Wednesday, September 29, 2021

Wednesday Night Links

  • SARS-1 died out before it could get very far, but not before inspiring a whole program of research that, in the end, proved deeply advantageous to most of the SARS-1 genotype. Prominent virologists, entire governments and NGOs all fell under the mysterious spell of SARS, fantasising for years about its genes and embarking upon lunatic hunts for more SARS virions in remote Chinese caves. Ultimately, they succeeded in producing and releasing to the world a modified and enhanced version of SARS, SARS-2, which is 80% similar to the original SARS-1 genome. All those genes free to replicate widely once more. This new virus has an extended phenotype of its own, of course. It has hypnotised our whole world. A vast part of our pharmaceutical industry now works for the virus, producing genetic instructions for its most critical anatomical feature, its masterpiece, the spike protein. Most of our governments want nothing more than to inject instructions for spike into all of mankind. Not only does our slavish replication of virus RNA represent a victory for SARS-2 in itself. As with MDV, injecting instructions for legacy spike into billions of humans also facilitates spread in ways we did not anticipate and still do not fully understand. The worldwide public health establishment fought for a year to prevent the development of far more effective natural immunity to SARS-2, thus ensuring a clear path for the insane spike protein injections and their infection enhancements. And then there is all of the worshipful research on SARS-2, ever eager to cede this virus magical properties. Top to bottom, this is the behaviour of the extended SARS-2 phenotype. If you think this taking things too far, consider the grant proposal that the notorious EcoHealth Alliance, headed by Peter Daszak, submitted to DARPA in 2018. These are the famous American NGO collaborators with the Wuhan Institute of Virology, and the proposal represents a direct window onto the program of research that gave us second-edition new-and-improved SARS. The proposed “research” activities involve activities so obviously reckless that they border on evil: Relentless bat sampling in Yunnan caves thought to be the approximate origin of SARS, creating samples of chimeric SARS-related coronaviruses optimised to infect humans, introducing these optimised viruses to humanised mice so they might actually infect cells, spraying of aerosolised spike proteins or virus vectors into caves to “boost” bat immunity – these and more are what the scientists associated with EcoHealth Alliance proposed to do. It is at base a bizarre kind of scientised worship of SARS and its infectiousness, and beyond that an effort of the lingering extended phenotype of SARS-1 to resurrect itself in some form and return to human hosts. It succeeded. [eugyppius
  • The vaccines gave billions of people antibodies to legacy spike proteins, including anti-NTD neutralising antibodies and anti-NTD enhancing antibodies. Delta is evolving to escape the neutralising antibodies, but not the enhancing antibodies. Which is what you would expect. We have sown antibodies against one viral protein in the lungs of half of mankind, and that protein has now evolved slight modifications to use those antibodies to its advantage where it can, and to escape the rest. Remember, we are still talking about a single domain in the complex spike protein: There are other antibodies to RBD that still disadvantage Delta. The net effect is still that all of these antibodies, added together – particularly those against the RBD – hurt rather than help. There are, however, Delta strains with key escape RBD mutations. The authors of this preprint find that four such mutations, already out there in various Delta sub-strains, are sufficient for Delta to evade the anti-RBD antibodies more or less completely. [eugyppius
  • We found no significant difference in cycle threshold values between vaccinated and unvaccinated, asymptomatic and symptomatic groups infected with SARS-CoV-2 Delta. Given the substantial proportion of asymptomatic vaccine breakthrough cases with high viral levels, interventions, including masking and testing, should be considered for all in settings with elevated COVID-19 transmission. [medrxiv]
  • As I lighted the first bowl, what struck me was the heat. Without much moisture, the ribbons burned fast and sharp. Yet as I drew more slowly, a deep, earthen husk spread into my mouth, at once pungent and delicate, with floral hints that drifted above a rich and savory base. Over the next week in Italy, I smoked little else. Dario kept a brick of the tobacco at home, wrapped in golden paper with the words “Pur Semois” stamped on top, beside a drawing of a 1950s man and the name “Vincent Manil.” Before I left, I snapped a photo of the label, planning to buy some at home. This, Dario warned me, would be difficult. The tobacco was hand-prepared in the Semois Valley of Belgium and was nearly impossible to find anywhere else. [NY Times]
  • After a plumber told me about his hectic day, I advised him to ask for a raise. I informed him of the generous signing bonuses plumbers were receiving for job hopping. And that’s been my advice to every person I speak with who is doing the heavy lifting in today’s economy—ask for a raise or promotion. And for business owners with overwhelming backlogs, I suggest increasing prices until some sense of control is regained, or business is lost. A travel ball parent who owns a home restoration company told me that’s exactly what he’s been doing. He said he can’t keep up with his workflow and is so far behind he’s raising prices and turning away business. And for what it’s worth, he said if you’re in the market for new cabinets, good luck! [Cinnamond
  • We present a 20-week study of our clinical experience with a multi-component over-the-counter (OTC) “core formulation” regimen used in a multiply exposed, high risk population. The OTC core supplementation formulations used include zinc and zinc ionophores; vitamins C, D3 and E; and l-lysine. Analysis of clinical outcome data from our sample of 113 subjects − comprised of roughly equal sized regimen-compliant (test) and non-compliant (control) groups meeting equivalent inclusion criteria of age and overall health, including prevalence of COVID-19 comorbidities − demonstrates a strong statistical significance in favor of use of the core formulations. The statistical analysis exhibits significance even with an assumption of a sub-15%, even as low as a sub-5%, post-exposure symptom-presentation rate. [link]
  • Uncertainty about the demand outlook means capital expenditure discipline. That in turn means rents stay high and more of it can be returned to shareholders. It’s like tobacco! What is amazing about the 10% dividend yield is that MMP's 30 year debt yields 3.8% with 9.6% dividend yield. It is strikingly similar to the equity risk premium at Altria, whose 30 year debt yields 4% with 7.7% dividend yield on the stock. See how low Magellan's dividend yield got at the peak of the midstream boom in 2014-2015. It was yielding under 3% - yet their debt was yielding closer to 5%. Wow: if you had followed the equity risk premium as a signal to chose between owning the stock or the bonds, you would have been in their debt instead of their stock given the -200 bps spread. Now with a +580 bps spread it seems to make more sense to own the stock. [CBS]
  • One key requirement for our EV of the Year—in addition to fun, value, and mission fulfillment—is that it make electric vehicles more desirable to buyers to a degree that moves the industry forward. That's where the Mach-E stands out from the 10 other vehicles we evaluated. At long last, an automaker has given us an EV that competes head to head with Tesla on design, performance, price, and range, and it neither looks nor feels like it was built in a tent. It's the perfect vehicle to rewrite preconceptions that were formed when the vast majority of EVs were too small, too slow, too expensive to buy yet too cheap to live with, and hobbled by too-short range and too-spotty public infrastructure that wouldn't allow them to venture far from home. Plus, the Mach-E has the driving dynamics and design to push new buyers past mere acceptance of EV technology to excitement. [Car and Driver]
  • An 18th century French banker and philosopher named Richard Cantillon noticed an early version of this phenomenon in a book he wrote called ‘An Essay on Economic Theory.’ His basic theory was that who benefits when the state prints a bunch of money is based on the institutional setup of that state. In the 18th century, this meant that the closer you were to the king and the wealthy, the more you benefitted, and the further away you were, the more you were harmed. Money, in other words, is not neutral. This general observation, that money printing has distributional consequences that operate through the price system, is known as the “Cantillon Effect.” [Matt Stoller]
  • I'm a believer in the taking advantage of the net issuance anomaly (i.e. companies retiring debt and repurchasing shares outperform those raising capital). Where does the anomaly show up today? Industries with companies that are returning capital to investors are banks, tobacco, energy, miners, pipelines. Industries that are raising capital are electric vehicles and many types of growth and tech - especially considering stock based compensation. (Although some tech is negative issuance, e.g. Apple.) The net issuance anomaly is related to our Sector Rotation Value Strategy. One logical mechanism which would cause the net issuers to under-perform is that they are in the "over-investment" part of their industry cycle. They take the proceeds of their equity and debt issuances, and they expand capacity, driving each other's economic rents down. [CBS]
  • Thought I would thread something quick on ETF economics to dissuade those of you thinking about launching your own ETF. As many of you know, all registered investment companies (RIC's) operate through a separate trust, which is governed by a board of directors and has its own counsel. An ETF is a RIC just like a mutual fund. Setting up a trust is very expensive.  Operating a trust is very expensive. Which is why small, single fund operators like Goobs typically rent someone else's trust to launch their product(s), in this case Advisor Shares'.  I have been on seven different trusts in 16 years. Here is a standard proforma P&L of renting someone else's trust.  The typical ETF breaks even at around $30mm in AUM.  In other words, at anything below $30mm, in this case, you as manager cut a check back to the trust for operating costs. In this example, between $10-12mm in AUM means you pay about $150,000 per year for the privilege of running an ETF.  Obviously, without a distribution plan to get to $30mm+, this becomes a fool's errand (trust me on this one). My guess is Goobs is planning on converting (gradually) many of his run-of-the-mill equity allocations to this ETF.  Instead of Ross choosing the Schwab drop-down ETF model for Mrs. Havercamp, he will just jam her into this steaming pile of garbage. [Peter DeCaprio]
  • Ishmael doesn't tell us a whole lot more about how lays worked; there was no need to for purposes of the story.  But fortunately for the curious, the system is very well explicated in a scholarly, highly detailed study of the nineteenth-century whaling industry, In Pursuit of Leviathan, by Lance E. Davis, Robert E. Gallman, and Karin Gleiter, published in 1997 by the University of Chicago as part of the National Bureau of Economic Research Series on Long-Term Factors in Economic Development. First, to clear up one misconception, the lays were not sequentially numbered from the largest share to the smallest.  In other words, the system didn't involve person A getting a 10th, B getting an 11th, C getting a 12th, and so on, until every last investor and sailor was accounted for.  For one thing, such a system would never work mathematically -- you would exceed 100% by the time you got to the 26th share. Instead, the numbers of the lays jumped.  For example, in the November 1843 voyage of the Abigail of New Bedford, the "shortest" lay (i.e., the largest share in compensation) was, unsurprisingly, the captain's, at 16 -- meaning one sixteenth (or 0.0625) of the profits, assuming there were any.   The first mate's lay was 29, the second mate's 50, the third mate's 72.  The cooper -- typically, one of the most important artisans on a whale ship -- got the 55th lay.  Each of the harpooneers (a/k/a "boatsteerers") got the 95th lay.  All the remaining lays were well above 100.  Added up, the lays totaled about three tenths, which left about seven tenths for the "owners," who could probably be more accurately referred to as partners. According to In Pursuit, a 70-30 split of the profits between the owners/partners, on one hand, and the captain and crew, on the other, was typical.  In addition, looking at data from over a thousand whaling voyages out of New Bedford, the authors of In Pursuit found that the distribution of lays followed a pattern: captains tended to get lays in the mid-teens, first mates in the 20s, second mates in the 30s or 40s, third mates in the 50s or 60s, etc. [ahab-beckons]

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