WSJ: “The U.S. Travel Association projected Tuesday that total spending on travel in the U.S., including transportation, lodging, retail, attractions and restaurants, would plunge by $355 billion for the year—and that 4.6 million American jobs would be lost.”
“Hotel owners in most every major urban market in the U.S. are now experiencing occupancy levels around 20% or less, a rate that will make it challenging to meet payroll, let alone pay other expenses and meet debt obligations, owners said.”
“American Airlines Group Inc., the world’s biggest carrier, will fly to only two long-haul destinations—Tokyo and London. Executives at British Airways, Korean Air and other large airlines have said they are in a battle for survival. Many smaller carriers, which form the bedrock of the 13,000 new jets ordered from Airbus SE and Boeing Co., have less access to new capital, and aren’t expected to survive.”
Transmission is mostly within families. “In China, human-to-human transmission of the COVID-19 virus is largely occurring in families.”
At least this report doesn’t seem to think that asymptomatic infection is important. “Asymptomatic infection has been reported, but the majority of the relatively rare cases who are asymptomatic on the date of identification/report went on to develop disease. The proportion of truly asymptomatic infections is unclear but appears to be relatively rare and does not appear to be a major driver of transmission.”
Incubation period of 5-6 days
Based on available information, the median time from symptom onset to laboratory confirmation nationally decreased from 12 days (range 8-18 days) in early January to 3 days (1-7) by early February 2020, and in Wuhan from 15 days (10-21) to 5 days (3-9), respectively.
“China has a policy of meticulous case and contact identification for COVID-19. For example, in Wuhan more than 1800 teams of epidemiologists, with a minimum of 5 people/team, are tracing tens of thousands of contacts a day. Contact follow up is painstaking, with a high percentage of identified close contacts completing medical observation. Between 1% and 5% of contacts were subsequently laboratory confirmed cases of COVID-19, depending on location.”
8. What is the secret to South Korea’s success? 74 cases March 18th down from 909 at the peak. Done so without taking authoritarian measures. Tested more than 270,000 people. This, along with contact tracing, and case isolation.
Still early, because a lot of their cases were within one church group.
Earlier experience with Mers showed laboratory testing is the key.
Korean Center for Disease control developed tests, cooperated with diagnostic manufacturers to develop commercial test kits.
Close contacts and those with minimal symptoms whose family members are free of chronic diseases and who can measure their own temperatures are ordered to self-quarantine for 2 weeks. A local monitoring team calls twice daily to make sure the quarantined stay put and to ask about symptoms. Quarantine violators face up to 3 million won ($2500) fines. If a recent bill becomes law, the fine will go up to 10 million won and as much as a year in jail.
Still, the numbers of new cases have dropped the past 2 weeks, aided by voluntary social distancing, both in the Daegu-Gyeongbuk region and nationwide. The government advised people to wear masks, wash their hands, avoid crowds and meetings, work remotely, and to join online religious services instead of going to churches.
The government hopes to control new clusters in the same way it confronted the one in Shincheonji. The national testing capacity has reached a staggering 15,000 tests per day. There are 43 drive-through testing stations nationwide.
Updated data below. For the 29 states I have data, there is a total of 1,822,979 new unemployment claims over the past week. However, of the 29 states, some states only report claims for a few days. If I assume the average claims of the non-reported days are the same, this comes out to 2,800,000 claims for the week for the 29 states. This is about 2.5% of the total civilian labor force in these states. Applying this number to the non-reporting states, this gives a total of 4,146,920 new unemployment claims for the week.
This calculation assumes that (i) for states that have reported, non-reporting days are similar to reporting days, and (ii) states that have not reported are similar to states that have reported.
March 17: The data is sparse of course at this point. One data point is the New York Manufacturing survey, where an overall index of activity fell by 34 points, the largest fall ever and similar to level seen during the Great Recession.
In Europe many factories are shutting down, either because of the virus or because of supply chain disruptions. France’s PSA (Peugeut, Opel, etc) is closing all European plants. Michelin is shutting factories in France, Italy, and Spain for a minimum of one week. Volkswagen is set to shut its main plant within days because of supply chain issues.
There can and should be resistance to the government just handing out cash to the corporations. See this nice Op-Ed by Tim Wu. For years airlines have abused their market power to saddle consumers with absurdly awful service, high feeds, and low quality, while making record profits. Instead of saving the profits for a rainy day, they have saddled the companies with debt, and used most of their cash flow for dividends and buybacks.
In France, a number of packages are being considered: €32 billion in deferred tax and social security, €8.5 billion for two month payments to workers temporarily laid off, €300 billion for bank loans for businesses.
The market for short term commercial paper is freezing up. The difference between the three-month commercial paper interest rate and the benchmark government overnight indexed swap rate increased to over 1 percentage point, from 0.24 points at the start of the month. Total amount of commercial paper outstanding is $1.1 trillion.
Bank lending is also freezing up. Overnight interest spread for between bank lending is increasing.
High yield debt
The performance of corporate bond markets has held up surprisingly well. The S&P high yield bond index is down about 13% as of March 16. The cost of insuring bonds against default, however, has been rapidly increasing
Muni bond market is doing okay, only off 1.2% as of March 16.
Redfin CEO: Housing is down, but from high levels. Interesting commentary on Mortgage market: “One bullet that the government fired to help housing this week didn’t hit its mark. Even as the Federal Reserve has lowered the federal funds rate to zero, mortgage rates have increased about 30 basis points, from a low of nearly 3% in early March. Money has only gotten cheaper, but the people originating loans can’t keep up with demand; volume is so high that lenders are taking profits.”
Although interest rates have been pushed to the zero lower bound, mortgage interest rates seem to be increasing, at least for now. The reason is that banks don’t want to hold the mortgages, and nobody wants to hold mortgage backed securities. Spread between 10 year treasury and mortgage rates is now over 3 percentage points.
Although mortgage rates are increasing, it seems that mortgage refinancers are not yet informed about this, and they are submitting refinance applications at a record place.
March 16 – Airlines are in trouble and already there is talk of a $50 billion bailout. International travel is at a standstill, and companies are canceling routes at a furious pace. United Airlines is cutting its flying in half in April and May.
This of course brings back memories of the post 9/11 airline bailouts, where the government handed out $5 billion in cash to airlines and billions more in subsidized loans, insurance payments, and other benefits, although not all of the loans were used up. It should be noted that several airlines went into bankruptcy around that time, including United Airlines and US Airways.
Restaurants are struggling to survive. 5 major cities and several states have shuttered all restaurants. Foot traffic down 50% in many cities. Many restaurants going out of business and laying off workers.
Retail: many stores closed until end of March. As of yet, still paying workers. Most online stores staying open.