I’m guessing that no single company will dominate the battery market. I see some pro-Tesla hype, but little that would motivate me to pay 5 times sales for Tesla rather than 1 times sales for BYD.
PeterMcCluskey
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Most investors are unaware that internal combustion engine cars are doomed. But I expect that they’ll mostly be replaced by cheap electric cars from companies with little brand name recognition. Car use will continue to move to an Uber-like service model, where the car is a commodity. I’m betting on BYD, not Tesla.
People who fund billion dollar trials normally demand that they be run by relatively cautious people. That conflicts with the need for innovative models.
The good news is that there’s wide variation in how expensive trials need to be. The larger the effect size, the smaller the trial can be—see the TRIIM trial.
I misunderstood how Santa Clara is reporting new cases, and I now see they’re getting revised, and will be about 15 to 20 per day, down about 70 to 80% from the April 10 peak. That’s still pretty good compared to most areas.
Note that there’s plenty of variation within California. Santa Clara county (Silicon Valley) is reporting almost no new cases, the rest of the bay area shows weak signs of success, and the state totals are being heavily influenced by poor trends in LA.
I’ll guess that some of it is because within-home transmission was a surprisingly high fraction of Rt in late March and the first few days of April. That will involve Rt close to 1 for transmission to adults in a typical household, until immunity effects inhibit a good deal of within-home transmission. I’m also guessing that infections are mostly going undetected in children.
Limits on test availability could affect reporting of COVID-19 deaths. I expect that some hospital deaths in March weren’t tested for COVID-19. Maybe also some were swabbed, and testing of those swabs was given low priority, with the result that some deaths are being reported with significant delays. There’s been some recent confusion over Pennsylvania’s reported deaths which suggests that standards have been changing for how deaths are counted, and that seems to be adding a few more reported deaths now than would have been reported a month ago.
Robin Hanson has blogged a bit about the healthy-recession puzzle: less exercise; he also mentioned nursing employment somewhere that I can’t seem to find.
I initially guessed ventilation would only provide minor benefits. But I’ve decided now that it looks medium to high value.
I’ve been influenced in part by this Stat article and this J Storrs Hall blog post.
This is a better analysis of the stock market’s reaction than most others that I’ve seen.
The stock market was irrational in subtle ways, but didn’t make blatant mistakes like failing to understand exponential growth.
I expect the biggest problem was recency bias / availability bias that caused markets to overweight the chance that this virus would be contained in the way that happened with Ebola, SARS, and a few other scares that were the most familiar analogies in most investors memories. I think this was one of the larger mistakes that I made.
It’s also hard to evaluate the economic consequences of a given number of infections and deaths. The pandemics of 1918, 1957, and 1968 all seemed to suggest less economic damage than is being forecast for this pandemic. Some of that is simply due to us being better able to afford to shut down businesses than was possible for prior generations—restaurants and airline travel were a much smaller fraction of the economy in 1968 than today.
I don’t see any signs that inflation calculations are expected to become less honest. There are certainly lots of opinions about how well the CPI measures what we want it to measure, but it has worked pretty well for Fed policy issues in the past, and I expect that to continue.
There were important obstacles to wealth creation in 2008. Inflation went negative for a while, which meant there was a decline in the wages at which labor supply and demand would remain stable. Yet wages don’t adjust downward in dollar terms—employers lay off workers, rather than cut wages, because wage cuts create very unhappy workers. That’s a substantial fraction of what went wrong. [This is a very condensed summary of Scott Sumner’s book The Midas Paradox].
That’s also happening today. Prices have declined, or at least wholesale commodities have. Wages likely haven’t declined to compensate.
Yet for this month, that’s just a tiny part of what’s happening. Wage adjustments wouldn’t keep waiters or oil drillers employed. I expect there’s currently a severe shortage of nurses and delivery people, which won’t be quickly solved. In that sense, what we’re experiencing is a massive shift in labor, more comparable to what happens in a major war than to what happens in a recession.
Value was destroyed by WW11, the 1957 pandemic, the 1968 pandemic, and 9/11. Yet it’s unclear how many of those caused recessions.
Wars and severe pandemics tend to cause inflation (for pandemics, that’s likely only significant if people doubt that they’ll live long enough to value having money a year from now), and inflation tends to postpone or prevent recessions.
Whether we get 2008-style labor market imbalances depends a fair amount on what inflation is like over the next couple of years.
The TIPS spread implies that the market expects low inflation for a long time, which tends to suggest a long, drawn out recession.
But I have low confidence in any forecast along these lines. Will large fractions of the newly unemployed prefer unemployment checks over new jobs that are, for now, relatively high stress and high risk? We don’t have much historical evidence to guide predictions here.
The Fed has substantial power to influence inflation, but seems to have a strong tendency to under-react to large changes.
The ISM Purchasing Managers report is the fastest way to get a decent estimate of how GDP is increasing or decreasing. The ISM report on March activity surprised many people, including me, by reporting a nearly neutral level of 49.1 for March. That’s a big difference from the 38.9 that was reported on October 1, 2008, which was the biggest single piece of evidence that convinced me to sell stocks in advance of the worst part of that crash (I did not handle this year’s crash anywhere near as well as that). Readings below 40 indicate sharp contractions, while readings near 50 suggest activity is nearly unchanged.
I’m changing my estimate of Q1 GDP to approximately unchanged, and I’m confused as to why the ISM report doesn’t show recession-like changes.
Wikipedia lists several whales with more cerebral neurons than humans.
First quarter will be low but I don’t think anyone is saying it will be negative.
Metaculus says −6.8%. It seems very likely that March and April will be negative enough to generate 2 quarters of negative growth, even if growth resumes by May.
A new paper: Correlation between universal BCG vaccination policy and reduced morbidity and mortality for COVID-19: an epidemiological study says that vaccination for tuberculosis has a potentially large effect on COVID-19 problems. This explains some of the strange differences between countries. That’s bad news for the U.S. (which hasn’t required the vaccine), good news for some countries.
I expect that already-overwhelmed regions such as New York City and Italy will stay in level 3 till at least the end of May, and possibly till July or August.
I expect that being currently overwhelmed has little effect on what restrictions will make sense this summer.
I expect transitions to level 2 to depend mostly on the availability of tests. So I see New York going to level 2 by mid-May. More New Yorkers will soon have immunity than in most other places, so it might actually be one of the safer places by May.
Some coronavirus-related problems are more tractable today than normal problems.
In a couple of months, longer-term problems should be our main focus, but it feels hard to focus on them now.
OOPS! I misread Chris Masterjohn’s advice. He recommends NO vitamin D supplements until the coronovirus threat is reduced.
I don’t expect any clear evidence. I expect that outdoor gatherings are fairly safe, especially in warm weather.
If there were no arrests, I’d predict no correlation with COVID-19 trends after adjusting for factors such as income and race. Crowded jails likely create some problems, but if jails spread the virus, that doesn’t tell us much about health policies.