My poor Italy

Manage
1

Italy just passed Iran in the # of infections with 5882 vs 5823 . A cynic could say that the high number is not alarming and simply because we have performed the highest # of tests. However we also have one of the highest mortality rates at close to 4%. So all this chatter (trump) about mortality being much lower than 1% seems wrong.

Perhaps Italy is unique because many still live at home or nearby their aging parents. Nonetheless this is the new reality starting tomorrow:

ITALY DRAFT DECREE TELLS PEOPLE NOT TO ENTER OR LEAVE REGION OF LOMBARDY AND 11 PROVINCES IN OTHER REGIONS
ITALY’S DRAFT DECREE SAYS SCHOOLS IN LOMBARDY AND 11 PROVINCES WILL REMAIN CLOSED UNTIL AT LEAST APRIL 3
ITALY DRAFT DECREE ON CORONAVIRUS SHOWS NEW RESTRICTIVE MEASURES FOR NEW AREAS IN REGIONS OF LOMBARDY, VENETO, EMILIA AND PIEDMONT
ITALY DRAFT DECREE URGES PEOPLE NOT TO MOVE AROUND INSIDE AREAS COVERED BY DECREE EXCEPT FOR ESSENTIAL WORKING NEEDS AND EMERGENCIES
ITALY DRAFT DECREE SAYS ALL LEAVE FOR HEALTHCARE WORKERS CANCELLED IN LOMBARDY AND 11 PROVINCES
ITALY DRAFT DECREE SAYS ALL GYMS, SWIMMING POOLS, HEALTH CENTRES AND SPAS TO CLOSE IN THE SAME AREAS
ITALY’S DRAFT DECREE CLOSES ALL SKI RESORTS, MUSEUMS, CULTURAL CENTRES IN SAME AREAS
ITALY’S DRAFT DECREE SAYS ALL SHOPPING CENTRES TO CLOSE AT WEEKENDS IN SAME AREAS
ITALY’S DRAFT DECREE CLOSES ALL SKI RESORTS, MUSEUMS, CULTURAL CENTRES IN SAME AREAS

There will be more restrictions too, like suspending all events with large concentration of people like sports and mass. And, on a personal note, the virus has reached even the small town where my parents live who now stay at home all the time.

I just can’t imagine how this type of lock-down won’t happen in every country of the world. If you can paint a rosier picture, where lock-downs everywhere will not be required, please do.

As far as markets, the 10Y old bull market won’t go down without a fight. Greed is amazingly powerful. It will continue to tease you with “bargains”. But the big names (aapl and such) are only back at levels of just a few months ago. It’s all a bit surreal.

I’m still following strategies, but also locking down gains using hedging and selling covered calls. I think I’ll also deploy the cash in the P123 Fixed Income model [color=blue]Corporate Ladder[/color] which is up 10% this year.

As far as my struggling Italy, here’s a video for inspiration that all italians are watching (with subtitles) [color=blue]The luck of being born in Italy[/color]

Forza Italia

Ciao

2

Marco,

The lockdown will last until April 3, meaning for nearly a month and - most importantly - orders that nobody enter or leave the region of Lombardy, as well as 11 other provinces in northern and central Italy, the most productive region of the Italian economy will be effectively shuttered.

One computer scientist who has been modeling outbreaks around the world said Italy’s spread has produced “one of the most alarming charts I have ever seen.”

Regards
James

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Best wishes for your parents and Italy.

I guess one of the more confusing datapoints to me is China itself, and it might represent a more optimistic scenario. For such a large population like China to have wide exposure to the virus the new case counts have dropped off considerably. I find that favorable outcome hard to reconcile with my expectation given initial rapid infection rates.

I guess also the warming weather should probably help in the northern hemisphere, although conversely might increase risks in southern hemisphere.

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China has locked everything down and they are deceiving on economic activity. Locking everything down is an effective way to slow transmission, but unless you reduce cases to zero, transmission rate comes back after lockdown ends. This virus will run its course. The only option is to slow it down.

Jeff

5

I also believe the virus will “run its course” . But lock-downs are necessary to slow it down or the health care system will collapse. There are people being treated in the hallways in Italy and we’re only 1 month into this. It also buys time for vaccines to be developed and save some lives.

Why not be fully hedged? What do you think you will be missing out on? The volatility is still very high , so there will be another 10% big move. Probably several.

What are the chances we will retest new highs??

Very low I think. I’m only down 5% from my all time highs from an amazing bull run. Why be greedy? I’m happy staying at this level for the rest of the year even if it means missing out on a new high by year end (which means I’ll close out my hedge for a loss offsetting some of my realized gains)

CAVEAT!!! hedges are not for everyone. The market is a rubber-band. The tendency is to short at the bottom of a mini-cycle and close at the top. You can easily lose more with hedging while the market is going down! So either place it and leave it alone, or place it only after a good run (7-10%) up and close after a drop taking small profits on the way down.

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Marco - our prayers are with your family and the people of Italy. Hopefully, the mitigation methods will slow down the spread to something manageable

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Marco - You must be feeling very anxious not to be able to get to your parents at a moment’s notice. It’s o.k. to have one’s parents on another continent when one can get there overnight. But now the situation does not allow this. So, I also extend my best wishes to you and your family.

In my opinion this situation will only be resolved when there is a vaccine available to combat the virus, which may only be in one year, or later. As we are already near the end of the expansion phase of this business cycle, the economic slowdown due the virus will tip us into recession, in my opinion. Since all the indicators are based on past data, we can only pick this up in one or two months from now.

Also, some of my shorter market timers running on P123 have moved to risk-off today. Interestingly, my analysis using the search term “debt” in Google Trends to predict stock market direction went risk-off at the end of February.

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That was on my mind when I talked to my Dad this weekend. He’s in high risk age group, and we discussed how packed the hospital was at his last emergency - with beds in the halls like you mentioned without there even being a pandemic. We talked about mortality rates, his supplies, and I tried to convince him to just isolate and stay at home, but I don’t know if he will. He really does his own thing. I’m hoping he takes some of the risk to heart though.

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Western mentality cannot handle pandemics. Here are the streets of Milan last night Several were interviewed and said that the government cannot interfere with their liberties.

With that in mind plan for the worst. The irony is that China might actually come out ahead of everyone after all. Only a handful of infections today.

And plan for a republican defeat too after watching some of the cringe worthy appearances from the commander in chief (actually I had to turn it off, it was that bad).

There might be some buying opportunity tomorrow…

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Hi from France (bad vacation timing). In a few weeks it will here be like in Italy now. South Korea is the place to be: much more hospital beds relative to population and lower healthcare costs than Europe. The U.S. have even less relative hospital capacity and costs are higher than in Europe. No vaccine is expected soon, we can hope inhibitors will downgrade the lethality rate to flu level. If it happens soon, a stock market V-turn is possible (watch clinical studies). Greed is still strong. If it doesn’t happen soon, more panic is to come if it becomes clear that everyone above 70 has to play Russian roulette (and being young in good shape is not a 100% guarantee). Today is special because a 2nd black swan in oil is adding up (but reverting this one is a matter of policies). Not sure the buying opportunity is today. Good luck to all of us and our families.

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In a stunning announcement late Monday evening, PM Giuseppe Conte revealed during an announcement from the Palazzo Chigi that he would be expanding Italy’s strict quarantine travel restrictions to the entirety of the country, Corriere Della Sera reports.

The restrictions will last for two weeks, and during that time, movement will be restricted across Italy.

ITALY PM CONTE SAYS WILL NO LONGER BE "RED ZONE", ALL OF ITALY WILL BE UNDER SAME CONDITION
ITALY PM CONTE SAYS MOVEMENT WILL BE RESTRICTED ALL OVER ITALY
CONTE SAYS ITALY WILL LIMIT PUBLIC ASSEMBLY THROUGHOUT COUNTRY
CONTE TO SIGN MEASURE TO EXTEND MEASURES THROUGH COUNTRY

The shutdown of schools and universities across the country will be prolonged until April 3.

https://video.corriere.it/coronavirus-parla-premier-conte/654659c0-623c-11ea-9897-5c6f48cf812d?refresh_ce-cp

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Ciao Marco,

I’ll fly back to Italy in two weeks for my father’s birthday, so I will see the situation first-hand. The measures we see there will soon be in place in many countries. France and Spain are just 10 days behind in having similar numbers of coronavirus infections.

What is worse for Italy is the collapse in the oil price. With over 70% of taxes on the gasoline price Italy gets an enormous amount of tax revenue this way; now that the prices are falling and much less people are moving around, the income from gasoline sales tax will sharply diminish and further deteriorate the government’s finances.

Let’s just hope for a quick recovery!

13

I am currently in Milan, and at the moment there is one-week time to wait for the delivery of food from supermarkets. I didn’t leave home in the last 3 days, but there are reports of still too many people in the streets. I am surprised of still how many are not acknowledging the full gravity of the situation.

Talking with a few entrepreneurs I know, orders are down 70% in the textile industry, 80-90% on restaurants and pubs. Delivery of goods and transports are still operational, as well as most of the constructions.

One good news is that an Italian diagnostic company today announced a quicker test for the virus:

Florian, I am not sure they will let you enter, Malpensa airport is currently shut down.

Most of the taxes on gasoline are excises, fixed no matter the price on gasoline. The demand clearly dropped, but that’s an issue for all indirect taxes such as VAT.

What’s worrying me is the public fiscal position and refinancing of bank debt: unless there is full support from the ECB, public finances and bank balance sheets could melt down quickly. We will see on Thursday the next ECB meeting

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Rome last night.

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Live cam in Milan Cathedral

[size=3]【LIVE】 Webcam Milan Cathedral | SkylineWebcams

MilanLive.JPG

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Just a few car around and a few people now. At the beginning people was ilarious, but now they are scared and at home.
Everyone has a friend or relative ill, and someone in hosptal and situation is serious (I leave in Bergamo, the worse site to be in Italy at the moment).
Many people are giving offer to hospitals to buy equipment. People who can is working from home…
Mortality is 4% because many stay home ill and nobody knows. I think this is the reason.

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Our thoughts and prayers are with you.