Hoarding has real consequences

I’ve used bigquerygeoviz and the county by county dataset from NYT to create a map of coronavirus in the US as of Apr 13 adjusted for population (cases per million county residents publicly available in Google BigQuery).

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  COVID-19 cases per million residents in US counties

Because it’s adjusted for population, it lets us see some interesting things:

• NYC and Louisiana are hit hard, as we know.
• Los Angeles and Miami, despite having a large number of cases, are actually not hot spots when considering the population.
• A couple Colorado mountain counties with relatively small year round population have a large number of cases due to the ski resorts (now shut down). Ditto for Blaine, Idaho, near Sun Valley ski resort, which hosted a large wedding from Seattle in February before anyone realized the risk.

But what’s going on in Albany, GA, with more cases per person even than congested Atlanta? According to a WSJ article, health authorities trace it back to a funeral in early March. However, the article also notes that Albany, GA is home to P&G’s second largest plant making, you guessed it, toilet paper. The folks in Albany have had to ramp up production 20% even while every day learning that someone nearby has fallen ill or died of COVID-19. “Mr. Patterson, the P&G plant veteran, said the hardest thing is having to maintain distance from friends and family who are struggling.”

Am I suggesting that hoarding toilet paper caused the outbreak in Albany, GA? No! And as the WSJ notes, people ARE consuming more toilet paper at home (vs. work, which typically uses a different grade of TP) so some of the increase in demand is legitimate. Ditto for groceries, demand for which is up 2x in NYC according to another recent WSJ story. But I think it does illustrate that there are real people whose real lives and families are on the line while they keep working so we can have nice things. Healthcare workers (bless you all!), grocery store stockers, delivery people, and yes, even toilet paper makers, are risking their health every day for all of our sakes.

Let’s take it easy on them.

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Graphing the Economy

I was poking around on the Federal Reserve’s very useful collection of data, and came across these interesting graphs:

This one I’m guessing is the total reserves of Fed member banks. I wonder where all the money in the stock market went?
http://research.stlouisfed.org/fred2/series/WRESBAL?cid=123

This one is roughly equivalent to the money supply. Inflation? What inflation?
http://research.stlouisfed.org/fred2/series/BASE?cid=124

Ooh. Ooh. Found another one. Total borrowings of banks from the Fed.
http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s%5B1%5D%5Bid%5D=TOTBORR&s%5B1%5D%5Brange%5D=5yrs
Liquidity problem? What liquidity problem?

Now, I’ve seen the line at the right of all these graphs somewhere before. Oh yes, electrical engineering, control systems theory. It’s an impulse function, the theoretical input to a feedback loop. Expect some economic oscillation ahead…

/dmc

whole lot of minus signs

Once upon a time, I subscribed to Business Week with about-to-expire FF miles. The best thing in it was the figures page, now available online for free:

Click to access 0842_figs.pdf

Minus signs everywhere, even the best-performing mutual funds in the last month earned negative returns. I’m sorry, but I think it’s funny that almost every number on the page is negative, even when it’s my money 🙂

I note that the S&P trailing P/E ratio is 19, hardly cheap by historical standards, and certainly not bear market standards. Forward P/E is supposedly 10, which I find really hard to believe, as that assumes company earnings almost doubling in the next year!

Curiously, trailing P/E was about the same a year ago, which means company earnings must have already fallen a lot in the last year since stocks are a lot lower today. This possibly helps explain why we see long valuation waves. At the top of a peak, earnings have already begun to decline, but the market’s momentum carries it to ever higher P/E ratios. At the bottom, the denominator (earnings) has already begun to recover, but market momentum is still negative, so you get P/Es in the single digits.

Here’s the scary part: even if earnings coming out of the recession are equivalent to today’s earnings, single-digit P/Es imply much lower prices ahead. Assuming anyone cares about fundamentals, that is, which I’m not sure they do 🙂

By the way, if you want to see what recedes in a recession, check out the Fed’s economic data at http://research.stlouisfed.org/fred2/. Most charts have the recessions clearly marked.

/dmc

Why the Fed Can’t Save Us Now

From http://www.lewrockwell.com/rozeff/rozeff220.html:

The Fed cannot create value. Causation runs from sound assets to sound credit. Causation does not run from credit creation to sound assets.

If you’ve never heard of Lew Rockwell or Austrian economics, now would be a good time to start studying.

/dmc