YouSaid · the spoken record

Erik Townsend

lines on the record: 44
first: 2020-02-12
most recent: 2020-02-12
sittings or episodes: 1
sources: podcast

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“Sure, macro voices is a weekly podcast that is specifically targeting professional finance and very sophisticated investors. It was created to fill a gap where there's just so many retail podcasts teaching newbies about investing, but there wasn't really something that was targeted at very experienced investors and finance professionals. So that's what the podcast is about. It's at macrovoices.com. The main podcast airs on We do a couple of extra smaller interviews every week as well. And it's all at macrovoices.com, or you can find us on iTunes or other feed readers just by searching for macrovoices”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Could have a really profound positive impact on the humanitarian story. Maybe it saves a lot of lives. And that's wonderful news. But I don't think it really has that much of a positive impact on the economic story because we're still going to have global trade screwed up. We're going to have travel screwed up. We're going to have the supply chain problems that we talked about. There's a whole bunch of stuff that is going to completely screw up the global economy. And this drug is not going to make one iota of difference. So I don't mean to minimize it and say it's not good news. It's definitely good news. But it's good news in terms of saving lives. I don't think it's going to save us from the economic impact, which I believe is going to be much worse than what markets are presently discounting.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Had coronavirus, and it appears to have helped to cure them. Well, that's wonderful news. But the thing is, the stock market went racing up like, oh, they cured it. It's no problem. Look, the situation here, if we have a global pandemic and there's this wonder drug for the sake of argument, that it is fantastically effective and it brings the case fatality rate from, you know, 12% down to 0.1%, which is about what the normal common flu is, because we can cure it in most cases. Well, first of all, that's unrealistic. It's not going to help that much. But suppose it did. Okay, you've still got a global pandemic with a very high serious complication rate where you're going to have the risk of overwhelming hospital facilities in many countries around the world. You've still got a major global economic event. Now, at risk of sounding like a greedy market guy, this drug”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Preston, I don't know if I'm pronouncing it correctly, but the Gilead drug is called Remdesivir or Remdesevir, something like that. The thing to understand, first of all, this is a drug that has never been improved for use in any country anywhere on Earth. It was originally developed to treat Ebola, and it didn't really work. And there's a lot of good reason to think that it will work with this virus. And curiously, China filed a patent way back on January 21st. That's very early in this story for the use of this particular drug to fight the novel coronavirus. So it does appear to have lots of promise. It was used apparently, and I don't know how this happened. Supposedly it's never been approved for use in any country, found that statistic, but apparently it was used, I guessed, on some kind of exception basis for this one patient in Sonomish, Washington who”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Airline travel and a lot of international trade. And of course, OPEC will institute deeper cuts. There will be things that will be done, but it won't be enough.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, yes and no. I think that as soon as we get to 5% down, central bankers are doing their own version of panicking and they're going to come right into the rescue. The question is whether the stimulus or the good news from stimulus or the bad news from a global pandemic crippling the global economy, which one is a bigger piece of news? And again, we don't know if it's going to be a global pandemic yet. That's a very real risk that I don't think people are adequately discounting, but it's not a certainty by any stretch of the imagination. So we don't know what's going to happen. If it does happen, I think that whether or not the stock market really tanks and crashes or not, I'm not sure because it's entirely possible that that central bank liquidity will save the day once again. But I don't think they can stop the crude oil market from crashing if we have a global pandemic that just shuts down.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Riding to the rescue with a huge amount of stimulus, and markets are conditioned for stocks to rally on that stimulus. I don't think that the stimulus is going to save the copper and iron ore and particularly crude oil markets. So most of my positioning right now in terms of downside is puts on crude oil futures.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Even if the fears and hesitations are not based on rational logical concern, they may still have a debilitating economic effect. So the real question is, does this turn into a global pandemic? And I think the answer to that is what we've seen in China says it's on a path that it should, even if that global pandemic does not have a very high fatality rate. It's still going to have a debilitating effect on the global economy. That will result in massive money printing, massive stimulus. For that reason, I tend to be more bearish on commodities than I am in the stock market. Believe it or not, although I am in the interest to full disclosure, I'm holding puts on the S&P right now at the 3,200 strike. I think it's very possible that we could get a panic that causes a big sell-off. But I know central banks are going to come.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“SARS and other viruses. Okay, okay. But if there is a pandemic The case fatality rate is not that high. So the people are not dying, but it's requiring all these hospitalizations. It's going to freak people out so they don't want to travel. And it's going to completely annihilate airline travel. Similarly, if the studies that we're seeing that say that this virus can live on surfaces and still be contagious by touching that surface for as much as 12 days later, it's going to affect trade. Who wants to buy parts from China if the parts might have germs on them? Now, those parts could be disinfected. There are ways to overcome these things. But remember, there's a psychological factor here. The part that I'm getting from China could have a virus on it that could kill me. And I've got to trust that somebody ran it under this ultraviolet light that they were supposed to run it under in order to kill the virus so it doesn't kill me. Do I want to take the chance or do I want to just avoid it? and not deal with it if I don't have to so”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Down, a much bigger wave down, particularly in copper and crude oil. I don't know that much about the iron ore market, so I don't want to comment on it. But in the crude oil market, which is primarily what I trade, look, the crude oil market depends in many respects on transportation, the airline industry, shipping industry, and so forth. That's where a lot of the energy gets burned. If you have to shut down airline travel, either by conscious decision of governments that they're banning travel, or simply because people are afraid to travel because the virus gets worse. And I think it is going to turn into a global pandemic. Now, a lot of people are saying, oh, wait a minute, it's not as bad as you think. There's a lot of evidence, and this is true. There is evidence to say that the case fatality rate might be lower. We should probably come back to case fatality rate, but it might be considerably lower than”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, first of all, copper crude oil, iron ore are all way down, and most analysts are now looking at this and saying, okay, these things are oversold on a technical basis, and maybe there's been an overreaction to the coronavirus, and this is your buy the dip opportunity. I don't think that that's right. Now, one reason it could look right is the scenario we talked about a minute ago, which is if they do announce a go back to work program because they want to keep the economy going, the markets are going to respond by saying, okay, it's all over, you know, the worst is over. They've fixed it now. I don't think that's the right way to look at it, but you could see a big bounce here. The way I look at it is we've gone through the first wave down. There's a bounce that happened at the end of last week. Maybe that bounce is not over yet. Kind of depends on the news flow. But I think there's another really big wave.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That involves sacrificing human life in the name of protecting the long-term interests of the country. They're much more inclined than Americans would be to think about what's best for the whole, even if it completely violates the rights of a few individuals, and in this case, a lot of individuals. So, Eric, we talked a little bit about the stock market, the bond market, QE, and you lightly mentioned commodities, but I know this is your forte is commodities. Talk to us how you see commodities playing out in the next quarter.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Of the country and its economic mission is paramount to them. And one of the things that's different about Asian culture and particularly Chinese culture from American culture is that they don't really have the emphasis that we have on individual rights and making sure that every person always has their rights respected. They tend to make decisions in terms of what's best for the whole, what's best for society overall. And if they had to make a decision, which was to sacrifice a bunch of people, let a whole bunch of people die in order to keep the economic engine of the country going, I'm not going to say that's what they would do because obviously, I mean, from a humanitarian standpoint, I would never make that accusation about the people or the leadership of China without knowing. But what I would say is culturally making it difficult to say.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, they have to. And I've been reading a few different pieces, including this one that I tweeted today. It's the way they're thinking about this is the entire nation's economy is dependent on their export business. They can't just shut it down. That's not an option that they're willing to consider. But what's the other option? Take people who are still contagious and put them into an environment where they can transmit the virus to other people. They're too unacceptable options and there is a political struggle, I perceive, going on behind the scenes. Now, who's in charge? Who's winning that debate? Obviously, they can't send everybody back to work and everybody infects each other and they all die. What's going to happen? My best guess is the Communist Party will make whatever decisions they think are most likely to make sure that the Communist Party stays in power. That's the most important thing. The important”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Things down until this virus dies out, or else we could kill off our entire population. We don't have any choice. It's the only thing you can do. So, you think that that's a much higher probability as well based on the way you're describing this that you think that they're going to go back to work?”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Oh, yeah, there's definitely one that I really want our listeners to understand because it's not even possibility. I think it's a prediction. Imagine this. The worst thing that could happen to you as a podcaster, Preston, is we publish this podcast and boy, this is some gloomy stuff that we're talking about. Two hours later, the Chinese government sounds the all clear and announces that the quarantines are being lifted and workers can go back to work. Well, don't we look like a couple of knuckleheads? Everybody would be all over your Twitter feed ridiculing you. I can't believe you two idiots don't know what you're talking about. Why are you doing a podcast? Look, here's the deeper level that you need to understand. What's going on right now in China? And if you look at my Twitter feed, I just posted the minutes of a meeting from China, Google translated into English that provides a lot of insight into this. There's a really big debate going on where one side is saying from this report that came on the 29th, we got a shot.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Have to use the same tactic of completely shutting things down and quarantining people, potentially entire cities, in order to stop it from spreading.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Goes through the process of either getting sick from it or not getting sick from it or what have you, and then 2.7 days go by. If you can keep people from coming into contact with other people for a certain period of time, you can contain it. So the point is this report perfectly explains the actions of the Chinese government. The only way to contain it when it starts to get out of hand is to shut things down so that people just don't interact with other people. And that's the only way to contain it. And that explains why they're shutting down other cities. Now, again, it's not in this report, it's in other reports where they've talked about how this is a racist virus. It picks on Asian people. Well, we don't know whether or not we're going to see the kind of R0 value in the spread of this virus in Western countries like the United States. But if it's anything close to that, then we're going to”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Scary be very worried about it. He said the six and a half percent case fatality rate he sees some flaws in their analysis. Now, obviously, this is way over my head, so I don't know what the flaws are. Read Dr. Eric Ding's analysis if you're knowledgeable about these things and you want to know. But the really, really important part of this report to understand is they said the only way to manage this is you can get the R0, which is 4.08, down to about 1 if you can contain the incubation period. In other words, if you can prevent people from having exposure to other people, for it's only about 2.7 days, I think was the number in the report. But remember, just shutting down or locking down a city for 2.7 days isn't enough because you've got to cover when people got it and how long they're contagious for and so forth. So you've got to lock things down so that whoever has it.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“As I described earlier, the combination of that high R naught value plus asymptomatic transmission means that it is just freakishly scary in terms of how transmissive this is, how quickly it spreads, and how impossible it is to contain it. So you say, okay, it's spreading very, very quickly. You can't use the thermometers and stuff. It doesn't help to contain it. That doesn't work. They also said in this report that they thought it might have a similar case fatality rate to SARS. And the good news on this particular point, Dr. Eric Ding, who's an epidemiologist at Harvard University, did a whole Twitter thread where he commented on this report from the China Academy of Sciences. And what he said is the R0 at 408 looks like very credible analysis. He agrees with their analysis. He says that's super.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That report in particular is the one where it all came together in my mind. I had the aha moment there. And the way to think about this is start with, what the heck is going on in China? We're hearing that this thing, according to a lot of people, is just a really bad seasonal flu. It's not as deadly as SARS. Why the heck are they locking down entire cities so that more people than the entire population of the United States are on lockdown? What the heck is going on in China if this is just the seasonal flu? Well, this report on January 29th from the Chinese Academy of Sciences, it's not yet peer-reviewed because things are happening very quickly here. This is a crisis situation. We don't have time for a peer review cycle, but it is a credible academic paper written by credible academics who have been published before in peer-reviewed journals. And what they say is, first of all, the R-0 value they estimate at $4.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, once again, great minds think alike, I guess. I think that I'll take it one step further than what you just described, which is what happens when we get inflation and the inflation starts to get to be too much. Well, the historical approach to solving that from a policy standpoint has always been raise interest rates. Paul Volcker himself, before he died, has publicly said, you can't do what he did back in the 80s to fight inflation next time around because that was only possible due to a relatively small amount of outstanding national debt. With the amount of debt that we now have, you can't raise interest rates substantially, especially not during a crisis because you would bankrupt the federal government and make it impossible for them to roll their debt forward. So if you can't increase interest rates to fight inflation,”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Precedent where future quantitative easing becomes more of a helicopter money kind of event and it starts going to social programs and all of a sudden you've got universal basic income and healthcare for everybody and forgiveness of college debt and free tuition and so on and so forth all coming out of central bank money printing as opposed to taxes at some time in the future. I think we could be headed there. Maybe the response to the virus will be the pivotal event that gets us out of the old style of quantitative easing and into a new helicopter money style. I'm not sure, but I think it's a distinct possibility.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Proven that you can conjure trillions of dollars out of thin air without taxing anybody. That's great news. It's time to stop giving that money to rich people and start using it to bail out Main Street, not Wall Street. And there's some fallacy to that argument that they're giving money to rich people because it's not really giving money to rich people per se. But you know that political rhetoric is going to sell and it's going to sell well. And I think that what you could get to and maybe the virus response is what gets you there is where people say, look, yeah, we need to have central banks conjure money out of thin air and we need to do a lot of it. But we need to use all of that money to respond to the virus. We're not going to buy any bonds from primary dealers. We're not going to give any money to institutional investors. We're going to directly monetize an emergency response to a pandemic outbreak. And that potentially sets a new...”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, you've been reading my mind once again, or great minds think alike. I'm not sure which. Something that I've predicted for years, Preston, as you know, is I've said, look, everybody has it in their head when I say everybody, I mean investors and financial markets have it in their heads that quantitative easing is good for asset prices because the way quantitative easing as we know it works is they buy bonds with the money that they conjure out of thin air, whereas the money come from. It comes from institutional investors that were holding those bonds that puts a whole bunch of money in their pockets. What do they do with it? They use it to buy other risk assets, whether it be stocks or what have you. And that's what's driven asset prices. Everybody's assuming that it's going to keep working that way indefinitely. And what I've predicted, and I thought it would be maybe the political cycle as we get into later in this election year, I've said, I think at some point politicians, particularly left-leaning politicians, are going to say, look, it's time central banks have”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's where this is headed. Now, I think that that logic is going to break down and break down hard when they realize just how bad this could be if it gets to its worst case. Again, but if we get something that even begins to look like what's happening inside of China across the rest of the world, it's so big and it is such a huge burden on global growth that it's going to be much bigger than anything that central banks can overcome through stimulus. On the other hand, At some point, this will play out. It'll be over. And you can expect just massive stimulus. And I think that's eventually going to fuel a V-shaped recovery, no matter how bad it gets, you know central banks are going to be there to drive the recovery back to wherever it needs to be. So I think this is going to get really ugly. And I don't know whether the money printing is going to happen before, during, or after, or all of the above.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Think there's a huge amount of central bank accommodation coming in response to this. The thing that we don't know is whether it occurs preemptively if the authorities are smart enough to see what's coming and they do a whole bunch of extra stimulus. I think that that really is what has fueled this stock market rally. You know, what we're seeing right now is copper crude oil and iron ore are all showing very, very ugly looking charts. They are not pretty at all. But we're at all-time highs on the stock market. How the heck is that possible? I think the answer is because central bank liquidity has fueled these markets so far, so long, everybody's used to it and the attitude of everybody on Wall Street is, hey, every time we've gotten bad news in the past and central banks respond by creating money out of thin air, the ultimate result ends up being higher asset prices. And I think people are speculating that”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“To that, which is right now the exchina data, where is it growing the fastest? Thailand, Indonesia, and Philippines, which are all places where the weather is quite warm right now. So we've already got warm weather in those places, and the outbreak is starting to occur there. We've still got very small numbers outside of China, so we don't know yet how fast it's going to grow. There is some data that suggests the case growth rate in China has already peaked, frankly.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Imagine if you had an investment that returned 10% per day of compound interest. Needless to say, it's multiplying itself many thousands of times over very, very quickly. But at least it's 10% and not 40%. The other thing that we've got going for us maybe is although it's not really known for this particular virus, research on other coronaviruses has said that it tends to get killed by hot weather. A lot of people think that what really ended the SARS outbreak was warm weather. And there have been some studies that say the amount of time that the contagious virus can live on surfaces is dramatically longer at four degrees Celsius as opposed to 30 degrees Celsius or 25 degrees Celsius, which is like 75, 80 degrees Fahrenheit. Now there's also unfortunately a counter argument.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“People and Asian men, particularly, are at the greatest risk. So that's not good news for the rest of Asia. This could easily spread across Asia, but it appears that the contagion rate and the infection rate is lower with non-Asian races. And one of the things that we saw at the worst of the Hubei case count increase, and of course we have to remember that these numbers coming from China are extremely suspect. We don't know if the data is any good at all. But at one point, the case count was growing at about 40% per day. That's just a super scary exponential growth path. So far, what we're seeing in the X-China data, which I think is much more reliable in terms of being believable numbers, it's about a 10% per day exponential increase in case count. Now, 10% per day is nothing to shake a stick at.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I'll be really honest. I think that this point, what I'm focused the most on is trying to get my head around how big it's really going to be. And you've got a case for it to become super huge, which is if the same thing that's already happened in China were to happen across the whole world. We're talking about just the biggest financial event of our entire lifetimes 10 times worse than the 2008 financial crisis. Major civil shutdown, crazy, crazy stuff that could shut the global economy down completely. Now, there's plenty of reasons to think that it's not going to be that bad. So why don't we go over what some of those reasons are that it's maybe not going to be so bad? First of all, this, believe it or not, is a racist virus. It targets something called ACE2 receptors, and I have absolutely no idea what that means. It's way beyond my pay grade, but the net net of it is Asian.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Down, which is really important to understand. But everybody assumes well, that's all terrible, but that's happening over there in China. That could never, ever happen in the United States. Look, there's already experts who are saying there's no way to keep it out of the United States. It's already here. It's already spreading. It's in the very early stages of spreading. The good news from a seasonal standpoint is we're getting into mid-February now. So if it takes another month before this really gets going, we're into March. The weather's turning better. And one of the things that, at least in the case of other coronaviruses, is known about these things is hot weather tends to kill them. So it may be that we get saved by the weather to some extent, but I don't think we can count on that.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Need serious medical attention. Well, if millions of people are going to get this around the world and 20% of them need to be hospitalized, you very, very quickly overwhelm the medical facilities of even developed countries. And in the emerging world, it's even more challenging because they really don't have any spare capacity to deal with something like this. Medical facilities will be completely overwhelmed. And you have a major, major health crisis around the world, even if the case fatality rate turns out not to be nearly as high as SARS just because of all of these complications. So that's the perfect storm is these three factors come together to say this thing is super duper contagious and it's spreading quickly. And you look at what's going on in China already with 400 million people locked down. We'll come back to a study a little bit later on that explains exactly why they locked all those people.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Number three, the very high serious complication rate may actually be more important than the case fatality rate. What a lot of people are focusing on right now is they're saying, look, okay, so maybe it's a really big deal. Maybe it's super contagious, but it's not as deadly as SARS in terms of the case fatality rate. So it's not going to be as bad. First of all, they don't know that the case fatality rate is not as bad as SARS. We can come back to that later. But for now, the point is, even if the case fatality rate is low, what we do know about this virus is that it has a high serious complication rate about”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Person gives it to three people each one of those three gives it to three more. So you go from three to nine to 81 to whatever comes next in that progression. There is currently a study that is concluding that the R0 for this virus is approximately 4.08, which is extremely high. It's higher than the SARS virus and it's way higher. is a benchmark. There's about a 1.28 R not on the normal seasonal flu. So it's, and four is not just four times worse than one. This is an exponential relationship. So it's many, many times worse. And it looks like the R0 value for this virus is over four. That means super duper contagious and it's contagious when you cannot detect that the person who's contagious is contagious. So there's no way of testing against it or knowing who is infecting other people.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Before you can detect any symptoms, that means that containment through the mechanisms that were used for the SARS virus is totally completely impossible. Those techniques are ineffective against this virus. Number two, high transmissivity. Now there's this number called R0 or R0. That very simply what that means is if a person is infected with this, how many other people are they going to give it to before it's over? If you have an R0 value of one, that means on average a person who's infected is going to give it to one other person. And that sort of sustains the same number of infected people because one person gives it on to one other person. An R0 of two means one person gives it to two people. And each one of those two people gives it to two people. So it becomes a geometric progression. An R0 of three starts to get really scary because now you're going not to square numbers, but to cube numbers.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You became contagious. The information that we see so far about this NCOV virus is that it can be contagious before you develop any symptoms for as much as five to seven days. Now, I want to be clear, this is a point that's been debated back and forth. First, they said, okay, asymptomatic transmission, it's a really big problem. Then somebody said, no, wait, that's wrong. It's not really asymmetric transmission. That's not what's in play here. The epidemiologists are still arguing this point. Some people have said, well, there's no conclusive proof that there's asymptomatic transmission. The way I look at this is, look, is there any conclusive proof that there isn't? And as long as there's no such conclusive proof, which there's definitely not, then we have to assume it's at least a possibility. And a lot of people think it's a certainty. What this means is the whole business about using the thermometers at the airport, it doesn't do any good because people are contagious and can give the infection to other people.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Reality. So let's talk about. I've heard you mention. The reason I see this as a perfect storm scenario, President, is three key factors that have come together to make me conclude that it's going to be very, very hard to contain this and prevent it from becoming a global pandemic. And those three factors are as follows. First of all, asymptomatic transmission. The way the SARS virus works is people who were infected with it got the fever before they became contagious to other people around them. So in the Hong Kong authorities really deserve an incredible amount of credit for acting swiftly. They very, very quickly implemented procedures all over the city where they're using these little infrared thermometer devices, taking everybody's temperature at checkpoints at any time you go into a building and so forth. And they're identifying people with a fever and quarantining them and testing them for SARS. The reason that work is because you got the symptoms that were measurable with a simple thermometer device before you.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Are reports of 400 million people on lockdown. Now, I don't know where exactly that 400 million figure came from. I think it's mostly the cities that are actually being locked down. And I think people may be adding together the population of the entire provinces to get that number. But let's suppose that the 400 million is wrong and it's really just the sum total of population of the major cities in those provinces. Okay, now we're only talking about 150 to 200 million, like two-thirds of the number of people in the entire United States. If the 400 million figure is accurate, then it's more people than the entire population of the United States. And Preston, there was, to give you a sense of how bad it is there, there was a video that was How the fear itself can actually True or not can drive.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“He's pulling his hair out saying, I can't believe they haven't figured this out yet. And at some point, I think the rubber is going to hit the road and the market's going to say, oh, this is real. And it's not just real in China. It's something that's going to affect the rest of the world.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I assume that this is just a really bad viral outbreak, and I try to figure out what impact is it going to have on the world. And if you look at what's happened in China, it is completely, totally out of control. And we're continuing for some reason the World Health Organization, I think has really dropped the ball on this. We're sending airplanes full of people in and out of China every day, and we're moving them all over the world. There have been finally just in the last week or so several mainstream epidemiologists, very highly credentialed guys saying, look, the cat's out of the bag, it's too late. You can't stop this. It's coming to the rest of the world. Now, we can get into a couple of reasons later on why maybe it won't be as bad as it was in China, but something's coming. And it's not just the seasonal flu. It's a whole lot more than that. And I think markets are not discounting it. So there's a lot coming. And I feel like Mark Baum in that movie.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Know how I approach this. There's a lot of information that seems like it's credible data. There's also a lot of conspiracy theories and possibilities and so forth. Conspiracy theories have a funny way of eventually turning into conspiracy facts. So I wouldn't be surprised if some of that stuff turns out to be true. But the way I've been approaching this situation is when I hear something like somebody says that China secretly engineered a biological weapon and it snuck out of the laboratory and that's the real story here. Look, I have no way of knowing whether something like that could be true. I think it's important that we investigate all of these theories after the fact. But what's important right now is what's actually happening. So I tend to fade all of those nefarious what-if somebody did this intentionally as a weapon, all that stuff. It's possible. It's plausible, I suppose. I just fade all of that.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, I tweeted last week that I think it's entirely possible that this could be the most mispriced risk in the history of financial markets. And that's probably an exaggeration. You know, if you think the big short story comes to mind, you remember Mark Baum, who was the fictional character who was based on the real hedge fund manager, Steve Eisman. You know, he's pulling his hair out. He's meeting strippers that own eight houses in Florida that they're flipping over. Or maybe it was in Las Vegas. I don't remember. And he's like, how can it be that we can still buy credit default swaps on this completely worthless paper for a few basis points? And it took months and months and months before reality hit the market. It's not going to take months and months and months this time, but I feel like reality has not hit the market yet. What you hear in the mainstream media and what you hear particularly in the financial press is, hey, it's a bad flu. It's not a big deal. It's going to blow over. Don't worry about it. You look at what's coming out of China, as you say. And just so our listeners know.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Wow, I wasn't expecting that intro. Thank you so much, Preston. But since you brought up Twitter, and I've been getting, it's funny, I don't know what you've been seeing on Twitter, but I keep getting hit over the head on Twitter. So I want to make it super clear to everybody. I am not an epidemiologist. I'm not a doctor. I'm not a virus expert. I'm not any of those things. My background about the last 12 years or so is I have been a full-time macro trader, a global macro strategy trader. I ran a hedge fund for a few years. So what I'm pretty good at is learning about situations from people who really are experts in figuring out how to translate these things to financial markets. So what I can offer to listeners is I've talked to people who really are experts on this. I've read a lot of their work. I'm learning as fast as I can about a subject I don't know very much about. And I want to be very clear in admitting I don't know very much about all of this epidemiology stuff. But hopefully I can help to translate.”
2020-02-12 · We Study Billionaires · TIP282: Novel Coronavirus (COVID-19) Economic Impact w/ Erik Townsend (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT