Post & Comment

I haven't run one of these columns in awhile.  It's amazing how much the world has changed since the last time I wrote one of these posts.  To review, this is a section of posts where I respond in brief comments to something I've seen in the news or online.  I've highlighted the headline note or post.

First, some links I think you might find of interest.

Bloomberg.com: "99% Of Those Who Died From The Virus Had Other Illness Italy Says."

The Atlantic.com: "What Really Doomed America's Coronavirus Response."

Websites that track where Coronavirus is and its statistics.

Johns Hopkins Coronavirus Tracker

Worldometers: Coronavirus Cases And Statistics

Fall-out:

Here's some of the things I'm watching and thinking about.

-Passing of the stimulus package and the ramping up of mask and ventilator production is the end of the beginning stage of this thing.  There's a lot more to come.

-How long of a recession we have going forward probably depends on how long we're closed down.  My guess, and it is a guess is we can avoid serious and longer term damage to the economy if we can get things going in the next 45 days.  Beyond that we may have larger concerns.

-I'm watching Mexico because it's a country too close to the US in terms of proximity, a country without the financial resources to deal with a pandemic and a pretty subpar medical system once you get out of the major cities.  Can't imagine what happens down there if the virus gets lose in the population.  

You're going to be paying more taxes in the next few years to pay for this.  I don't care what anybody says about that at this point.  Somebody is going to have to pay for all of this spending.

What we've seen so far is the fear/anxiety phase of this.  The next phase could likely be anger.  That anger is going to be directed at political leaders and the bullseye likely will be on the President.  I would say today that there's a much higher probability of the President losing the coming election at this point than a few months ago, particularly if Joe Biden is the Democratic nominee.  I think the probability is also rising that Mr. Trump might not even be the Republican nominee.  My thinking on this is if it looks by June that the President is headed for a landslide loss he might just bow out.  I'm not sure his ego is such that it could handle that sort of thing and might opt on taking a pass to avoid that humiliation.  Probably a long shot and not trying to make a political point.  Just looking at the facts.

An Update

I want to update you on what I’m seeing now.  You know I’ve written in the past about my father, who was a lawyer from a small town in Indiana.  He gave me one invaluable piece of advice which was to be forthright with folks and give them the news straight out, good and bad.  I’m going to do that today just as I've had to do through other market crashes and wars as well as good times in my 30+ years of investing.  Up front I will tell you that nothing in all these years compares to this pandemic.  The September 11 attacks are the closest event that comes to mind.  Like that sad day, we’re experiencing a huge exogenous economic shock.  This is unprecedented in modern memory. There’s a playbook for what happens when unlooked for events wash over the transom, so we’re pretty familiar with what happens after an earthquake or hurricane.  The chapter on global pandemics for that playbook is being written as we speak.  We’ve experienced unprecedented volatility in world markets as investors try to come to grips with the economic consequences of a world on lockdown from the coronavirus.  Nearly all global asset classes have experienced steep declines in excess of 20% in March due to the uncertainty surrounding the virus and governments response to it.   There really hasn’t been any place to hide besides cash.  

Being straight with you is to say I have no crystal ball telling me what’s in store in the near future other than I believe the news cycle will continue to be grim. I can make guesses, but to say that I know for sure how this pans out would be unfair to you.  Nobody knows for sure and the best educated guesses are no better than yours or mine.  Instead I’ll rely on my experience when markets have gone through terrible events.  In that vein, I want to prepare you for  the possibility that stocks could fall further.  The  possibility also exists where markets rally in the coming weeks only to see us sell off again, perhaps even falling further depending on the news cycle.  Of course nobody knows if either of these scenarios will happen.  Stocks might blast off much as they did after 2018’s decline and quickly erase much of this month’s losses.  I think this best-case scenario is the least likely given where we are right now in the life of the virus, but anything is possible.   Therefore, while we all hope this is over soon I want you to be prepared that there may be more pain to follow.  Much will depend on the news and the Government’s response to this event.

“Men make plans, God laughs” is an old Yiddish proverb reminding us that the life is unpredictable despite our best intentions.  Very few of us would have imagined that a global pandemic was coming as we turned the page into 2020.  The US economy was in pretty good shape before all of this occurred.  If there is a hook on which to hang our hats it is as recent as six weeks ago there were few structural issues threatening overall economic growth.  Locking the majority of the country down for whatever period of time means a massive economic disruption and throws all those forecasts out the door. Some of that economic activity won’t be recovered.  Nobody’s going on vacation or to the movies, out to eat or to a ball game right now.  Some revenue is merely  being postponed.  For example, they’re talking about moving the Kentucky Derby and the Masters Golf tournament to September, assuming it’s medically feasible by then.  But the cash that we’d spend on all those things will still be with us, ready to be used on the other side of this as long as economic confidence doesn’t take too much of a hit.  In that regard the Federal Government is signaling its going to do what’s needed to make sure programs are available to tide certain parts of the economy over until we get through this.  The Federal Reserve is also flooding the markets with liquidity. Basically, what you are beginning to see is the Government opening up their playbook for responding to a disaster by flooding the impacted zone with cash.  Uncle Sam is about to open the checkbook big time.

With the news cycle so grim it's important to remember that millions of people still have jobs and much of the economy isn’t going away, but is being put on hold.  Somebody who needs a new cellphone, a new set of tires for their car or just a pair of jeans will still need these things when this is over, plus maybe a few things more.  All that cash folks are pocketing now from everything they’ll give up in the coming weeks will probably get spent with gusto in a few months.  Assuming, the disease doesn’t morph into something more deadly it is reasonable to expect pent up economic demand to start coursing through the system later this year and carry over into 2021.  If you buy my thinking on this then it is reasonable to assume that stocks have declined to much more attractive valuations if investors are willing to look out 12-18 months.  Investors with that type of time horizon and the willingness to assume more risk should think seriously about taking advantage of the opportunities because corporate America is for sale.  Now there’s a reason that stocks are so cheap given all the uncertainty out there.   But I say there’s value being created right now in the markets even as I’m telling you there’s some probability that stocks could fall further in the coming weeks.  I say markets are cheap knowing that the world is looking into a deep dark pit right now and nobody knows when we’ll starting digging our way out.  But we will dig our way out!  It is only a matter of time and sound policy before we start that process.  In that vein, I’m not very good at asking clients to send my firm additional dollars to invest but I will say that if you buy my line of reasoning then I’d suggest perhaps sending us some additional money to put to work on your behalf over time.  Better times will come just as winter turns to spring.  The seeds in the heroic work of our medical communities and the Federal government’s checkbook are being planted even if we can’t see any green shoots yet.

Everything said so far comes with the following warnings.  Don’t expect that I or anybody else will know when the final bottom is put in on this decline.  We'll only know that later on when looking in the rear view mirror. As I have cautioned above, it is possible that markets will trend lower in the coming days or weeks.  In 2008 you could have bought stocks in October right after that crash, been rewarded with gains through the end of the year, only to have to sit through the final throws of that bear market through March 2009.  In retrospect it didn’t matter because any major index you bought back then has paid you handsomely regardless of whether it was October of 2008 or March of 2009.  I think there’s a very high probability you’ll feel that way in the coming years even if we miss out on the absolute lows.  

Also you should absolutely not be investing new dollars you will need in the markets on a short-term basis.  Don’t bet next year’s tuition money on the markets right now.  The better strategy I believe is to pick at assets with dollars you are willing to allocate to longer-term investments as they become or remain cheap.    Also you should be prepared for the possibility that any new dollars allocated to the markets may decline first before they start to advance, assuming there's a recovery.  There is no guarantee of profit but the margin of error down here is much more favorable for long-term investors.  One last caveat is to remember something I said to you the other day.  The news cycle is likely to get worse before it gets better, but stock prices will turn before the news cycle.  Stocks will likely start to recover once investors begin to sniff out a recovery.  This is why I say don’t try to time this market by selling and trying to pick the bottom.  To do that means you have to be confident you’re going to know when to get back in.  I have seen that type of skill elude individual investors time and time again,  especially if we have a massive ramp higher in prices when investors begin to believe that the future is clearing up. 

Now I want to talk about our portfolio strategies which are centered around ETFs.  While there are enormous advantages to ETFs, especially during volatile times, they are not immune from market declines as ETFs will lose value by something that mirrors the decline in their underlying index. They are also not a panacea for volatility. Recent events have shown they can be whipsawed around like any common stock. However, besides their cost and tax advantages ETFs  form a diversified portfolio of assets, backed by the value of the securities in an underlying index while removing single stock risk from the portfolio.  Warren Buffett has always said bet on America.  I would rather bet on America and the World by buying diversified baskets of assets right now than worrying about individual companies.    As grim as the news is right now the cavalry in the form of the Government’s checkbook and the ingenuity of the free enterprise system will eventually right the ship of state.  I think it will profit most of us to be around when that turn comes, even if that turn is further out right now and from perhaps lower price levels.

Finally, it's fair to say that our Government was slow to respond to the threat this disease posed to the country. But the Federal Goliath is now very much awake!  It is beginning to do what it always does in situations like this, throw ridiculous amounts of cash at the problem.   That  will eventually make a difference.  It is when these programs are seen to start stabilizing things and when investors think we’ve reached peak infection that I believe markets will turn.  I cannot honestly tell you from where that will be and we need to be prepared that it could be from lower stock price levels than what we see today.    I don’t know if markets have to go down further but if history is any guide, the turn will be violent and I think we’re going to want to be along for the ride when prices start moving the other way.

I plan to update you regularly until we’re through this event.  Please call with any questions or concerns.  Most important to me is that you please stay healthy and safe.

Thoughts Amidst The Volatile Markets

By Christopher R. English, President of Lumen Capital Management, LLC

I thought I would update my thoughts on what has been occurring with markets as I think it is going to be impossible to ignore the headlines that have been coming out about the coronavirus and yesterday's market decline.  I'm going to revert to my question and answer form for this letter.

What Happened Yesterday?

Markets experienced over a 7% decline yesterday based on chaos in the oil markets as a growing tiff between OPEC and Russia has morphed into a price war between Saudi Arabia and Russia.  Also, over the weekend the news on the coronavirus became much worse in terms of the progression of the disease in much of the world.  Italy, Iran and South Korea seem to be some of the hardest hit places.  Cases in the US have been lighter but officials believe more will be uncovered as we test more.  Over the weekend, Italy placed under quarantine the regions around Milan.  Also, case counts and mortality rates have continued to climb around the world, raising fears of a larger global slowdown than previously calculated.  While it is true as I have argued that the flu may be a bigger threat in any given year, public health authorities are clearly pulling out all stops in order to slow down transmission.  This leads to negative headlines and that's not good for stock prices.  A trader’s first reaction in the face of such uncertainty is to hit the sell button, hence yesterday's decline.

OK, So What Are Some Of The Uncertainties Weighing On Markets?

Let's start with a few things nobody knows.  First, despite what you might see in the press, nobody knows how this will pan out and that's part of the uncertainty which is causing such disruption with markets.  We're in uncharted waters in terms of this virus, perhaps not so much with what it is or what steps may need to be done to slow it's transmission, but what the economic implications are.  Same with what's going on in the oil markets.   What I do know is you ARE going to hear a lot of wild claims and frightening numbers regarding oil, the disease and the stocks.  What we can say with a pretty high degree of probability is that those numbers in terms of infections and mortality will likely get worse before they get better in the coming weeks. There is also a high degree of probability that you are going to hear more about quarantines, school closings and restrictions of movement.  {As I'm writing this Italy has just extended its quarantine to the entire country}.  Accept that the news on this is likely to get worse before it gets better.  

Nobody knows where the ultimate bottom will be in stocks but if this decline acts like many of the others, then stocks will turn before the news gets better.  Nobody knows when volatility will subside but we have to accept that it will likely be elevated for some period of time.  

Nobody knows the economic impact of all this over the next twelve months but we do have a pretty good idea that worldwide growth will contract in 2020 and perhaps into the early months of 2021.  With the major indices now down nearly 20% from top to bottom, there's a substantial likelihood that a large chunk of this contraction is now baked into stock prices.  While nobody knows where an ultimate bottom may be put into for the markets, we do know that stock prices are significantly lower then they were fourteen trading days ago.  Yields on both ETFs and stocks are now significantly improved from a few weeks ago and while some of those yields may be now suspect, especially in the energy sector, they are much more attractive today given the decline as well as the collapse of treasury yields.

Finally, nobody knows what the government's response to this will be in terms of trying to stimulate the economy or shelter the blow to the most affected sectors of the economy.  Yet there is a very high probability that some kind of response is coming, especially if the President wants to retain his job.*

Are We In For Another 2008?

The 2008 financial crisis was the pricking of a speculative bubble in housing that ultimately threatened the financial infrastructure of the country.   While there is never a guarantee, this will likely prove to be one of those unlooked for events that occasionally washes over the transom, catching investors unaware.  I'm positive if you'd asked the majority of the financial community six months ago what worried them the most, they were unlikely to have said a global pandemic.  Yet here it is and what we do know is that ultimately markets will find a level of equilibrium and from that will at some point build a base from which they can make a sustained move higher in the future.

What Are The Things We Know?

What I do know is that the share prices of corporate America have been put up for sale and that prior to all of this, the US economy was in pretty good shape.   While I don't know if stock prices need to go lower or from what level stocks will ultimately find their footing from which to make an advance, we are building in a margin for error given the substance of the decline.  It is still my strategy to look for value as markets decline and put some of the cash we've had on the sidelines to work.  We will in all likelihood not catch the ultimate bottom of this decline and I certainly don't know when you'll be rewarded for having a patient long term strategy.  But it has been my experience in over 30 years of investing that having a patient and disciplined approach has usually resulted in you being rewarded for buying when markets are most fearful if you have a normal investor's 12-18 month time horizon.  Having said that, I do also believe it's possible we'll need to endure continued volatility in the coming weeks until the news cycle gets better.  Plainly speaking, the time to sell was probably earlier in the year.  It is better to get a buy list together sooner than we think, not for today or perhaps tomorrow.  You're buying for the future and I've said to you time and time again, I believe the future is full of promise.

*The President announced after I'd written this post that he was meeting with congressional leaders tomorrow to discuss ways to alleviate some of the coming economic burdens on small businesses and to discuss a response to the coronavirus.  

Please contact me if you want to discuss this or anything else. Call my office at 312.953.8825 or email us at lumencapital@hotmail.com 

About Chris

Christopher R. English is the President and founder of Lumen Capital Management, LLC-a Registered Investment Advisor regulated by the State of Illinois. A copy of our ADV Part II is available upon request. We manage portfolios for investors, developing customized portfolios that reflect a client’s unique risk/reward parameters. We also manage a private partnership currently closed to outside investors. Mr. English has over three decades of experience working with individuals, families, businesses, and foundations. Based in the greater Chicago area, he serves clients throughout Illinois, as well as Florida, Massachusetts, California, Indiana, and other states. To schedule a complimentary portfolio review, contact Chris today by calling 312.953.8825 or emailing him at lumencapital@hotmail.com.

Interest Rates

A truly astounding chart from the twitter feed of Strategas,  a leading institutional brokerage and asset management firm providing macro research, capital markets and, investment management services. They note their chart was from last week so these numbers are very likely currently higher than they were when this was put out.

One other thing about interest rates. The current 10-year US treasury rate is under 1%, trading around 67 basis points. What you are saying when you buy a 10-year bond today is that you have so little confidence in the future US economy that you're willing to hold an piece of paper that has an extremely high probability of losing money after taxes and inflation during the life of the bond in order to get away from the market's volatility.

*Long ETF’s related to the S&P 500 in both client and personal accounts.

Nobody Knows.

I thought I would update my thoughts on what has been occurring with markets as I think it is going to be impossible to ignore the headlines that have been coming out about the coronavirus and yesterday's market decline.  I'm going to revert to my question and answer form for this letter.

What happened yesterday?
Markets experienced over a 7% decline yesterday based on chaos in the oil markets as a growing tiff between OPEC and Russia has morphed into a price war between Saudi Arabia and Russia.  Also over the weekend the news on the coronavirus became much worse in terms of the progression of  the of the disease in much of the world.  Italy, Iran and South Korea seem to be some of the hardest hit places.  Cases in the US have been lighter but officials believe more will be uncovered as we test more.  Over the weekend Italy placed under quarantine the regions around Milan.  Also case counts and mortality rates have continued to climb around the world, raising fears of a larger global slowdown than previously calculated.  While it is true as I have argued that the flu may be a bigger threat in any given year, public health authorities are clearly pulling out all stops in order to slow down transmission.  These leads to negative headlines and that's not good for stock prices.   Traders first reaction in the face of such uncertainty is to hit the sell button, hence yesterday's decline.

OK so what are some of the uncertainties weighing on markets?

First let's start with a few things nobody knows.  First despite what you might see in the press, nobody knows how this will pan out and that's part of the uncertainty which is causing such disruption with markets.  We're in uncharted waters in terms of this virus, perhaps not so much with what it is or what steps may need to be done to slow it's transmission, but what are the economic implications.  Same with what's going on in the oil markets.   What I do know is  you ARE going to hear a lot of wild claims and frightening numbers regarding oil, the disease and the stocks.  What we can say with a pretty high degree of probability is that those numbers in terms of infections and mortality will likely get worse in the coming weeks.  before they get better.    There is also a high degree of probability that you are going to hear more about quarantines, school closings and restrictions of movement.  {As I'm writing this Italy has just extended its quarantine to the entire country}.  Accept that the news on this is likely to get worse before it gets better.  

Nobody knows where the ultimate bottom will be in stocks but if this decline acts like many of the others then stocks will turn before the news gets better.  Nobody knows when volatility will subside but we have to accept that it will likely be elevated for some period of time.  

Nobody knows the economic impact of all this over the next twelve months but we do have a pretty good idea that worldwide growth will contract in 2020 and perhaps into the early months of 2021.  With the major indices now down nearly 20% from top to bottom, there's a substantial likelihood that a large chunk of this contraction is now baked into stock prices.  While nobody knows where an ultimate bottom may be put into for the markets, we do know that stock prices are significantly lower then they were fourteen trading days ago.  Yields on both ETFs and stocks are significantly now improved from a few weeks ago and while some of those yields may be now suspect especially in the energy sector, they are much more attractive today given the decline.  They are also more attractive given the collapse of treasury yields.

Finally nobody knows what the government's response to this will be in terms of trying to stimulate the economy or shelter the blow to the most affected sectors of the economy.  Yet there is a very high probability that some kind of response is coming, especially if the President wants to retain his job.*

Are we in for another 2008?

The 2008 financial crisis was the pricking of a speculative bubble in housing that ultimately threatened the financial infrastructure of the country.   While there is never a guarantee this will likely prove to be one of those unlooked for events that occasionally washes over the transom, catching investors unaware.  I'm positive if you'd asked the majority of the financial community six months ago what worried them the most they were unlikely to have said a global pandemic.  Yet here it is and what we do know is that ultimately markets will find a level of equilibrium and from that will at some point build a base from which they can make a sustained move higher in the future.

What are the things we know?

What we do know is that the share prices of corporate America have been put up for sale and that prior to all of this the US economy was in pretty good shape.   While we don't know if stock prices need to go lower or from what level stocks will ultimately find their footing from which to make an advance, we are building in a margin for error given the substance of the decline.  It is still our strategy to look for value as markets decline and put some of the cash we've had on the sidelines to work.  We will in all likelihood not catch the ultimate bottom of this decline and we certainly don't know when you'll be rewarded for having a patient long term strategy.  But it has been my experience in over 30 years of investing that having a patient and disciplined approach has usually resulted in you being rewarded for buying when markets are most fearful if you have a normal investor's 12-18 month time horizon.  Having said that we don't know when we'll be rewarded for this strategy and it is possible we'll need to endure continued volatility in the coming weeks until the news cycle gets better.  Plainly speaking, the time to sell was likely earlier in the year.  It is better to get a buy list together we think, not for today or perhaps tomorrow.  You're buying for the future and I've said to you time and time again I believe the future is full of promise.

*The President announced after I'd written this post that he was meeting with congressional leaders tomorrow to discuss ways to alleviate some of the coming economic burdens on small businesses and to discuss a response to the coronavirus.  

The Silent Epidemic {Part II Rendering Unto Caesar}

The issue of tax paying is as old as human civilization and the resentment to being compelled to render unto Caesar is probably just as ancient.  Human history is filled with revolts and wars over paying taxes.  The United States began as a tax revolt from the British King.  Yet governments since the dawn of time have needed a way to fund their expenditures and some sort of burden sharing with the population has always been necessary.  Today we have perhaps better and perhaps more fair ways of taxing then were used in antiquity but the need to fund the essential services of government is ongoing, as is the creative ways these same governments have come up with to fund those essential services.

As I've said in previous posts this series of articles is not debating what taxes are imposed or on whom they should be targeted.  But the basic reality is that no matter where you live you are going to pay taxes in many different forms.  You pay income taxes in most states.  You pay sales taxes, property taxes, use taxes, tolls, amusement taxes, gas taxes etc.  Some of these are hidden from you.  Yes, you can see your sales taxes on a bill but most of us today probably just look at the final line when we get out our wallets.  Other taxes are more hidden.  The gas tax in Illinois doubled from 19 cents per gallon to 38 cents per gallon back on July 1st but I'll bet most people have forgotten that by now, if they ever knew what they were paying.  For most of us the price at the pump is what's important when we fill up our cars.  Similarly,  take a look at your cell phone bill at some point.  My math tells me I pay over 16% in various charges for my basic cell phone plan.    

Governments at all levels in Illinois, especially as the pension burdens have become so immense here, have been forced to raise taxes in every conceivable manner possible.  Politicians prefer raising taxes in ways that the average person doesn't necessarily see reflected on their paychecks or their property tax bill, but that doesn't mean citizens don't foot the bill.  Starting in January, 2019 for some new fees but mostly on July 1st  Illinoisans started paying what is estimated to be nearly $4.6 billion in new taxes.  This includes everything from the above noted doubling of the state gas tax to taxes on marijuana sales, to increases on cigarettes, e-cigarettes and parking garage fees.  

In Chicago taxes were raised this year on home sharing {ie renting out your property on a web site}, liquid nicotine, ground transportation {taxi's and the like}, water and sewer, tobacco, amusements {sporting events etc.} parking and online sales.  To plug a currently estimated $838 million budget shortfall in next year's budget the new mayor of Chicago is proposing new taxes or increasing taxes on other items.  Even that won't be enough to pay the bills without help from the state and gimmickry.

Again, this is not a series devoted to debating the issues of taxes.  For the purposes of everything I'm covering here I don't care why citizens are paying what they are.    Also I'm not here to have the debate on whether taxing items like cigarettes or alcohol at a higher rate is good on a societal basis.  Instead I'm limiting this discussion to the consequences of these actions.  One of the main results is that Illinois ranks dead last in terms of the tax burden in places on its household.  WalletHub calculates that the effective tax rate on a median household in the state is 14.9% and costs that median household nearly $8,600 annually in taxes.  You can click on the link above to see their methodology and I'm sure one can find other studies that show different numbers.  However, nobody argues that the tax burden hurdle isn't very high in Illinois.  For comparison, according to WalletHub that median dollar calculation is around $7,200 in Wisconsin, around $5,950 in Michigan and $5,815 in Indiana.  I picked these states because they closely neighbor the Chicago region.  Also remember that's for the state.  The tax burden is likely higher in Chicago and Cook County.   Finally this burden is tacked onto what folks already pay in Federal taxes, FICA and healthcare.  It is not hard when doing the math on taxes at every level to come up with the calculation that the average tax burden for middle class citizens in Illinois is likely well over 50% of their income.  Add in the potential costs of health care and it't not hard to see how the middle class continues to get squeezed.

Later in this series we'll run some actual numbers as illustrations on what we're cumulatively discussing.  Today we've hopefully laid the groundwork for understanding the massive burden we're placing on households in the state.  Death and taxes may be the only two certainties in life but never has rendering unto Caesar been as burdensome as it likely is now for the citizens of our state and especially for those of us that live in Chicago, Cook County or both.

Coming in the next article we'll take a look at the toll of rising property taxes.

More Thoughts On The Flu, Coronavirus & Bernie Sanders

Here are some numbers on influenza I thought you might find interesting{my highlights}:

"Influenza is a highly infectious disease that usually strikes during the winter season. Globally, it causes an estimated one billion cases of influenza, resulting in 290,000 to 650,000 deaths per year. A person can get the virus simply by being near an infected person that coughs, sneezes or talks, or by touching something with the virus on it."  

Link: CDC:  "Disease Burden of Influenza."

One in eight of us will get the flu {world population of roughly eight Billion}.  I keep hearing the flu has a mortality rate of 1.4%.  I can't verify that but I'm going to assume that's a number for industrialized nations.  My math shows mortality levels much higher worldwide assuming the global case numbers are close to accurate.  This means higher likely mortality in less developed regions of the world.  Soooooo.......influenza kills each year roughly the same amount of people killed in our Civil War.  Yet the world does not come to a standstill because of the flu.

Another way to view this is that the flu kills more people each year than auto accidents{36,560 fatalities in 2018}.  People still get in cars even though around 11 people are killed for every 100,000  people driving.

On to the coronavirus:

My guess is it's been around longer than we think but masquerading as the flu.

Infection and mortality levels are likely to rise and provide headline fodder over the coming weeks.  We're going to find a lot more cases here at home now that we have better testing.  Also the disease doesn't seem to have made it to Africa yet.  

The untold story is how quickly science has globally sprung into action trying to identify, treat and ultimately develop a vaccine.  Remember  my belief that one of the transforming changes in modern society is the exponential advances in knowledge.  I'll have more to say on this at a later date.

Bernie Sanders may ultimately get the Democratic nomination but the party elites are uniting to do their best to stop him as Buttigieg, Steyer and now Klobuchar have now dropped out of the race.  Reports are saying that Buttigieg and Klobuchar either have or will soon endorse Joe Biden.  The Democrats seem to have learned the lesson the Republicans didn't until it was too late back in 2016.  Can't help but think that's part of the reason that stocks are rallying today, besides being terribly oversold.

Finally all of corporate America is going to get a hall pass this year in terms of earnings.  Everything is going to get blamed on the coronavirus.  Expect bad news out of a lot of companies over the next few months.  Very high probability that stocks are discounting a large piece of this already.

Back later in the week.