I have to say I see no encouraging economic news in the forseeable future. None.
Anyone who has an equity heavy investment portfolio should take note, and think about actions you might want to take now to identify and mitigate risks against further market decline. Reevaluate your risk tolerance for significant loss, your time horizon, etc. Put some bad scenarios to the test. My short take is extreme volatility and increasingly bearish sentiment, accompanied by massive developments seemingly out of nowhere for the forseeable future. Lots opportunities of course, but not for the inexperienced or faint of heart.
You’ll notice that I’m headlining with a big bold statement and a pretty pointed call to action. And you might reasonably expect to find pages of pretty graphs, data points, and footnotes coming up next. Ain’t gonna happen.
So here’s my plan. Stay with me.
As I write it’s 10:15 on March 11. S&P 500 just dropped through 2800.
I’m going to continue telling stories here, making bold predictions, and generalizing writ large. Gonna spit things out as fast as I can. Just write away. On whatever I feel like. As I see it. No proof. I’ll keep tweeting what I’m following. Happy to engage with you there or if I like you privately. If I say something here that’s false call me out publicly. Please. I’m not here to propagate rumours or conspiracy stories.
If you’re reading this shortly after March 11 it’s just noise. I’m just some loon who has started spouting nonsense on the internet. If that’s the case, but you’re intrigued, or someone has pointed you here, I offer this as a token of my credibility. Go back and read through my blog posts. Start with this post and work your way forward in time.
You’re back! Does my observation carry any more weight now?
Hopefully you’ll see where I’m going with this. Or it will be blindingly obvious if you’re visiting from the future.
To be honest, I haven’t really been obsessing too much over cruise ships for the last 36 hours or so. I pretty much stated my case here and moved on. Because as large as this story is, there is a lot of big news right now, with profound implications for so many populations and industries.
I sort of expected some dramatic action yesterday, and it didn’t happen. But there were some hints. Pence made mention of a 72 hour action plan that started from the Saturday meeting. Trump made some remarks yesterday about big news coming today. But no big news. This evening I went back for another look.
I mentioned in my first post on cruise ships that I was watching two ships, the Pacific Princess and the MSC Opera. There have been a few others that I’ve kept an eye on that I don’t have to drag out right now.
The MSC Opera is docked in Genoa. I thought I read somewhere that the passengers and crew were cleared to disembark, but now I’m not sure. It will come out soon enough. I’d bet my last dime on there being infection aboard. I hope the actions of port and health authorities in Greece and Italy with this ship will come under close scrutiny. Malta turned the ship away under pressure from doctors there. There’s a story there if anyone wants to find it.
A point I’d like to make on Pacific Princess is one of spin. They went aboard, tested a small group of occupants, and came back with close to a 50% positive rate. 21 people total, according to the Princess web site. And the headline number everywhere has remained small. It’s not a stretch to suggest that the majority of crew and a good number of passengers are currently infected. The true numbers will no doubt be available somewhere, some time. I want to emphasize that perception is being very tightly managed. They could easily have tested all passengers by now and made summary results available. But 21 doesn’t raise the same alarm as 867, or some such number. The CV-19 numbers being thrown around in the US lately have been largely bullshit. I’ll talk about that lots. Just a heads up.
One more Pacific Princess thought: US announced they would take passengers but not crew. I’d bet that there was a plan in place, if only briefly, for the ship to depart Oakland for BC. That’s probably back in the air now, but a relatively minor concern in the scheme of things. It sounded like US was expecting owner to handle it.
Now, to some current at-a-glance pics from my free Android App. These are cruise ships shown.
What I think I’m seeing is that ships that are at sea are mostly lollygagging around. Ports seem very empty. Destinations appear to be almost completely empty. I’m sure there’s data out there to support or disprove my thesis, but all will become clear soon.
I have a narrative on the last few days. Here’s some points:
1) US and cruise chiefs met Saturday under the cloud of Pacific Princess and with other alarming information just bubbling up. I’m pretty sure there were clear negative indicators in Florida over the previous week that were at best willfully ignored, at worst understood and suppressed.
2) while wanting to be supportive of the business, I think the administration likely laid down the law on avoiding another Pacific Princess. And put the onus squarely on the business to make sure it didn’t happen, and that if it did they would own it.
3) public messaging changed quite dramatically on Sunday. Public health official’s concerns were winning the day through the weekend. I mentioned the State Dept announcements earlier.
4) Pence made specific mention of at least one other ship they were interested in. Can’t remember the details, but there could very well have been others. One other ship I was watching as likely known infected was due in two days ago but is now loitering around Grand Bahama.
I’m going to venture that limited or possibly full onboard testing started on the weekend across multiple ships, and after positive results started pouring in, the magnitude of the problem became clearer.
I’m also convinced that no ships with known cases will enter port in the US. Not their problem.
I’m not going to speculate much further, but if ports insist on seeing negative test results for all passengers and crew in order to land they may remain largely empty. There are some very tough decisions ahead on how to deal with this, and the magnitude of the challenge may be much higher than anybody was expecting.
Just dug out a post that I made to Trawler Forum when the subject was introduced. Feb 17. It didn’t get much traction then.
I was pretty much bang on. But it’s not a couple. It’s much more than that.
Anyway, I’ll offer up my highly individualized plan for social distancing and how I got there. There’s lots of credible information out there, so I’m not going to try to explain too much.
Not long after I started following CV-19 closely I started thinking about risk. It’s the kind of guy I am. I like to make qualitative decisions and manage risk. Get the big stuff right and don’t sweat the small.
Question one: How afraid am I to get the virus personally? For me, not terribly. I’d likely survive, and for the moment I have top notch care available locally. I don’t work or care for others, so a stint in the hospital wouldn’t be a huge disruption.
But that’s just the beginning. Think about your close circle. Those who are most at risk of catching the virus from you if you become infectious. People you work with. Family. And identify those who are high risk From what we know age is the big leading indicator, but there may be others with health concerns.
For me, there are really only two people who are at significantly higher risk from the virus in my immediate orbit, my mother in law Kathleen and my sister Susan. I’m in regular close contact with both of them. The other people that I have regular contact with are not at high risk, so I am less concerned with unknowingly infecting them.
I had a brief chat with Susan about this. She has a terminal illness and is carrying on with life in downtown Toronto, walking to work at her government office and free of interactions with the general public. She’s relatively protected there. But she still goes out to community events and her church. I can’t fault her choices, and am relieved that I’m off the hook. If she catches C-19 it’s not likely to have been from me.
Kathleen is a different case. She and I have lived under the same roof for more than 20 years. I love her dearly. She’s 77 and vibrant, but not invincible. So I’ve worked with other members of the household to implement a regimen that I hope will allow us to live together while taking appropriate precautions to protect her. It’s an evolving situation, but I’m pretty comfortable with it right now.
Lots more to come on this, but thought I’d throw it out.
I saw the C-19 term earlier on Trawler Forum, and I think I’m going to adopt it locally. I’m referring to the novel coronavirus, COVID-19.
I have many thoughts. And I’ve had several discussions today that have helped clarify things. It started with an early morning chat with a friend who I was very close to in my youth, and who is now an accomplished thought leader and business developer. I’ll call him David henceforth. And I’m hanging in Guelph with Samantha, Sarah and Kathleen. They provide perspective, comfort, and support as always.
The cruise ship thing is a done deal for me. I don’t need to obsess over the end. So I’m focused pretty much entirely on the virus now. The CCL puts have boosted my portfolio, and I laid down additional hedging about two weeks ago that I think protects me against the financial threats I see. They’re in lockstep with C-19 and this may well turn into a financial crisis in addition to being a health crisis. But there’s nothing more for me to do to there.
I want to describe where I come from on C-19. This is tough. I don’t operate like most folks. My perspective is idiosyncratic and largely self-formed. My twitter profile says I’m a pro-social hermit living on my boats. There’s a long back story, but I’ll try to be brief.
I used to work in data. Lots of it. Loved it. Spent 20 years with one data warehouse in the financial industry, from developer to end user to business ownership. Saw hundreds of millions of shareholder dollars spent supporting efforts to provide business leaders timely and meaningful metrics, and hence insights into their business. I have an undergraduate degree in computer science.
I’ve also made a habit all my life of surrounding myself with smart, thoughtful and generally level-headed people. Especially those whose experiences and perspective differ from mine. Samantha, my spouse of 30+ years, is probably the smartest person I know. She don’t operate like most folks either.
But when I say surround myself I mean it figuratively. My friends are few and scattered. I need very little social contact. I can happily spend days, weeks alone. Hence the hermit part. I’ve been involved in and welcomed into many communities, but have always resisted the pull towards the center. I’m a little too disjointed and intense for most folks, and am not big on assimilation. Hence my unique and self-formed opinions.
Pro-social? In an alternate universe I’d be a social science wonk. The most fascinating ideas I’ve tossed around (mostly internally!) in recent years are around technology and societal change. I continue to find interesting nuggets in history, geography, economics and political science. And I believe in good government and an informed and educated populace. I have followed US politics closely since I lived there almost 30 years ago.
I guess I should also offer up that I’ve lived in the US, Australia and New Zealand as well as Canada, where I was born. Over the past two years I have spent much of my time in the US. I’m a very proud Canadian, I support the current government, and I have confidence in leadership at all levels. I would identify as a Democrat were I to vote in the US. Hope that doesn’t slam any doors.
I got rid of broadcast television in the mid 1990s.
And that leads to perspective.
The outcome of the 2016 US election turned my world upside down, because I really believed for a long time afterwards that data and analytics – my world – had played a little recognized but significant part in Donald Trump’s victory. It also put up a few social barriers for me. I didn’t want to be a hater, and found the anti-Trump rhetoric that ramped up quickly overwhelming and disturbing. It’s really easy to get sucked into the fire.
So in response, I cocooned. I abandoned the personal arguments and debates and set out on my own to get some answers to what’s going on around us. It’s been an interesting trip so far.
My boat travel has been a key part of the process, allowing a wonderful local perspective across often diametrically opposed landscapes. You don’t really know New York City until you’ve followed the garbage and explored the ports in New Jersey. The last couple of years are documented here.
And the internet. Ahh, the internet. So full of promise… It more than anything else enables me to lead the life I do. Like all things a double-edged sword. I got pretty spooked in 2017. My challenge was perspective. I wanted a balanced, consistent view of the world.
My actions in 2017 are what I think gradually brought clarity. Essentially I went on a media lock down. I picked a small number of online social communities to hang out in, and settled on a handful of reputable major news providers. I spent a few months getting the right mix to establish a baseline, and it’s been largely unchanged since. For me the payoff since has been huge, just having a consistent daily diet of news and analysis through the last couple of years. We all need anchors, and I feel comfortable that mine is well set.
One more relevant piece of back story. I have a history of following some types of disasters pretty obsessively. Katrina and Fukushima as well as several aviation incidents kept me glued to the screen for weeks, and provided me with an approach and framework for selective deep dives to build an overall narrative. And while I largely sat out the 2008 financial crisis racing Lasers and riding bikes in Canberra I pretty much put the pieces together afterwards. C-19 isn’t my first rodeo.
So, getting back to this disaster. Being a news junkie and generally interested in this sort of thing, I’ve been following developments from the beginning. When the Pacific Princess news started coming out my attention was captured, and has been there ever since.
I’ve recently expanded my toolset to include twitter, and I’m settling in to share my thoughts and perspective here and there as we go through this. Happy to have you with me. @jeff_zolo
Wow. I’ve been muttering that for the last 24 hours. But I’ve finally put the pieces together I think.
Those that haven’t read my earlier posts should read this one first.
The big final piece for me was recent US State Dept announcements saying (my words) 1) don’t go, and 2) we won’t rescue you from quarantine if you do. They’re getting ready to pull the trigger.
So, the big question is whether the cruise lines fold their hand immediately. One assumes they will. If they don’t they’ll be willingly and knowingly risking people’s lives. Cancel all future sailings immediately and get to work managing the fallout.
On that assumption, what to do with the passengers afloat? Here’s what I think will happen. I should note that the Caribbean trade is several hundred thousand passengers. I should also note that I expect this to happen world wide.
1) entry will be delayed until onboard inspections and testing can take place and results received. This is entirely at the port’s discretion.
2) many ships will fail testing and will be refused entry to the port.
What I’ve been wondering all along in my doomsday scenario is what would happen to the ships that get turned away everywhere. No port is obligated to take them. They don’t have home ports. They’re ‘international conveyance’ in the eyes of the WHO.
The recent CBC report on preparations at Vancouver and Victoria got me thinking of Halifax. Helluva place to moor a few dozen big ones. Fill the Basin.
It’s a remarkable thought. Are we ready to do this? Canada, that is. I’m pretty sure the US has landed its last infected ship.
I should note that I’m not an authority on any of this. Just informed speculation. I’ve been tracking this since Pacific Princess.