March 25th Links

• The Compression of Morbidity paradigm was introduced as a hypothesis of healthy aging in 1980. It was a counterpoint to the then prevalent paradigm of the "Failures of Success", which argued that increasing life expectancies would lead inevitably to additional years of chronic debilitating illness, economic collapse, and increasing misery for many seniors. In its simplest form, the new thesis was that "the age at first appearance of symptoms of aging and chronic disease can increase more rapidly than life expectancy." Since most of the morbidity, disability, frailty, infirmity, decreased health-related quality-of-life, medical care costs and other descriptors of ill health (considered here as synonymous) occur later in life and are bounded at the lower end by their age at onset and at the upper end by the age at death; a more rapid rise in the age at first chronic infirmity than in the age at death would squeeze total lifetime morbidity into a shorter span, and thus reduce infirmity. The health strategies necessary to attain morbidity compression, it was conjectured, would be based largely on postponement of ill-health by prevention of chronic disease. [Fries]
• As I see it, there are basically two possibilities: The virus is as dangerous as we feared and in particular sends far more people to intensive care than seasonal influenza, but due to a combination of luck in the way the epidemic initially spread, a very aggressive eradication policy launched early enough and/or a climate unfavorable to the spread of the virus, a number of countries have managed to stop the epidemic before it kills many people, while in other countries where these conditions were not present many people have already died and many more will die in the coming months, although sometimes you can't see that yet because of the criteria used to count the number of deaths ascribed to the coronavirus. For some reason, something went wrong in Italy and China at the beginning of the epidemic, which explains the large number of deaths there, but in reality the virus is less dangerous than we feared and the number of deaths will eventually subside, which is already the case in China and is perhaps beginning to be the case in Italy. The situation will improve in the countries that at the moment appear to be on course to follow Italy's trajectory and the number of deaths will not suddenly explode in those where it’s still low. Similarly, in the countries that now seem to have managed to stop the epidemic or even to prevent it from ever starting, there will be no resurgence or rapid spread of the epidemic in the coming months. [PL]
• Angiotensin converting enzyme 2 (ACE2) receptors have been shown to be the entry point into human cells for SARS-CoV-2, the virus that causes COVID-19. In a few experimental studies with animal models, both angiotensin converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs) have been shown to upregulate ACE2 expression in the heart. Though these have not been shown in human studies, or in the setting of COVID-19, such potential upregulation of ACE2 by ACE inhibitors or ARBs has resulted in a speculation of potential increased risk for COVID-19 infection in patients with background treatment of these medications. [link]
• Despite the market movements this year (U.S. 10-Year inflation is now priced at 0.79%), the inflationary inflection point is actually nearing. With the impact of the COVID-19 virus on financial markets and economic activity, the Federal debt leverage is about to balloon to unprecedented levels. Inflows will decline (capital gains taxes, excise taxes, corporate income taxes) at the same time that the balance sheet expands (for unemployment and emergency stimulus funding aimed at stabilizing the incomes of workers). This almost certainly marks the end of the almost 38-year bull market in bonds, with profound implications for what recommended bond and stock asset allocations should be going forward. Once this becomes more apparent to the market, and the short-term crisis abates, investors will want to own "hard asset" oriented businesses that will be inflation beneficiaries. However, these types of companies have been amongst the hardest hit in our portfolio this year, as markets fail to look past the economic slow-down over the next several months. As investors ultimately turn toward inflation beneficiary businesses, though, there will not be enough supply (liquidity), as these – the mining, energy and other such sectors – have effectively been eliminated from the S&P 500 and other major indexes in favor of mega-cap stocks with index-centric liquidity. In this event, such a reversal could be both rapid and of great magnitude. [Horizon Kinetics]
• I don't know why more people aren't worried about this. If there is no down side to increasing spending by 10 percent of GDP, why doesn't the government do so all the time? I think that the answer is that eventually you turn into Zimbabwe, with hyperinflation. Hyperinflation is like a virus, in that by the time you can see it, it's too late to stop it. Hyperinflation destroys the social fabric. It's something to fear. [AK]
• You have to choose between surrendering to the virus, or an economic crash. You want to choose surrender to the virus, but you will get your economic crash anyway. An uncontrolled epidemic is probably going to last longer than a 2-month lockdown (even much shorter if you instituted it earlier), resulting in maybe a shallower but more protracted economic collapse. [Cochran]
• There is very substantial heterogeneity in published estimates of case fatality risk for H1N1, ranging from less than 1 to 10,000 per 100,000 infections. Large differences were associated with the choice of case definition (denominator). Because influenza virus infections are typically mild and self-limiting, and a substantial proportion of infections are subclinical and do not require medical attention, it is challenging to enumerate all symptomatic cases or infections. In 2009, some of the earliest available information on fatality risk was provided by estimates based primarily on confirmed cases. However, because most H1N1 infections were not laboratory-confirmed, the estimates based on confirmed cases were up to 500 times higher than those based on symptomatic cases or infections. The consequent uncertainty about the case fatality risk — and hence about the severity of H1N1 — was problematic for risk assessment and risk communication during the period when many decisions about control and mitigation measures were being made. [NLM]
• I think there is some connection between the subsequent decline of religious affiliation and the total rout of social conservatives on issues of same-sex marriage and this sense that people had in the mid-2000s that religious conservatism was associated with a totally incompetent president and a botched war and then a financial crisis. [Douthat]
• "Why did these companies sacrifice long-term financial health for short-term stock prices gains?" The answer lies in a little-noticed line on their cash flow statements labeled, "stock based compensation." On average, these companies each spent $200 million per year on issuance of options to top management. Those very same managers were the ones who decided it was a good idea to leverage the balance sheet to buy back stock. At the very same time, they also decided it wasn't a good time to be a holder of those shares and so they sold, collectively, over half a billion dollars worth of their own shares in the open market. [Felder]