturer were up 17% for the week. Next week’s economic data are expected to be light earlier in the week but reports on the consumer price index and producer price index for October are set to be released Thursday and Friday. Consumer sentiment for November is also due Friday. Provided by MT Newswires.

What happened to the market today (Monday)?

  • Pfizer getting 90% success rate on virus vaccine
  • AAPL, FB down today, BA, JPM, V, BAC up big!
    • Why are there some winners and some losers?
    • Profit taking!
    • Big Rebalencing out of tech and into everything else/finacials.

Dollar Cost Averaging Leaps and UAA last week:

  • BA Jan22 275 Leaps
  • V Jun22 225 Leaps
  • More shares for UAA earlier last week
  • Made for an awesome move up today!

Where will our markets end this week?

More Vaccine optimism, and Stimulus!

DJIA – Bullish

SPX – Bulish

COMP – Bearish

Where Will the SPX end November 2020?

11-09-2020            +5.0%

11-02-2020             +2.0%         


Mon:            BYND

Tues:            LYFT, PRPL       

Wed:            TCOM

Thur:            CCL, CSCO, DDS, DIS

Fri:               DKNG, JD

Econ Reports:


Tues:            JOLTS

Wed:            MBA,

Thur:           Initial Claims, Continuing Claims,  CPI, Core CPI, Treasury Budget

Fri:               PPI, Core PPI, Michigan Sentiment


Mon –            

Tues –          CN: CPI

Wed –         

Thursday –    

Friday-         EUR: GDP

Sunday –       

How am I looking to trade?

The big decision now is when to take protection off and let stocks run into a Christmas Rally ?!?!?!?!?


BIDU         11/16 AMC

DIS             11/12 AMC


www.myhurleyinvestment.com = Blogsite

customerservice@hurleyinvestments.com = Email



Emotions and Decision Making: Five Steps to Improve Your Process

By Prasad Ramani, CFA

Posted In: Behavioral FinanceDrivers of ValueEconomicsLeadership, Management & Communication SkillsPortfolio Management

After considering the importance of emotions and how they influence our decision making, the logical question to ask is, What can we do about it? What steps can we take to improve our decision making?

1. We are not perfect! Let’s admit it.

To mitigate the effect of emotional and cognitive biases, we first need to acknowledge them. We are more prone to these shortcomings than we like to think. And Aristotle wasn’t exaggerating when he said, “Knowing yourself is the beginning of all wisdom.” Awareness helps us question our thought processes and engage the System 2 part of our thinking self that helps us channel our logical “Inner Spock.”

System 1 and System 2 thinking form the two pillars of the conceptual decision-making model popularized by Daniel Kahneman in Thinking, Fast and Slow. System 1 processes are fast, automatic, and instinctual. They require little effort to engage and often represent the primary response to a decision problem, ranging from quick intuitions to more extreme fight-or-flight reactions. System 2 thinking helps to regulate System 1 emotions and intuition through effort and deliberation. Since they are more reflective, System 2 decisions tend to be made more slowly and generally lead to better outcomes.

The best defense against bad decisions is to increase our awareness of these psychological factors and thus fire up our System 2 thinking.

2. Embrace meditation and mindfulness.

Many star executives, CEOs, and politicians — from Apple and Bridgewater founders Steve Jobs and Ray Dalio, respectively, to US congressman Tim Ryan — have long practiced and vouched for the positive effects of mindfulness and meditation.

Mindfulness and meditation have now gone mainstream in the corporate world. Apple and Google, for example, have introduced mindfulness training courses and practice tools to help employees relieve stress and improve concentration.

Extensive research in neuroscience demonstrates that meditation and mindfulness help regulate attention, emotion, and self-awareness, which lead to increased physical and mental well-being. A series of studies have also confirmed that they improve individual decision-making ability in varied fields by increasing our awareness of those internal thoughts, feelings, and attitudes that underlie our decision-making processes.

Not sure where to start? These meditation tips for beginners are a good jumping-off point, and there is plenty of excellent material for those willing to delve deeper. Of course, like most worthwhile endeavors, meditation and mindfulness require daily practice to master. But an investment of just 15 minutes each day is well worth the effort.

3. Keep a decision journal.

Memory is not a very reliable witness. It mostly helps you reconstruct an event rather than recall it.

So start reviewing your decision making in a decision journal. Record and detail your thoughts and analysis. Why did you choose a particular course of action? What were the factors that influenced you? Over time, you’ll begin to understand your process, what habits are recurring, what shortcuts you may be taking, and which of those shortcuts are productive and which are not.

A key challenge is not to fixate on poor decisions or adopt a negative mindset when things go wrong. Reframe these emotions as helpful and corrective feedback that is required for learning and improving.

4. Appoint a devil’s advocate.

Back in the 1600s, the Roman Catholic Church faced an interesting dilemma. As it considered candidates for sainthood, the Vatican had a hard time finding dissenting viewpoints to argue against a potential candidate’s elevation. Who would publicly and vigorously oppose the canonization of a presumed saint? Yet due diligence required someone to make the counter argument.

So the Vatican came up with an official position to take on the role of the opposition: the devil’s advocate. This not only gave the dissenting perspective sanctioned standing but also empowered the Vatican to seek out differing points of view.

Having a devil’s advocate can help your own decision making by forcing you to question your assumptions. Often what we take as a given does not hold up under scrutiny. Your devil’s advocate can uncover those blind spots and help you anticipate unforeseen challenges and obstacles. Their purpose is to encourage you to take into account information that you may have otherwise failed to consider.

Your devil’s advocate could be a trusted adviser or a friend, preferably one who cares more about you than your feelings. You can be your own devil’s advocate, but that requires a rigorous and fraught process to avoid building an autobahn of confirmation bias.

5. Work with a coach.

Coaching is one of the best kept secrets at Wall Street hedge funds. Coaches work with traders to help them keep calm and increase their awareness of their behavior in high-stress situations. Not all of us are hedge fund managers trading millions of dollars a day, but we could certainly use elements of coaching to help us improve our day-to-day decisions.

The coach’s most important function is to listen non-judgmentally and ask probing questions. They won’t offer any magical formula, but by encouraging you to externalize your thoughts, they can help you find the perspective that can lead to breakthrough ideas and solutions. You don’t have to engage a  professional psychologist or other PhD to benefit from coaching. Simply a trusted friend or adviser will do. In fact, just talking to your rubber duck can provide some clarity. Computer programmers employ this approach as an effective de-bugging strategy. The very act of explaining a problem out loud can help find solutions.

To be sure, none of us will ever be able to completely filter out our emotions and cognitive biases. But by being mindful of them — indeed, by embracing mindfulness — we can reduce the toll they take on our decision making and help improve the choices we make for both ourselves and our clients.

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/erhui1979


What’s It Like to Live with Negative Rates? We’re Already There, So Consider How to Position

10:55am ET 11/4/2020  5 min read

They haven’t really worked in Europe, and the Fed writes off the very idea. Still, negative interest rates are already with us in the U.S. and have been for a while, thanks in part to COVID-19.

Wait a minute. How can we say negative rates exist when the Fed’s target rate remains positive at between zero and 0.25%? It’s actually a relatively simple calculation, and investors should consider how to position themselves for this strange environment that seems likely to stick around as COVID-19 takes its grim toll. Negative rates are a fact on the ground whether or not the Fed actually takes the plunge and makes it official.

Here’s why rates are negative: The 10-year Treasury note yielded approximately 0.8% as of late October 2020. That’s well below the latest year-over-year core consumer price index (CPI) growth of 1.7%, giving us a “real yield” of negative 0.9%.

You get that by subtracting inflation from nominal returns on investment. An investor putting money into a 10-year Treasury note with those yield and inflation numbers factored in would end up losing ground after a year. That’s despite the Treasury yield being above zero and the Fed sticking to its guns by not dropping its overnight lending rate below zero.

“We’ve been in a quasi-negative rate environment for a while,” said Shawn Cruz, trader business strategy manager at TD Ameritrade.

The Fed contributes to that even without officially taking rates below zero. Just by lowering them to current levels, it made it harder for investors to break even. So how should investors approach this scenario?

Whether negative rates result from direct central bank action or a combination of things, sectors that tend to do better in times of strong growth might not do as well with rates of zero or below. We’re talking about Financials and Industrials. Instead, negative rates might favor things that you can put a fence around, lock up in a safe deposit box, or invest in without much expectation of huge future growth beyond dividends.

Negative Rates Already Here, So How Should Investors React?

“Negative rates would likely be favorable to the real assets, like commodities and real estate, and would potentially help some Material sector stocks as well,” Cruz said. “It would not be beneficial to the Financial sector.”

“All your ‘safe-haven’ assets like Treasuries have little-to-no yield” in a negative interest rate situation, Cruz continued. “Even investment-grade corporates would have little-to-no yield. Your high-yielding credit would be pretty risky, so people would go into lower-risk equities, including traditional lower-risk stocks like Utilities and more defensive stocks like Consumer Staples.”

By “high yielding,” Cruz was referring to corporate bonds that pay heftier yields but come with more risk. They’re not for everyone, so anyone looking for yield in a negative rate environment might start considering defensive stock sectors or longer-term fixed income. It looks like this is already happening. The high-yielding Utilities sector led all S&P 500 sectors in October by a pretty good length.

In Europe and Japan, the central banks officially set benchmark interest rates at negative levels along some points of the yield curve. The Fed Funds rate target was set between zero and 0.25% when the pandemic first slammed markets. That’s down sharply from recent peaks above 2% just two years ago.

While “defensive” and dividend-yielding sectors of the stock market have performed well during the current negative real rate environment, the pandemic’s twisted things a little. Info Tech and Communication Services—dominated by “mega-caps” including Apple (AAPL), Amazon (AMZN), Microsoft (MSFT)—have been among the top market performers of 2020. That’s less rate-related and more a function of investors believing these companies benefit from the “stay at home” scenario so many are stuck in.

We’re getting ahead of ourselves, however. What is a negative interest rate policy (NIRP), why do central banks sometimes put it in place, and would the Fed ever consider such a move?

Negative Rates: What They Are and How They Work

When rates go negative, it means that banks depositing money into the central bank must pay to keep the money there. Theoretically, this would make banks more willing to make loans to businesses and keep money flowing into the economy, rather than sitting in a vault. NIRP is also designed to stoke inflation to help economies avoid entering dangerous deflationary spirals.

The U.S. never targeted negative rates, but the Fed did keep its benchmark short-term interest rate at approximately zero from late 2008 through late 2015 as the economy got hit by the Great Recession and its aftermath. As we noted, the Fed dropped rates back to that level in March. Would the Fed ever resort to negative rates? 

Cruz doesn’t think so, but he can’t write it off, either, based on how COVID-19 has torn through the economy. It gets even more complicated now as chances of a fiscal stimulus seem to fade.

“The big thing that’s changed regarding negative rates is that it used to be more of a thought exercise, but now it seems more plausible,” Cruz said. “We’re within a stone’s throw of effectively being there with all the moves the Fed’s been making.”

The Fed lowered rates as far as it could in 2020 without taking them actually below zero, and it also did other things like ramping up asset purchases. That means venturing into the market and scooping up mortgage-based securities and Treasuries to add capital and liquidity. This is called “quantitative easing.” 

If the Fed thinks its current policy hasn’t worked, it has options besides dropping rates below zero. It could add to its asset purchases. It could also continue lobbying Congress for new fiscal stimulus as Fed Chairman Jerome Powell did for months in 2020. That mostly fell on deaf ears after Congress passed a large fiscal stimulus bill early in the pandemic crisis. 

Assuming fiscal stimulus has to wait until 2021, as appears more likely, does that mean the Fed could decide to cut rates to below zero? Its late 2020 meetings might provide more insight, so investors should consider paying close attention to Powell’s post-meeting press conferences and to Fed meeting minutes, typically released several weeks after each meeting.

“If they do cut further, the question becomes, is the juice worth the squeeze?” Cruz said. “Negative rates haven’t helped Europe much, and the Fed looked at that and decided that corporate bond buying was more effective than cutting to negative territory. Also, pretty much across the board, Fed members have come out and said we need more fiscal stimulus.”

In late 2019, former Fed Chairman Alan Greenspan expressed the belief that eventually negative rates could happen here.

When Greenspan spoke in late 2019 of the immense appetite investors seem to have for yield, he noted that by purchasing Treasuries for that yield, investors effectively lower the yield they receive because yields fall when the underlying Treasury price rises.

“We’re so used to the idea that we don’t have negative interest rates, but if you get a significant change in the attitude of the population, they look for coupon,” Greenspan told CNBC.

Negative Rates Don’t Appear to be Helping Overseas

Europe and Japan put negative rates in place to stimulate business and consumer spending, but arguably the strategy didn’t work. By 2019, close to $17 trillion in negative-yielding bonds had built up around the world with little or no sign of improvement in the tepid European and Japanese economies. And that was before COVID-19.

Economic growth in the Euro area, as measured by gross domestic product (GDP), rose just 1.3% in 2019, according to The World Bank, and that was with negative interest rates greasing the skids and no pandemic. COVID-19 makes it a little harder to judge the impact of negative rates, because it’s likely no amount of rate easing would blunt the impact of the shutdowns. Still, Q2 2020 GDP growth in the Euro area looked dismal at a negative 11.8%.

Things don’t look any better in Japan. Growth was 0.7% in 2019, before the pandemic, The World Bank said. That’s not significantly better than Japan’s 0.4% growth in 2014 when rates were positive.

“In talking about negative rates, we’re finding that all these countries tried, but no one has really been able to boost business spending,” said Sam Stovall, chief investment strategist at research firm CFRA. “A lot of people question the merit of negative interest rate policies, so why would we want to here when it hasn’t worked?”

In the U.S., the Fed kept up its drumbeat against negative rates even as 2020 advanced and the economy fell more than 31% on a seasonally adjusted basis in Q2 before rebounding 33.1% in Q3. GDP remains more than 3% below the level of Q4 2019.

“Negative rates are not a tool that we see as something we’re looking to use,” Powell told Bloomberg in early October 2020. “It’s really two things. One is that we have tools we think served us well and will continue to serve us well. And the second is the evidence on negative rates is sort of mixed.” Since their effect isn’t clear and the Fed now has a better understanding of how asset purchases work, he feels the Fed has the tools it needs.

Desperate times can mean desperate measures, however, and if the pandemic intensifies, perhaps the Fed might be tempted to play the negative rate card. At the very least, the benchmark 10-year Treasury yield could conceivably re-test recent record lows down near 0.5%. That would intensify the negative rates on the ground situation investors find themselves in and could hasten the flow of money into those safety deposit box-types of investments Cruz referred to.

The low rate situation also wreaks havoc on the U.S. dollar, which in October fell to 2.5-year lows. A weak dollar can actually help U.S. companies by making their products cheaper overseas, but can exacerbate problems back home. Mainly, it’s inflationary. While the Fed wants to bring inflation back and avoid a deflationary spiral like in Europe and Japan, it also has to be cognizant of price pressure on consumers in a country where unemployment is near 8%. That puts the Fed between a rock and a hard place.

If Rates Go Negative, Where Should Investors Consider Going?

Assuming rates here fall to zero or below, how should investors consider reacting? Utilities, Real Estate, Consumer Staples, and other dividend-paying stocks could come into play.

These sectors offer yields well above the 10-year Treasury yield. In fact, the dividend yield on the S&P 500 Index (SPX) of 1.75% as of late October 2020 was higher than the yield on the 10-year Treasury note and the 30-year bond. The Utilities sector rose 10% to lead all sectors in the late-September through late-October period as investors chased yields. But it’s worth noting that dividends are never a guarantee, and can be particularly vulnerable during a recession. Companies have already been cutting them left and right since the pandemic hit. They’re often the first place where companies try to trim costs.  

One sector that investors might want to consider being cautious about in such a scenario is Financials. “Financials is the sector that will get hurt more than anyone else by negative interest rates,” Cruz said. “Lower rates don’t bode well” for Financial stocks.

Already, Financials are the second-worst performing S&P 500 sector year-to-date in 2020, down more than 21%. Negative rates can hurt banks because they have to pay to leave money on deposit at the central bank and can end up paying to own government bonds. At the same time, they often can’t pass negative rates along to retail depositors because they fear the money will go away.

In a negative interest rate environment, Cruz said, it could be tempting to chase high-yield fixed income investments, as those types of investments might be among the only ones paying relatively high rates. But investors need to know what they’re getting into before adopting such a strategy.

“The biggest thing is, you have to be careful not to chase yield into risky places,” Cruz said. “People will look at the bond market and say, ‘Here’s a good yield.’ And if you’re at negative rates and something looks good from a rate perspective, it’s probably very risky. Really ask yourself: why is this paying such a high yield relative to lower risk assets?”

In other words, when the weather gets rough, many investors look for a place to park, which brings us back full circle. Even a zero—or negative—interest rate on Treasuries and other investments may seem compelling, if the economic situation were to deteriorate. It’s an old Wall Street adage: “Sometimes you seek return on invested capital; other times the overriding concern is the return of invested capital. 

A Sensible and Compassionate Anti-COVID Strategy

Dr. Jayanta Bhattacharya 

– November 4, 2020

The following is adapted from a panel presentation on October 9, 2020, in Omaha, Nebraska, at a Hillsdale College Free Market Forum.

My goal today is, first, to present the facts about how deadly COVID-19 actually is; second, to present the facts about who is at risk from COVID; third, to present some facts about how deadly the widespread lockdowns have been; and fourth, to recommend a shift in public policy.

1. The COVID-19 Fatality Rate

In discussing the deadliness of COVID, we need to distinguish COVID cases from COVID infections. A lot of fear and confusion has resulted from failing to understand the difference.

We have heard much this year about the “case fatality rate” of COVID. In early March, the case fatality rate in the U.S. was roughly three percent—nearly three out of every hundred people who were identified as “cases” of COVID in early March died from it. Compare that to today, when the fatality rate of COVID is known to be less than one half of one percent.

In other words, when the World Health Organization said back in early March that three percent of people who get COVID die from it, they were wrong by at least one order of magnitude. The COVID fatality rate is much closer to 0.2 or 0.3 percent. The reason for the highly inaccurate early estimates is simple: in early March, we were not identifying most of the people who had been infected by COVID.

“Case fatality rate” is computed by dividing the number of deaths by the total number of confirmed cases. But to obtain an accurate COVID fatality rate, the number in the denominator should be the number of people who have been infected—the number of people who have actually had the disease—rather than the number of confirmed cases.

In March, only the small fraction of infected people who got sick and went to the hospital were identified as cases. But the majority of people who are infected by COVID have very mild symptoms or no symptoms at all. These people weren’t identified in the early days, which resulted in a highly misleading fatality rate. And that is what drove public policy. Even worse, it continues to sow fear and panic, because the perception of too many people about COVID is frozen in the misleading data from March.

So how do we get an accurate fatality rate? To use a technical term, we test for seroprevalence—in other words, we test to find out how many people have evidence in their bloodstream of having had COVID.

This is easy with some viruses. Anyone who has had chickenpox, for instance, still has that virus living in them—it stays in the body forever. COVID, on the other hand, like other coronaviruses, doesn’t stay in the body. Someone who is infected with COVID and then clears it will be immune from it, but it won’t still be living in them.

What we need to test for, then, are antibodies or other evidence that someone has had COVID. And even antibodies fade over time, so testing for them still results in an underestimate of total infections.

Seroprevalence is what I worked on in the early days of the epidemic. In April, I ran a series of studies, using antibody tests, to see how many people in California’s Santa Clara County, where I live, had been infected. At the time, there were about 1,000 COVID cases that had been identified in the county, but our antibody tests found that 50,000 people had been infected—i.e., there were 50 times more infections than identified cases. This was enormously important, because it meant that the fatality rate was not three percent, but closer to 0.2 percent; not three in 100, but two in 1,000.

When it came out, this Santa Clara study was controversial. But science is like that, and the way science tests controversial studies is to see if they can be replicated. And indeed, there are now 82 similar seroprevalence studies from around the world, and the median result of these 82 studies is a fatality rate of about 0.2 percent—exactly what we found in Santa Clara County.

In some places, of course, the fatality rate was higher: in New York City it was more like 0.5 percent. In other places it was lower: the rate in Idaho was 0.13 percent. What this variation shows is that the fatality rate is not simply a function of how deadly a virus is. It is also a function of who gets infected and of the quality of the health care system. In the early days of the virus, our health care systems managed COVID poorly. Part of this was due to ignorance: we pursued very aggressive treatments, for instance, such as the use of ventilators, that in retrospect might have been counterproductive. And part of it was due to negligence: in some places, we needlessly allowed a lot of people in nursing homes to get infected.

But the bottom line is that the COVID fatality rate is in the neighborhood of 0.2 percent.

2. Who Is at Risk?

The single most important fact about the COVID pandemic—in terms of deciding how to respond to it on both an individual and a governmental basis—is that it is not equally dangerous for everybody. This became clear very early on, but for some reason our public health messaging failed to get this fact out to the public.

It still seems to be a common perception that COVID is equally dangerous to everybody, but this couldn’t be further from the truth. There is a thousand-fold difference between the mortality rate in older people, 70 and up, and the mortality rate in children. In some sense, this is a great blessing. If it was a disease that killed children preferentially, I for one would react very differently. But the fact is that for young children, this disease is less dangerous than the seasonal flu. This year, in the United States, more children have died from the seasonal flu than from COVID by a factor of two or three.

Whereas COVID is not deadly for children, for older people it is much more deadly than the seasonal flu. If you look at studies worldwide, the COVID fatality rate for people 70 and up is about four percent—four in 100 among those 70 and older, as opposed to two in 1,000 in the overall population.

Again, this huge difference between the danger of COVID to the young and the danger of COVID to the old is the most important fact about the virus. Yet it has not been sufficiently emphasized in public health messaging or taken into account by most policymakers.

3. Deadliness of the Lockdowns

The widespread lockdowns that have been adopted in response to COVID are unprecedented—lockdowns have never before been tried as a method of disease control. Nor were these lockdowns part of the original plan. The initial rationale for lockdowns was that slowing the spread of the disease would prevent hospitals from being overwhelmed. It became clear before long that this was not a worry: in the U.S. and in most of the world, hospitals were never at risk of being overwhelmed. Yet the lockdowns were kept in place, and this is turning out to have deadly effects.

Those who dare to talk about the tremendous economic harms that have followed from the lockdowns are accused of heartlessness. Economic considerations are nothing compared to saving lives, they are told. So I’m not going to talk about the economic effects—I’m going to talk about the deadly effects on health, beginning with the fact that the U.N. has estimated that 130 million additional people will starve this year as a result of the economic damage resulting from the lockdowns.

In the last 20 years we’ve lifted one billion people worldwide out of poverty. This year we are reversing that progress to the extent—it bears repeating—that an estimated 130 million more people will starve.

Another result of the lockdowns is that people stopped bringing their children in for immunizations against diseases like diphtheria, pertussis (whooping cough), and polio, because they had been led to fear COVID more than they feared these more deadly diseases. This wasn’t only true in the U.S. Eighty million children worldwide are now at risk of these diseases. We had made substantial progress in slowing them down, but now they are going to come back.

Large numbers of Americans, even though they had cancer and needed chemotherapy, didn’t come in for treatment because they were more afraid of COVID than cancer. Others have skipped recommended cancer screenings. We’re going to see a rise in cancer and cancer death rates as a consequence. Indeed, this is already starting to show up in the data. We’re also going to see a higher number of deaths from diabetes due to people missing their diabetic monitoring.

Mental health problems are in a way the most shocking thing. In June of this year, a CDC survey found that one in four young adults between 18 and 24 had seriously considered suicide. Human beings are not, after all, designed to live alone. We’re meant to be in company with one another. It is unsurprising that the lockdowns have had the psychological effects that they’ve had, especially among young adults and children, who have been denied much-needed socialization.

In effect, what we’ve been doing is requiring young people to bear the burden of controlling a disease from which they face little to no risk. This is entirely backward from the right approach.

4. Where to Go from Here

Last week I met with two other epidemiologists—Dr. Sunetra Gupta of Oxford University and Dr. Martin Kulldorff of Harvard University—in Great Barrington, Massachusetts. The three of us come from very different disciplinary backgrounds and from very different parts of the political spectrum. Yet we had arrived at the same view—the view that the widespread lockdown policy has been a devastating public health mistake. In response, we wrote and issued the Great Barrington Declaration, which can be viewed—along with explanatory videos, answers to frequently asked questions, a list of co-signers, etc.—online at www.gbdeclaration.org.

The Declaration reads:

As infectious disease epidemiologists and public health scientists we have grave concerns about the damaging physical and mental health impacts of the prevailing COVID-19 policies, and recommend an approach we call Focused Protection.

Coming from both the left and right, and around the world, we have devoted our careers to protecting people. Current lockdown policies are producing devastating effects on short and long-term public health. The results (to name a few) include lower childhood vaccination rates, worsening cardiovascular disease outcomes, fewer cancer screenings, and deteriorating mental health—leading to greater excess mortality in years to come, with the working class and younger members of society carrying the heaviest burden. Keeping students out of school is a grave injustice.

Keeping these measures in place until a vaccine is available will cause irreparable damage, with the underprivileged disproportionately harmed.

Fortunately, our understanding of the virus is growing. We know that vulnerability to death from COVID-19 is more than a thousand-fold higher in the old and infirm than the young. Indeed, for children, COVID-19 is less dangerous than many other harms, including influenza.

As immunity builds in the population, the risk of infection to all—including the vulnerable—falls. We know that all populations will eventually reach herd immunity—i.e., the point at which the rate of new infections is stable—and that this can be assisted by (but is not dependent upon) a vaccine. Our goal should therefore be to minimize mortality and social harm until we reach herd immunity.

The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk. We call this Focused Protection.

Adopting measures to protect the vulnerable should be the central aim of public health responses to COVID-19. By way of example, nursing homes should use staff with acquired immunity and perform frequent PCR testing of other staff and all visitors. Staff rotation should be minimized. Retired people living at home should have groceries and other essentials delivered to their home. When possible, they should meet family members outside rather than inside. A comprehensive and detailed list of measures, including approaches to multi-generational households, can be implemented, and is well within the scope and capability of public health professionals.

Those who are not vulnerable should immediately be allowed to resume life as normal. Simple hygiene measures, such as hand washing and staying home when sick should be practiced by everyone to reduce the herd immunity threshold. Schools and universities should be open for in-person teaching. Extracurricular activities, such as sports, should be resumed. Young low-risk adults should work normally, rather than from home. Restaurants and other businesses should open. Arts, music, sports, and other cultural activities should resume. People who are more at risk may participate if they wish, while society as a whole enjoys the protection conferred upon the vulnerable by those who have built up herd immunity.


I should say something in conclusion about the idea of herd immunity, which some people mischaracterize as a strategy of letting people die. First, herd immunity is not a strategy—it is a biological fact that applies to most infectious diseases. Even when we come up with a vaccine, we will be relying on herd immunity as an end-point for this epidemic. The vaccine will help, but herd immunity is what will bring it to an end. And second, our strategy is not to let people die, but to protect the vulnerable. We know the people who are vulnerable, and we know the people who are not vulnerable. To continue to act as if we do not know these things makes no sense.

My final point is about science. When scientists have spoken up against the lockdown policy, there has been enormous pushback: “You’re endangering lives.” Science cannot operate in an environment like that. I don’t know all the answers to COVID; no one does. Science ought to be able to clarify the answers. But science can’t do its job in an environment where anyone who challenges the status quo gets shut down or cancelled.

To date, the Great Barrington Declaration has been signed by over 43,000 medical and public health scientists and medical practitioners. The Declaration thus does not represent a fringe view within the scientific community. This is a central part of the scientific debate, and it belongs in the debate. Members of the general public can also sign the Declaration.

Together, I think we can get on the other side of this pandemic. But we have to fight back. We’re at a place where our civilization is at risk, where the bonds that unite us are at risk of being torn. We shouldn’t be afraid. We should respond to the COVID virus rationally: protect the vulnerable, treat the people who get infected compassionately, develop a vaccine. And while doing these things we should bring back the civilization that we had so that the cure does not end up being worse than the disease. 

Jay Bhattacharya is a Professor of Medicine at Stanford University. He is a research associate at the National Bureau of Economics Research, a senior fellow at the Stanford Institute for Economic Policy Research, and at the Stanford Freeman Spogli Institute.


The Chinese yuan is ‘a long way’ from achieving reserve currency status, says strategist




  • The Chinese yuan has “a long way” to go before challenging the U.S. dollar’s status as a reserve currency, says Independent Strategy’s David Roche.
  • Roche said it is “very, very difficult” to dethrone the dollar’s status as a reserve currency.
  • He also pointed out that the U.S. economy has been shrinking in the last 20 years, “yet the dollar is an increasing proportion of the settlement of international trade.”

SINGAPORE — The Chinese yuan has “a long way” to go before it comes anywhere close to challenging the U.S. dollar’s status as a reserve currency.

That’s according to David Roche, president and global strategist at Independent Strategy.

“Dethroning the dollar — which the euro tried to do, and settled at a miserable 18-20% of all the international things that go on — is very, very difficult,” Roche told CNBC’s “Squawk Box Asia” on Monday.

A number of “almost abstract” conditions, including not having too much leverage in the system as well as the rule of law, need to be met before a currency can achieve reserve status, the strategist said. He added that the Chinese yuan is “a long way from achieving that.”

“There is a certain amount of illusion at the moment that the (yuan) — which accounts for 2% of international trade settlements and even less if you come to financial investment flows — that this can take over,” Roche said.

He was also skeptical about arguments that the People’s Bank of China’s digital currency will be the “magic potion” that allows the greenback to be knocked off its position as the world’s reserve currency. The digital yuan is part of China’s push toward becoming a cashless society and is issued and controlled by the country’s central bank.

Such a phenomenon is going to happen, though it will take a “very, very long time,” Roche said: “Don’t be in a rush to play on that particular theme because I think the dollar is gonna sit there for a while yet.”

Still, Roche suggested the reserve currency status tends to be “unmerited.”

“The U.S. economy has progressively shrunk over the last two decades, it is a smaller proportion of international trade,” he said. “Yet the dollar is an increasing proportion of the settlement of international trade and an even bigger proportion of financial reserves.”


Walmart ends contract with robotics company, opts for human workers instead, report says




  • Walmart has cut ties with Bossa Nova Robotics, which made robots that scanned shelves for inventory, according to The Wall Street Journal.
  • The retailer has come up with other simple and cost-effective ways to manage the products on its shelves with its human workers rather than the robots, according to the report.
  • The company is still pushing forward with other tech experimentation and recently picked four stores that will act as e-commerce laboratories.

At some Walmart stores, robots have roamed the sales floors and helped check if shelves were stocked. But the big-box retailer has now decided to end its contract with the robotics company behind those machines after finding that people can do about the same work, according to a report by The Wall Street Journal.

The report, which cited unnamed people familiar with the situation, said Walmart recently cut ties with Bossa Nova Robotics. A Walmart spokesperson told the Journal that about 500 robots were in Walmart’s more than 4,700 stores when the contract ended.

Walmart has seen significant growth during the coronavirus pandemic, as Americans buy toilet paper, canned goods, puzzles and more. The company’s online sales nearly doubled in the second quarter, as consumers shipped purchases to their homes and retrieved them by curbside. That’s created a new challenge for the big-box retailer — quickly restocking shelves and making sure it has the right inventory on hand.

In a recent interview on CNBC’s “Squawk Box,” Walmart CEO Doug McMillon said sporadic out-of-stocks have continued to be a problem. He said that if he could change one thing about Walmart’s business, it would be “to have an even higher in-stock level.”

According to the Journal’s report, Walmart has come up with simple and cost-effective ways to manage the products on its shelves with the help of its workers rather than using the robots. The report said Walmart U.S. Chief Executive John Furner also worried about shoppers’ reactions to the robots.

Walmart is pressing ahead with other tech-based experimentation, however. Last week, the retailer said it would turn four stores into e-commerce laboratories that test digital tools and different strategies that could speed up restocking shelves and fulfilling online orders.


The Dow is set to surge 5% to a record as Pfizer says Covid-19 vaccine is more than 90% effective


Fred Imbert@FOIMBERT

Yun Li@YUNLI626

Investors cheered on Monday after drugmakers Pfizer and BioNTech said trial data indicated their Covid-19 vaccine is 90% effective.

Many on Wall Street applauded the announcement as a sign that the pharmaceutical industry may soon have a viable way to control a disease that has derailed the U.S. economy for much of 2020 and has killed more than 230,000 Americans.

Futures on the Dow Jones Industrial Average surged 1,500 points, or 5.2%, implying an opening gain of more than 1,400 points. The Dow’s previous intraday record was 29,568.57, about 1,245 points from Friday’s close.

S&P 500 futures jumped 3.4%.

Tech-heavy Nasdaq 100 futures fell 0.5% as traders left crowded growth and stay-at-home stocks in favor of cyclical companies that could outperform if the Pfizer vaccine is approved for widespread use.

Stocks were already set to continue their big post-election rally Monday as Democrat Joe Biden defeated incumbent Donald Trump in the U.S. presidential race to become president elect, according to NBC projections.

Dow futures were up about 400 points before the vaccine news.

The 90% effective rate from Pfizer and Germany’s BioNTech was better than what the market was expecting. Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, has said that a vaccine that was 50% to 60% effective would be acceptable.

“Amazing news from Pfizer with 90% efficacy. This hopefully is the beginning of the end of our fight against Covid,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in an email.

“As I’ve been saying on the hopes of this, we need to shift our attention to those parts of the market that have been the most hammered because of Covid and away from the work from home stocks that have had such an incredible year because Covid is not forever,” he added.

Travel, restaurant and hospitality companies that saw their equities swoon in the spring as Covid surged saw some of the strongest rallies on Monday following Pfizer’s announcement.

“It is materially bullish for stocks in the near term,” said Tom Essaye of The Sevens Report. “Regarding the data, the 90% efficiency rate in preventing COVID-19 is higher than was hoped for…Given election clarity and the calendar (holiday’s approaching), a run in the S&P 500 to 3900 is not unreasonable. ”

Shares of cruise-operator Carnival Corp. rocketed higher by 18%, Southwest Airlines jumped 9% and the Walt Disney Company popped 6% as investors bet a vaccine may allow more vacationers to attend its many amusement parks.

“I think that the rally is justifiable. I think we’re going to start a new discussion, and the discussion is what’s America going to look like post Covid,” said CNBC’s “Mad Money” host Jim Cramer. “If you think about where we were last week, where we felt that there was very little chance to be able to stop this thing, now suddenly we have hope.”

The Monday rally for equities also marked the first trading day after NBC News projected that former Vice President Joe Biden won the 2020 presidential election against incumbent President Donald Trump. The call came four days after Election Day and amid close counts in several battleground states.

Wall Street hoped the victory for Biden would reduce the odds of a drawn-out election fight, even as Trump refused to concede. Many traders had put on bets for market volatility in November and were unwinding those positions, helping fuel a rally.

In the meantime, the chances of a “blue wave” that sweeps Democrats into the majority of both the Senate and the House have waned, meaning drastic policy changes such as tax hikes are less likely.

“A Biden presidency with a Republican Senate would be unlikely to see any increase in taxes, which was arguably the biggest fear investors had about a Biden presidency,” Brian Levitt, global market strategist at Invesco, said in a note on Sunday. “And a Biden presidency could mean a return to a more traditional, predictable approach to trade policy, which would likely result in less volatile markets.”

Democrats are projected to keep their House majority, although Wall Street was watching closely as Senate control is still in limbo. Both of Georgia’s Senate races are likely going to runoffs slated for early January.

Wall Street had rallied in the past week in anticipation for such a gridlocked government and was set to build on that rally as it gained clarity in the presidential race.

All three major averages just notched their best weekly performance since April. The S&P 500 and Nasdaq jumped 7.3% and 9%, respectively, last week, while the Dow rose 6.9%. The S&P 500 also posted its biggest election week gain since 1932.

Tech was the biggest winner last week among the 11 S&P 500 sectors, surging 9.7%. Investors piled into the high-growth group as the prospect of higher taxes and tighter regulations under a Democratic sweep decreased.

Trump rejects outcome

Stock futures gained even as Trump is refusing to concede the election, vowing that as soon as Monday his team will start “prosecuting our case in court to ensure election laws are fully upheld.”

The president and his surrogates have launched lawsuits in multiple key states, including Pennsylvania and Michigan, and have signaled they plan to press for recounts in some close races.

Biden announced Monday morning the members of his coronavirus task force, who will be charged with crafting a plan to curb the spread of the coronavirus as it reaches record-level highs in the U.S.

Among its ranks are Dr. Ezekiel Emanuel, chair of the Department of Bioethics at The Clinical Center of the National Institutes of Health, and Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota.

The U.S. reported more than 126,000 new cases of the coronavirus two days in a row and has reported a new record daily spike in cases every day over the past four days, according to data compiled by Johns Hopkins University.

“As the election focus starts to fade, investors will begin paying more attention to Covid as cases continue to explode and Europe institutes a series of mitigation measures,” Adam Crisafulli, the founder of the Vital Knowledge, said in an note on Sunday. “Vaccine anticipation has helped protect stocks from the ugly virus headlines.”

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