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What’s Up With The Vacancies?

A report from the Wall Street Journal. “U.S. home sales sputtered in January, the latest sign that some of the lowest interest rates in half a century are failing to offset the high prices and limited inventory keeping many buyers on the sidelines. Felicia Elkins was struggling to find a home in Oak Island, N.C., so she started looking at new homes further out of town. She recently bought a four-bedroom, two-story house in a newly built subdivision for $230,000. ‘We could have continued to rent, but that’s just like throwing money away,’ she said.”

“News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.”

From Crain’s Chicago Business in Illinois. “The market is flattening out after a historic construction boom that added more than 26,000 apartments to downtown Chicago over the past decade. But the expanding economy, and especially the strong downtown job market, has allowed the market to avoid a glut. Landlords have been able to keep their buildings full without slashing rents.”

“Still, some neighborhoods are out of balance, if only temporarily. Cook County Assessor Fritz Kaegi has hit many multifamily properties with big assessment increases over the past year, fueling worries that large tax hikes will follow. The city and state’s fiscal woes have added to the anxiety. As a result, some investors have become wary of buying here, a trend that ‘has caused some stall in the market,’ said Ron DeVries, senior managing director in Integra’s Chicago office.”

“‘A lot of people are stepping back from the market,’ he said. ‘Before you had 10 people making offers. Now you have four people making offers.’ That’s not good if you are a seller: Fewer buyers usually means lower prices. But the uncertainty could create a buying opportunity for investors willing to take a risk on the direction of property taxes, DeVries said.”

The San Francisco Chronicle in California. “It is a good time to be condo shopping in San Francisco — if you happen to be rich. From the Embarcadero to Yerba Buena Island to Nob Hill to SoMa, the wave of deluxe condo offerings washing over the city will test the upper reaches of one of the nation’s priciest housing markets. The latest crop of super-duper deluxe towers includes the 154-unit Four Seasons Private Residences at 706 Mission St., a glass-and-stone-tower and the penthouse is on the market for $49 million. There is the 120-unit One Steuart Lane — on the Embarcadero over looking the bay — where several penthouses are expected to top $20 million.”

“Investing in luxury condos has not always done well in San Francisco. The most obvious example — and definitely an outlier — is the Millennium Tower, where a design flaw caused the building to sink and tilt. A dozen units in that building sold in 2018 and 2019 for an average of $986 a square foot — well below the $1,400 a square foot the building averaged during its original sell out a decade ago.”

“But even investments in structurally sound buildings have not always offered healthy returns. In 2008, real estate mogul Victor MacFarlane bought three penthouses at the St. Regis for $30 million and then spent millions more combining them into a six-bedroom mansion in the sky. In 2008, he put it on the market for $70 million, where it sat until 2010, when he cut the price to $49 million. Eventually, the bank took the property back and sold it for $28 million.”

From Mansion Global on Florida. “J. Christopher Burch, the co-founder of the Tory Burch fashion brand, just bought a classic Miami Beach estate with spectacular views of Biscayne Bay and the Downtown Miami skyline for $14.2 million. The property, which had been on the market since November 2017 when it was listed for $19.75 million, sold on Feb. 18.”

From Multi-Housing News. “The U.S. student housing industry faces choppy waters as a Millennial-driven enrollment boom tapers off and many university markets struggle with oversupply. Growing risks to international enrollment, such as the spreading paralysis caused by the COVID-19 outbreak in China and elsewhere, pose further challenges to student accommodation providers. ‘It’s really the secondary markets that keep me up at night,’ said Laura Formica, vice president of operations at Homestead U. ‘Enrollment’s just stagnant, there’s been a ton of new development, and there aren’t the bodies to fill the beds.'”

The Auburn Villager in Alabama. “The Auburn City Council approved a 90-day moratorium on new student-housing developments in the city at its meeting on Tuesday night. To me, this is one of the most significant steps that this council could take to solve what I consider to be one of our most significant issues in this town, and that’s the saturation of student housing,’ said Auburn Mayor Ron Anders.”

The Louisville Business Journal in Kentucky. “A large apartment complex on South Fourth Street near the University of Louisville is more than halfway through a radical transformation and rebranding — and new tenants have started moving in. Birmingham, Ala.-based Capstone Real Estate Investments LLC has rebranded the former Arch Apartments on South Fourth Street near the U of L campus as Trifecta Apartments and is about 60 percent finished with a complete overhaul of the complex, said Christopher Mouron, executive vice president for acquisitions and development and principal at the company.”

“Mouron said in an interview with Louisville Business First last year that there’s an oversupply of this type of housing unit around the university. The oversaturation leads to lower occupancy and lower rents. As a result, Capstone chose to increase the number of units overall while decreasing the number of beds by renovating the property to include more single apartments. The company believes the investment will pay off due to the location.”

“‘It feels like there’s a lot going on there,’ Mouron said ‘… We feel the immediate area is trending in the right direction.'”

From Senior Housing News. “Faced with the realization that a ‘pivot to growth’ of its senior housing operating portfolio (SHOP) will not happen in 2020, Ventas on Thursday announced a strategic plan to turn around the struggling segment. Ventas’ SHOP same-store cash net operating income (NOI), which accounts for around 25% of its total real estate assets, continued the downward spiral that began in the second quarter of 2019. The segment posted a 7.5% loss in same-store cash NOI in Q4, after posting a 5% loss in the third quarter.”

“Ventas once again cited a confluence of market dynamics, particularly new competition and pricing, as the reason for the poor performance. Occupancy across the SHOP portfolio plummeted by 160 basis points year-over-year, from 87.9% to 86.3%. Ventas’ operators did not experience an expected seasonal lift and the occupancy gap widened materially in September, ending the month approximately 115 basis points lower than a year ago. There are also signs of distress in Ventas’ triple-net senior housing portfolio.”

“‘The trailing twelve month ended 3Q19 EBITDARM ratio held steady at 1.1x, which implies most operators are not making any money on the leased portfolios,’ RBC Capital Markets Analyst Michael Carroll wrote in a note to investors.”

From Crested Butte News in Colorado. “What’s up with the vacancies in local workforce housing units? There are at least eight up at this end of the valley right now. Income restrictions play a role and fitting into the open puzzle piece isn’t always a given. Government red tape is a contributor, as are rules like no dogs and no weed. I know there has been some recent worry that all the affordable housing projects in the pipeline will not fill up in a timely manner and leave local governments holding the debt. Others seem to think we could build a thousand more deed-restricted units right now and they’d fill up in a second. I don’t buy it—plus, bringing that many more people to the valley to fill the units would require more workers to service their needs.”

“When you consider the housing projects in the city of Gunnison, Crested Butte and Mt. Crested Butte, there are literally hundreds of potential workforce housing units on the drawing board and in the pipeline. The timing of them all needs to be coordinated so that the vacancy rates don’t pile up because there could be, God forbid, a glut of affordable housing units. Could it be that maybe all that Brush Creek controversy that delayed and then cancelled the project actually saved the developer a boatload of money?”

This Post Has 149 Comments
  1. ‘about 60 percent finished with a complete overhaul of the complex, said Christopher Mouron…“Mouron said in an interview with Louisville Business First last year that there’s an oversupply of this type of housing unit around the university. The oversaturation leads to lower occupancy and lower rents’

    ‘It feels like there’s a lot going on there’

    There is Chris, it’s known as Yellen bucks going to money heaven. In your case, face, meet buzz-saw!

    1. Capstone Real Estate Investments purchased the complex about a year ago for $24.7 million from Campus Crest at Louisville LLC. The firm specializes in student housing development, and this is its first project in Louisville.”

      Looks like Powellbucks to me.

    2. “As a result, Capstone chose to increase the number of units overall while decreasing the number of beds by renovating the property to include more single apartments. ”

      At least this is a smart idea. Students can adapt to normal apartments, but nobody can adapt to those weird bed-based student apartments (which I never heard of until a year ago). I suspect this stuff will just be converted into semi-slums anyway.

  2. ‘bought three penthouses at the St. Regis for $30 million and then spent millions more combining them into a six-bedroom mansion in the sky. In 2008, he put it on the market for $70 million, where it sat until 2010, when he cut the price to $49 million. Eventually, the bank took the property back and sold it for $28 million’

    Yet every major city went on another luxury airbox building boom. And at price way higher than the last decade. But there’s no bubble, right WSJ?

    ‘Burch just bought a classic Miami Beach estate for $14.2 million. The property, which had been on the market since November 2017 when it was listed for $19.75 million’

    Nobody needs a 20M airbox or shack. These people are gambling.

  3. BTW, some of you are having words or letters added to your screen names at log-in. You need to check it before you hit comment and if you fix it a few times it should go back to normal. Clearing your cache might help too.

  4. Fairfax, VA Housing Prices Crater 10% YOY As Northern Virginia/Washington DC Emerges As Ground Zero For Mortgage Fraud Epidemic

    https://www.zillow.com/fairfax-va-22031/home-values/

    *Select price from dropdown menu on first chart

    A distinguished economist quipped, “Why buy a house when you can rent one for half the monthly cost. Buy it later after prices crater for 70% less.”

  5. ‘The U.S. student housing industry faces choppy waters as a Millennial-driven enrollment boom tapers off and many university markets struggle with oversupply. Growing risks to international enrollment, such as the spreading paralysis caused by the COVID-19 outbreak in China and elsewhere, pose further challenges to student accommodation providers’

    Hey, that’s Leslie’s line!

    ‘It’s really the secondary markets that keep me up at night…Enrollment’s just stagnant, there’s been a ton of new development, and there aren’t the bodies to fill the beds’

    Enrollment isn’t stagnant Laura, it’s going down and will for years. Even Bloomberg acknowledged that years ago when reporting on foreclosed (brand new) student housing in College Station and Oklahoma.

    These idiots got high on their own supply. “Recession proof!” Again, very few cases where participants pulled back before disaster.

    1. SARS was a much smaller and easily contained coronavirus than COVID-19, yet took upwards of 9 months to contain. Plus the Chinese student population is much larger now than it was in 2002-2003. Thus the impact of COVID-19 on Chinese student enrollments and related housing demand could be much more significant and protracted than that of SARS.

          1. It’s worth remembering that foreigners pay full freight at UC.

            Those UC pensions won’t fund themselves.

    2. Higher-edu student enrollment is declining, since prospective students are figuring out/or already have figured out:
      1) Higher-edu is a bubble/scam in that there aren’t that many jobs in our gig economy for all of the graduates and that what student’s learn today is mostly leftist teachings with only a smattering of useful skills.
      2) the cost-benefit analysis of the exorbitant cost of tuition (and room & board) vs. a paper degree isn’t “penciling out”.
      3) Online Universities, MOOCs, apprenticeship programs, and virtually all other options are much less expensive and have a higher probability of teaching the skills necessary to land a real, paying job.
      4) Student loan debt really sucks, and limits options to servitude, debt slaves/debt serfdom. Oh, and our friends in Congress made it not dischargable in BK. How nice for the system and how bad for the students.
      5) The higher-edu system is broken. QED.

      – BTW I notice at most every College and University that I’ve seen lately (Colorado, but I’m sure it applies nationally) that there are tremendous building projects going on. I’m sure some of this is “luxury” student housing (a clear oxymoron, like “jumbo shrimp”), but also new facilities of every kind. This serves to enrich the elite meritocracy and their enormous, bloated administrator bureaucracy, but what about the students? Do they give a rat’s a$$ about career success and landing a job? (rhetorical). Bubbles always pop. Higher-edu isn’t different.

      “Trees don’t grow to the sky.” – German Proverb

      Stein’s Law: “If something cannot go on forever, it will stop.” – Herbert Stein (1916-1999), Economist

        1. Great short interview w/ Mike Rowe on the skills gap. Higher edu. vs. alternative edu.

          However, higher edu has gamed the system; they can do that since they’re a cartel, even if steering everyone out of high school into higher edu isn’t the right answer, there’s money to be made and empires (bureaucracies) to build. It’s all done with debt; $1.6T in student loan debt to be specific. Two problems: 1) Not everyone needs to go to college. The trades and other options are just fine for some, and 2) For those that choose to attend college, the value-add isn’t there anymore due to curriculum and cost. Two solutions: 1) Return to balanced workforce training and focus, and make sure that there are jobs for all segments, and 2) Fixed the broken higher edu cartel system. Tuition cost is self-limiting, but for government student loan guarantees keep ratcheting up; set the loan limit at $5-10K/yr. and watch what happens to tuition prices. Just like housing, take the government out of the picture. Free markets can fix this without any “help” from the government. Online learning is in many cases, already short-circuiting the higher-edu game. What counts is skills and abilities, and not the diploma. Many employers have already figured this out.

          1. Online learning is in many cases, already short-circuiting the higher-edu game. What counts is skills and abilities, and not the diploma. Many employers have already figured this out.

            Hence the rise of “coder boot camps”. Only Corporate America cares about sheepskins, and they are wising up. Smaller employers don’t care if you have a diploma. Startups look for coders who work on open source projects, a diploma is irrelevant.

          2. I was kinda lucky, my HS had the best shop class in state…so i had drafting print shop electronics photography i was the assistant photographer of the yearbook.. Academically i was ok, We also had auto power mechanics we also had 3 lifts in the back so students could work on their cars . This was a regular HS, not the alternative schools for dropouts and trouble makers, they have today…. and the smart college bound kids went across town to the “real” high school.

      1. BTW I notice at most every College and University that I’ve seen lately (Colorado, but I’m sure it applies nationally) that there are tremendous building projects going on.

        CSU in Fort Collins build a brand new stadium, even though there was nothing wrong with the old one, except that it wasn’t on campus. It cost a cozy $220M. For a team that is rarely in the top 25.

      2. Kids are also figuring out that American companies are pretty much DONE with any non-software R&D, or even production. No need for highly degreed traditional scientists or engineers, or even BS level technicians. Process chem and engineering, forget it. They optimized those processes years ago and shipped the production off to China where the electricity was cheap.

        Right now the growth areas seem to be animating microtransaction games for the young and wiping butts on the old.

    3. The U.S. Census Bureau has collected data on the finances of state and local governments for decades. At state colleges and universities, while actual education was subsidized “auxiliary enterprises” such as dorms, stadia and food used to cover their costs with fees. But fee revenues were down to 80 percent of their costs in 2016, draining off money from actual education.

      You can download a spreadsheet of this by state in this post. The discussion is mostly about NY vs. the U.S., but the spreadsheet (as I recall) has all the states, or most of them.

      https://larrylittlefield.wordpress.com/2019/10/06/public-higher-education-census-of-governments-employment-and-payroll-data-for-2017/

      This is one case where you’d think they would have seen the demographic change coming.

    4. “U.S. student housing industry“

      So now it’s an “industry”? The yield chasing insanity is so epic. If you could even get 3% on a ten year treasury, who would invest in rentals for pot heads Bernie supporters taking classes in Feminist Principles in Environmental Justice for Oppressed Minorities?

    1. The Financial Times
      Charts that Matter Oil
      Coronavirus creates oil ‘contango’ as supertanker rates dive
      China’s shutdown has cut price of oil and the tankers that carry it
      Harry Dempsey
      February 17 2020
      Running idle: vessels used for storage to rise?

      The coronavirus outbreak has stunned commodity markets, sending oil prices lower and disrupting the global shipping industry. Weaker demand for raw materials in China has caused Brent crude, the international benchmark, to fall more than 10 per cent in less than a month to about $57 a barrel. It has also pushed rates for oil-carrying supertankers down by three-quarters to about $23,000 a day.

      Spot market prices for oil fell so much in February that they briefly became cheaper than contracts for delivery in six months’ time, a phenomenon known as “contango” that usually indicates a heavily oversupplied market. That can create a trading opportunity for commodity houses, which have reportedly inquired with shipowners about hiring vessels to use as floating storage.

      But market-watchers think a big uptick in the number of ships used for floating storage by those seeking trading profits is unlikely, unless coronavirus fears send spot prices even lower from here.

  6. “that’s just like throwing money away”

    Oak Island (south of Wilmington) looks like a nasty place to be in a hurricane.

    1. Oak Island, North Carolina – Wikipedia
      https://en.m.wikipedia.org/wiki/Oak_Island,_North_Carolina

      (snip)

      Tropical storms are a continuing source of concern with Hurricane Hazel being the most devastating. In the 1996-1999 period, four major hurricanes (Bertha, Fran, Bonnie, and Floyd) made landfall with Hurricane Floyd having significant effect on the town.[13] More recently, in October 2016, the eye of Hurricane Matthew passed almost directly over the town inflicting extensive damage to the dune system,[14] and in September 2018, Hurricane Florence caused severe flooding and wind damage in addition to washing away large amounts of beach sand.[15]

    2. I don’t see a lot of jobs nearby either, nor any major military base that I can see. They can’t all be commuting to Wilimington?

        1. It sounds like the entire global economy will take a hit.

          Coronavirus outbreak
          Coronavirus ‘could cost global economy $1.1tn in lost income’
          Oxford Economics says virus already having ‘chilling effect’ as China factory closures spread
          Coronavirus updates – live
          Phillip Inman
          Wed 19 Feb 2020 12.01 EST
          Last modified on Wed 19 Feb 2020 16.27 EST
          A man wearing a protective face mask walks in a deserted shopping area in Beijing.

          The coronavirus could cost the global economy more than $1tn in lost output if it turns into a pandemic, according to a leading economic forecaster.

          Oxford Economics warned that the spread of the virus to regions outside Asia would knock 1.3% off global growth this year, the equivalent of $1.1tn in lost income.

          1. The article does not tell us what is lost to China and what is lost to the rest of the world. Since China is part of the world, its losses impact the world. But it is possible, but not likely, that the rest of the world could actually speed up as the supply chain goes to places such as India. More likely, China takes virtually all of the net hit. Although that could change if Iran does not contain the virus. Elsewhere, the world seems to be doing rather well. Outside of China, there are about 1,700 cases and only 17 deaths. That tells me that the mild cases are being caught and included in the total. That speaks to present containment, however it still can change. I have said before that if it breaks containment, you could see millions and as much as tens of millions of deaths. However, that is true of severe flu epidemics too, since you have billions of people in the world. Of course, there will be more than a .1% death rate but 2% seems pessimistic in countries with modern medical care. Your prediction of 30 to 40% death rates because further from reality every day.

          2. I never predicted 30% to 40% case fatality rates, though I did use available data with a calculation that you posted which gave such results.

            I get the point that the early data was likely misleading about the true case fatality rate (CFR), since the most severe cases are easiest to detect and most likely to be confirmed.

            However, I believe the 2% CFR figure which you and the Chinese Communist Party like to tout is likely to ultimately prove to be a low estimate. Note that the SARS CFR was underestimated during the outbreak, but ultimately came in around 10%.

          3. there are about 1,700 cases and only 17 deaths. That tells me

            It can’t tell you much.

            Excluding China and the cruise ship, cases are twice what they were three days ago. Three days.

          4. Here’s the CFR estimator you posted, calculated using current data from the John Hopkins University COVID-19 web page:

            Total deaths 2,362
            Total recovered 21,259
            Estimated CFR =
            2,362/(2,362+21,259) = 10%.

            It’s dropped a lot from the initial levels, but seems unlikely to ever drop all the way down to 2%.

          5. “…cases are twice what they were three days ago. Three days.”

            With approximately exponential growth at a three day doubling time, a small number of cases can explode into a large number of cases over a matter of weeks, just as they did inside China.

          6. The incorrect practice of including unresolved cases in the denominator of the CFR estimator seems to be very popular among attorneys, reporters, and government health agencies. This creates downward bias in the resulting CFR estimate.

            The memory of SARS looms over the Wuhan virus. Here’s how the outbreaks compare

            By Julia Hollingsworth, CNN

            Updated 3:54 AM ET, Sun February 2, 2020
            Hong Kong restricts border to contain Wuhan coronavirus

            Ukrainian riot police prepare to push back protesters, who planned to stop buses carrying passengers evacuated from the Chinese city of Wuhan, outside Novi Sarzhany, Ukraine, Thursday, Feb. 20, 2020. Several hundred residents in Ukraine's Poltava region protested to stop officials from quarantining the evacuees in their village because they feared becoming infected. Demonstrators put up road blocks and burned tires, while Ukrainian media reported that there were clashes with police, and more than 10 people were detained.
            Bus with Wuhan evacuees attacked in Ukraine
            TOPSHOT – Police gather near the scene of a shooting in Hanau, western Germany, on February 20, 2020. – At least eight people were killed in two shootings late on February 19 near the German city of Frankfurt, with an unknown number of attackers still at large, police said. The shootings targeted shisha bars in Hanau, about 20 kilometres (12 miles) from Frankfurt, according to local media, and police launched a huge manhunt in the town of around 90,000 people.

          7. Sorry about the last post…accidentally landed before I finished editing out the garbage. The main point is at the bottom, though.

          8. What’s not often talked about is that a highly contagious disease with a long incubation period where people are contagious while asymptomatic, such as COVID-19, with a fatality rate of say 4%, will kill many more people than something like Ebola with a much higher fatality rate but an incubation period where asymptomatic people are not contagious. The fatality rate in itself does not tell the whole story. This could end up being one of the worst pandemics in the history of mankind, fatality rate be damned.

          9. “…twice what they were three days ago…”

            The latest version has an eightfold increase over four days.

            Virus spreads in South Korean city as thousands are screened
            By Associated Press
            Published: Feb 22, 2020 10:06 a.m. ET
            In some positive news, China said Saturday the daily count of new virus cases there fell significantly to 397, though another 109 people died of COVID-19
            AP
            Medical workers wearing protective gears carry a patient infected with a new coronavirus to a hospital in Chuncheon, South Korea, Saturday, Feb. 22, 2020.

            South Korea on Saturday reported an eight-fold jump in viral infections in four days to 433, most of them linked to a church and a hospital in and around the nation’s fourth-largest city, where health workers scrambled to screen thousands of worshippers.

            The country also reported its third death from the virus, a man in his 40s who was found dead at home and posthumously tested positive.

          10. The mainstream media says eightfold increase in South Korea cases over four days, but my long division says fourteenfold.
            (433/31 = 14)

            Goats and Soda
            Coronavirus Cases Triple In South Korea; WHO Keeps Eye On Africa, Iran
            February 22, 20202:43 PM ET
            Colin Dwyer 2018
            A medical worker takes a look outside a preliminary testing facility at the National Medical Center in Seoul, South Korea, where people suspected of having contracted the novel strain of coronavirus are being tested.
            Chung Sung-Jun/Getty Images

            The number of new coronavirus cases nearly tripled in South Korea on Saturday, the fourth consecutive day that tally has seen a major spike. Korea Centers for Disease Control and Prevention reported that the total number of confirmed cases in the country rose to 433 — less than 24 hours after the sum stood at 156.

            As of Tuesday, the number of confirmed cases was just 31.

          11. I am going to guess Japan will be the next to see skyrocketing numbers. The cat is out of the bag. It’s already spreading around the US, you can bet on it.

    1. Which of the below scenarios is correct? We’ll know by mid-May (three months from now!).

      BIMCO: Coronavirus Comes at the Worst Time for Shipping
      February 21, 2020

      The outbreak of the coronavirus, originating from Wuhan, China, comes at one of the worst time for the shipping industry, which is currently struggling with the additional fuel costs from IMO 2020 and the switch to low-sulphur fuels, according to BIMCO.

      “Demand is destroyed in China due to the coronavirus. Demand stemming from consumer spending, power generation and industrial production is lost every day that large parts of China remain quarantined. That demand will not necessarily rebound once the virus is contained,” Peter Sand, BIMCO Chief Shipping Analyst, said.

      Even though there is a veil of uncertainty hampering the ability to predict the outlook for the shipping industry, BIMCO’s Chief Shipping Analyst analysed three scenarios:

      • In BIMCO’s Scenario 1, it is assumed that the virus in large parts will be contained by the end of February and that the Chinese workers will return to work during early March, prompting a subsequent pick-up in manufacturing, industrial production and refinery throughput, as well as shipping demand.

      • In Scenario 2, it is assumed that in the medium-term large-scale quarantines will continue until mid-March, but hereafter economic activity picks up and reaches a state of normalisation by April-May.

      • Scenario 3 is the worst-case scenario, where the spread continues until an indeterminate point in time. However, with the massive uncertainties related to this scenario, it remains outside the scope of this analysis to make long-term projections. As such, BIMCO’s analysis primarily focuses on the short to medium-term implications.

      Shipyards in China, many of which would otherwise be busy with IMO 2020 scrubber retrofitting, have remained closed and declared force majeure in many cases. An estimated 150 vessels are currently under retrofit at Chinese yards, according to Clarksons.

      “The lockdown of newbuilding yards may prove to be the only silver lining to the outbreak as inflow of more ships are temporarily stopped,” BIMCO said.

      1. “I never predicted 30% to 40% case fatality rates, though I did use available data with a calculation that you posted which gave such results.”

        Yes, you did. The numbers were showing 50% the way you were using it and then you stated that you expected that to drop to around 30 to 40%. It is not the Chinese who are using the 2% numbers it is experts outside of China. There really is no sense talking to you since I gave you the opportunity to disown the 30 to 40% number just a few weeks ago and you did not. So that means you have lied about this twice

        1. Could you PLEASE lay off on the death rate?

          The death rate isn’t the real issue here. Even if there were no deaths at all, we’re basically looking at a two-month world-wide full on work stoppage. It’s during that time that the necessary STUFF that gets made and delivered won’t be made or delivered. I can do without scrapbooking supplies and movie tickets and new dresses. But we need medical supplies, food, drugs, diapers, soap, toothpaste, oil. It doesn’t ALL come from China.

          1. Spot on, Oxide. While Mr 2% CFR yammers on about whether my calculation using the estimator he posted was a “prediction”, the elephant in the room is the negative economic impacts of the quarantine measures. They have only just begun to show up in measures of economic activity.

        2. Cannot find the exact quote but this is the time of alarmist calculations you engaged in and contrary to your assertions, weeks later 2% looks more and more likely probably too high:

          Professor Bear
          February 3, 2020 at 9:18 pm
          Here’s an example for you:
          Suppose there are 10,000 confirmed cases of which 200 survived and 200 fully recovered (roughly the situation at one point last week). There are at least three different ways one could estimate the death rate.
          1) If you assume all 9,600 of the unresolved cases will recover, the estimate is 200 / 10,000 = 2% (RR’s math).
          2) If you assumed none of the 9,600 unresolved cases will survive, the estimate you would get is
          (200 + 9,600) / 10,000 = 98%.
          3) if the remaining 9,600 survive at the same rate as those whose outcomes were already reported (50%), then 4,800 would die and 4,800 would survive. The resulting death rate estimate would be (200 + 4,800) / 10,000 = 50%.
          Now the 98% estimate and 50% estimates are likely too pessimistic. However, the assumption that none of the remaining 9,600 unresolved cases will end in death seems overly optimistic.
          In short, the 2% estimate is implausibly low.

          1. “In short, the 2% estimate is implausibly low.”

            And yet you cling to this number, plus the delusion that only Chinese people die from coronavirus. It’s ridiculous.

      2. “We’re going to have to learn how to make our own stuff again.”

        Exactly already happening. Trump wants the supply chain to move from China coronavirus is just speeding up the process.

        1. “And yet you cling to this number, plus the delusion that only Chinese people die from coronavirus. It’s ridiculous.”

          I cling to the number but have never said only Chinese get the virus.

    2. Economy
      Coronavirus Hits U.S. Business Activity
      Surveys indicate February U.S. output fell to lowest level in more than six years as global economies started to feel effects of China’s virus outbreak

      Coronavirus and trade tensions are testing the stability of global supply chains. While that’s pushed some businesses to consider loosening their ties with China, WSJ explains why leaving the “factory of the world” is easier said than done. Photo: China Daily via Reuters
      By Paul Hannon and
      Amara Omeokwe
      Updated Feb. 21, 2020 12:42 pm ET

      U.S. business activity in February fell to its lowest level in more than six years as companies pulled back on fears that China’s coronavirus outbreak would slow global growth, according to private survey data released Friday.

      Data firm IHS Markit said its U.S. composite output index—an aggregate measure of activity in the services and manufacturing sectors, fell to 49.6 in February, down from 53.3 in January, and the lowest level since October 2013. A level below 50 percent indicates contraction, while a level above 50 signals expansion.

    3. Shanghai is China’s economic juggernaut. Coronavirus has left it a city on edge
      By David Culver, Yong Xiong, Natalie Thomas and Ben Westcott, CNN
      Updated 9:39 PM ET, Thu February 20, 2020
      David Culver in an empty Shanghai.

      Shanghai (CNN)
      On a normal weekend, Shanghai’s world-famous Nanjing Road is packed with shoppers and tourists, keen to indulge themselves in China’s thriving financial hub.

      But this week, the streets are mostly empty and stores are either closed or deserted due to fear of the deadly coronavirus, which has killed more than 2,000 people across the country.
      When a customer does enter a shop, the relieved store clerks rush over to see if they can help — but only after they have taken the newcomer’s temperature.

      Yena Lei, a financial industry manager, said that Shanghai is usually quiet around the Lunar New Year holiday, when people take long breaks to be with their families, “but not like this.”

      “Now there’s very few people,” she said. “You cannot go outside for anything, to meet with friends or have dinner or lunch. Everything is stopped.”

        1. Definitely no V so far. One of my wife’s regular customer came by the shop yesterday and was disturbed to see one of the managers there whose husband is a pilot. The assumption being that he was at higher risk of bringing it home than other people. Everybody is on edge and few go to the shops in person. My wife’s focus on delivery of both coffee/food and DIY home coffee supplies has managed to pay the staff so far.

          1. Is she selling from stock, or are delivery trucks still rolling?

            Some delivery trucks are still rolling. She has a pretty big stock of green beans and bags and such and so far there doesn’t seem to be any threat to gas or power. The first shortage on the horizon that she is seeing that affect her coffee supply is actually due to the locusts in Africa rather than coronavirus. They haven’t wiped out any big coffee production areas yet but it could happen any time. Some of the best specialty coffee varieties come from Africa.

    4. Here’s three reasons why the 30-year Treasury yield plunged to a record low
      By Sunny Oh
      Published: Feb 21, 2020 12:19 p.m. ET

      The 10-year Treasury note yield also fell below the key 1.50% level on Friday

      The U.S. 30-year Treasury bond yield dropped to an all-time low on Friday, sparking worries among investors who wonder what it’s saying about the economy’s future prospects.

      Analysts say the slump in the long bond’s yield this week reflects a confluence of factors including easy Federal Reserve monetary policy, concerns about the COVID-19 epidemic’s impact on economic growth, and an absence of inflationary pressures.

      Historically, a slump in long-term yields can indicate fears that growth will start to disappoint and inflation will fall which may make the real return on bonds more attractive.

    5. I think it has the potential to sink the entire world economy into a depression worse than we’ve ever seen. Being that China is the world’s manufacturer, a prolonged shutdown of their economy absolutely destroys the supply chain for all things for sale in the US. Car parts, RV parts and materials, appliances, electronics, everyday household items and just about everything else a person spends money on. Once the shelves run bare, there’s no reason to employ a bunch of people since there’s nothing to stock nor sell. Wall St. has not even begun to factor this into their equations.

  7. A report from the Wall Street Journal.

    “She recently bought a four-bedroom, two-story house in a newly built subdivision for $230,000. ‘We could have continued to rent, but that’s just like throwing money away,’ she said.”

    “News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.”

    – A couple of comments here.

    – Renting during and after the peak of a(nother) housing bubble is prudent, since houses, once shelter and price-stable, have been completely financialized and now behave as any other asset class. That means asset bubbles and crazy price swings, but just on a longer time frame, since housing is illiquid. The depreciating asset with high carrying costs part of the equation is temporarily masked by the bubble, but it’s still just as true today as yesterday. Maintenance, property taxes, HOA/COA fees, and insurance on top of principal and interest payments didn’t just magically disappear because of the temporary price rise of housing bubble 2.0. Yes, you can time the market, and bubbles are obvious both during and after the fact. The Fed knows this full well and was intent on blowing another housing bubble as documented in Ben Bernanke’s WaPo Op Ed on Nov. 4th, 2010 (search for the link if needed).

    Once the housing bubble pops, which is the case globally now, prices fall and peak or even pre-peak buyers “suddenly” find themselves underwater. How is that “throwing money away” on money losing asset? Another fine mess, courtesy of the Fed and the rest of the nefarious, scheming central banks.

    – The REIC narrative continues: “Housing only goes up”, “it’s always a good time to buy”, and renting is always “throwing money away.” There should be Fiduciary Responsibility for Realtors, since housing is now just another asset class an they’re just another asset broker. Note that some stock brokerages now have ZERO FEES for some investments. Ahem! Realtors, take note! There’s absolutely NO justification for 6% sales commissions.

    1. ‘We could have continued to rent, but that’s just like throwing money away,’

      It will be interesting to see whether FBs keep saying this once the price decline contagion reaches their neighborhood.

      And I totally agree with the point that a 6% commission is throwing alot of money away!

    1. Gotta lock in that low interest rate because you can refinance the purchase price (so I’ve been told).

      1. It wouldn’t surprise me to hear American Financing dot net air commercials promoting just that.

        That company is such a lying fraud.

  8. A report from the Wall Street Journal.
    “U.S. home sales sputtered in January, the latest sign that some of the lowest interest rates in half a century are failing to offset the high prices and limited inventory keeping many buyers on the sidelines.”

    – Add “limited inventory” to the REIC narrative. Make that limited affordable inventory.

    – Question: How can there be a shortage, when there are so many vacant housing units everywhere? This is of course mostly unreported because “narrative”, but it’s also reality. A quick search will show this, but “narrative”, so “shut up”, because “reasons.”

    – A few examples, and I’m sure there are many in the archives on the HBB blog.

    https://www.sfgate.com/realestate/article/An-estimated-100-000-homes-are-sitting-empty-in-13692007.php
    An estimated 100,000 homes are sitting empty in the San Francisco metro area
    By Amy Graff, SFGATE | Updated 10:22 am PDT, Sunday, March 17, 2019

    https://www.citylab.com/equity/2018/07/vacancy-americas-other-housing-crisis/565901/
    Vacancy: America’s Other Housing Crisis
    Richard Florida | July 27, 2018

    https://laist.com/2019/11/20/los-angeles-housing-vacancy-homeless.php

    Authors Pull Back Study That Found LA Has More Vacant Homes Than Homeless People [UPDATED]
    by Matt Tinoco in News on November 20, 2019 3:36 PM

    https://247wallst.com/housing/2019/09/30/there-are-over-17-million-vacant-homes-in-america/
    There Are Over 17 Million Vacant Homes in America
    By Douglas A. McIntyre | September 30, 2019 10:40 am | Last updated: January 11, 2020 3:48 am
    “The U.S. Census Bureau has released its American Community Survey for 2018. Among the items the government agency measures are housing units. There are 138,539,906 in the United States. Of those, 17,019,726 homes are vacant. The number is staggering, and it approaches the number of people who live in the New York City metro area, which includes the nearby cities in New York, New Jersey and Connecticut.”

    1. “limited inventory”

      By UHS definition, Inventory does not include anything not advertised for sale (by them). This would be like a retailer telling you the item on the shelf is the last one even if he had a truck load of it out back.

  9. Thought this was interesting – Frank Lloyd Wright house being auctioned off in LA. Last listing price was $4.2million in Jan 2020. Sold in 2014 for $3.8m. Auction at starting at $3m.

    https://www.harcourtsauctions.com/properties/2255-verde-oak-drive-los-angeles-ca-90068/

    From the price history on Realtor.com (abridged below) this house has spent 8 of the last 10 years on the market –

    2/18/2020 Listed $3,000,000 -21.05%
    2016-2020 Listed but not sold for between $4.195m and $4.295m
    11/18/2014 Sold $3,800,000 +34.39%
    2011-2014 Listed but not sold for between $4.195m and $3.995m
    6/02/2006 Sold $2,827,500 -5.09%
    5/18/2005 Sold $2,979,000
    10/18/1988 Sold $1,150,00
    10/10/1986 Sold $650,000

    1. Going for that natural green mold look. ? The rich and gambling debt people love trading these over priced dumps back and forth and the stealtors love it even more!

    2. Love the picture of a skull and a Tommy Gun over the fireplace.

      From the outside, that is one ugly house. Makes a McMansion look good by comparison.

    3. That’s not a Frank Lloyd Wright house. It’s Frank Lloyd Wright JUNIOR, the son who also went into architecture.

      By the way, Wright Sr. houses are terrible. I’ve toured two FLW Sr. houses, one of them Fallingwater. Sure, they are unique and artistic, but as houses, they are flimsy, leaky, unstable, and uncomfortable to be in, much less to live in.

      1. Oops you’re right, it is the son, not the father. Re maintenance, most seem like they have to be rebuilt practically from the ground up. Particularly true of the Mayan block houses, where the bricks were mostly sand and started to disintegrate.

  10. Scary development: My son who went to Disneyland this week has a 103 F fever and cough. And we all had our flu shots, so it is presumably not one of the known flu strains that went into the vaccine.

    1. Scary development

      Didn’t you mention a day or two ago that your whole family had caught a bug in Utah? Not the same thing? (or am I mis-remembering)

      1. It’s hard to say if his case is a version of the Utah bug or something he caught at Disneyland. They just went up there Tuesday, so if he caught a Disneybug, the incubation period is pretty short.

        In my case, I came down with what my wife brought home several days after showing no symptoms. Probably would have been smart to sleep on the couch, but we’ve been sharing our germs for over a quarter of a century, so why stop now? Whatever doesn’t kill you will make you stronger, usually…

    2. Scary development

      That is scary, especially considering COVID-19 case numbers are a lagging indicator. With such a long incubation period at times, it stands to reason that it is already spreading rampantly through CA though few are showing symptoms yet. To put a positive spin on it in your son’s case, he’s probably got something else given said incubation period for COVID-19.

      1. And to put a negative spin on it, I may have already had a mild case and passed it on to God knows who. I am frankly not overly concerned about my immediate family, given our age range, ambient health, and access to treatment. But the thought that my recent respiratory symptoms, including dry night cough that disrupted my sleep, could have reflected a latent case without my knowledge, is deeply disturbing. I’m particularly concerned about the risk of vulnerable populations coming into contact with asymptomatic carriers.

    3. The flu shots were off this year so it could be the flu. I was sick with something a few weeks ago, and I had a flu shot. Lasted awhile although nothing too bad just annoying mostly. pretty sure corona virus is pandemic now and the world will take a hit, how bad IDK ? Its in Iran now so how will it stop from going to Africa ? Latin America ? places with less technology and discipline than Asia.

  11. Philip Haney Dead: ‘See Something Say Nothing’ Author Dies at 67

    3 hours ago

    Reports of Haney’s death first appeared on the morning of February 22. Fox News’ contributor Sara A. Carter tweeted regarding Haney’s death saying, “Somebody I deeply respected and considered a friend Phil Haney – a DHS whistleblower during the Obama Admin was apparently killed yesterday in Southern California. Pray for his family and pray they find the person who murdered him. Still trying to get confirmation on details.”

    There are unfounded rumors on social media that Haney was killed having been shot dead. There are no reports of a shooting in the area around Plymouth, California.

    https://heavy.com/news/2020/02/philip-haney-dead/

    1. It’s early yet (streaming C-SPAN live now, because f* corporate media), but looking to be a strong finish. Not expecting that in South Carolina, but keeping eyes on the prize in California and Texas.

        1. Things are way more effed up in this country than most people realize. We’re at the point of no return, in my opinion. We’re sitting on a powder keg.

        2. Were in Florida recently?

          I asked below one of your posts but I’m sure you never saw it.

          Anyway, you don’t owe me anything I had a great time, really can’t believe it has been that long.

  12. A federal judge late Friday temporarily blocked the U.S. government from quarantining coronavirus patients in Costa Mesa after city officials argued that the surprise proposal came with no information about how surrounding neighborhoods would be protected from the deadly virus.

    The city filed a request on Friday afternoon to halt the plan to house 30 to 50 people who tested positive for the coronavirus at the state-owned Fairview Developmental Center until the 109-acre center — which sits next to several residential neighborhoods — is determined suitable for the quarantine and safeguards are put in place to protect the neighboring community.

  13. The end of the everything bubble ?

    https://www.aljazeera.com/news/2020/02/china-coronavirus-outbreak-latest-updates-200222222743195.html

    Fears are mounting over the rise of coronavirus cases outside mainland China, with Iran recording a sixth death from COVID-19, as the disease is known, and South Korea reporting a surge in new infections.

    The World Health Organization (WHO) said it was concerned about the jump in cases with no clear link to China, where the virus was first detected in late December, and called for urgent funding to support countries with weaker health systems.

    1. Fears are mounting over the rise of coronavirus cases outside mainland China, with Iran recording a sixth death from COVID-19

      So, 6 dead out of a total 28 cases? That’s a death rate of 21%. So much for the idea that people aren’t dying outside of China, and that the fatality rate is low. Paging ABDan!

  14. A study of 138 patients infected with the new virus in Wuhan, published in the Journal of the American Medical Association (JAMA) on February 7, showed the most common symptoms were fever, fatigue and dry cough. A third of the patients also reported muscle pain and difficulty breathing, while about 10 percent had atypical symptoms, including diarrhoea and nausea.

    The patients, who ranged in age from 22 to 92, were admitted to the Zhongnan Hospital of Wuhan University from January 1-28. “The median age of patients is between 49 and 56 years,” JAMA said. “Cases in children have been rare.”

    While most cases appeared to be mild, all the patients developed pneumonia, according to JAMA.

    About a third subsequently developed severe breathing difficulties, requiring treatment in the intensive care unit. The critically ill were older and had other underlying conditions such as diabetes and hypertension.

    Six out of the 138 patients died – a figure amounting to a 4.3 percent death rate, which is higher than estimates from other parts of China. Less than 2 percent of the total number of infected people have died from the virus so far but that ratio could change since the outbreak is still in its early stages.

    1. Meanwhile, four people in Germany caught the virus but symptoms were so mild they didn’t even know they had it. Something is really wonky about this.

      1. Nothing wonky. Places with good health systems catch the mild cases. Places with bad or just overwhelmed systems just catch the people near death. The virus is consistent the health systems differ. That is why understanding that the CFR is 2 percent or less is so important. If it is above that rate in a country it means there are a lot of hidden cases in that country. In this country there are I think 35 cases and no deaths. Thank you Trump for your decisive actions.

        1. For example when two people died in South Korea, I new that there were probably at least 98 more cases some where within a few days they were found. Now we have over 500 cases and four deaths. This does not mean that were all new cases, it means that the system is working and the health authorities are finding the persons who gave the dead people the disease and the people exposed by them. Conversely, the Wuhan numbers are garbage you have to be dead to be counted and some not even then.

        2. “That is why understanding that the CFR is 2 percent or less is so important.”

          Unless you clearly define what a case is, and how to estimate how many there are, that number is meaningless and irrelevant.

          1. Wuhan Woman With No Coronavirus Symptoms Infects 5 Relatives Revealing New Extent of Challenge
            The case study, published in the Journal of the American Medical Association, offered clues about how the coronavirus is spreading, and suggested why it may be difficult to stop.
            Reuters
            Last Updated: February 22, 2020, 11:41 AM IST

            China: A 20-year-old Chinese woman from Wuhan, the epicenter of the coronavirus outbreak, traveled 400 miles(675 km) north to Anyang where she infected five relatives, without ever showing signs of infection, Chinese scientists reported on Friday, offering new evidence that the virus can be spread asymptomatically.

            The case study, published in the Journal of the American Medical Association, offered clues about how the coronavirus is spreading, and suggested why it may be difficult to stop.

            “Scientists have been asking if you can have this infection and not be ill? The answer is apparently, yes,” said Dr. William Schaffner, an infectious disease expert at Vanderbilt University Medical Center, who was not involved in the study.

          2. PB it is quite simple, when you are tested and come back positive you are a case. Even for you that should be understandable. Of course, it means you have a health system that can conduct the tests. Iran’s six deaths out of 28 cases is very concerning. There are a lot of undiagnosed cases in that country.

          3. “PB it is quite simple, when you are tested and come back positive you are a case.”

            That may be the legal definition of a case. If so, it makes the CFR statistic scientifically meaningless and irrelevant, in light of inadequate testing capacity relative to the scale and international distribution of the outbreak, plus the potential for asymptomatic transmission. Hopefully even you can grasp that.

          4. Given that attorneys and medical doctors are not required to take statistics as part of their training, the scientifically incoherent definition of CFR is not surprising.

          5. Iran’s six deaths out of 28 cases is very concerning. There are a lot of undiagnosed cases in that country.

            You just pulled that out of your ass. Because you have no knowledge or proof whatsoever.

          6. As Dan condescendingly explained earlier, a “case” means that a patient tested positive. By his own logic, “confirmed case” is redundant and “undiagnosed cases” don’t exist.

          7. medical doctors are not required to take statistics as part of their training “Bio-statistics” was my first course in med school, Aug. 1971.

        3. why understanding that the CFR is 2 percent or less is so important.

          Constantly contradicting yourself will not make you the prediction champion of the world. It’s tedious.

          1. It’s also tedious when he accuses me of making predictions, when all I did was post calculations based on the data available at the John Hopkins Coronavirus COVID-19 Global Cases web page.

            Until one clearly defines what a “case” is, estimating the Case Fatality Rate is an exercise in futility, and arguing about whose “predictions” are “correct” in this context is even more futile.

    1. Housing bubble 2.0 reignited by record/near-record low interest rates starting in 2019. Lower rates = higher prices. However, people are ignoring the message of the bond market. Lower yields signaling lower growth. Global economy was already slowing in 2019, well ahead of the viral pandemic which started (approx.) in Dec., ’19. Covid-19 will only exacerbate and accelerate the economic downturn that’s already “baked into the cake” from 10 years of Fed and other central bank “stimulus” (read financial heroin). In my view, indicators are signaling recession in H2 ’20, if not sooner. My question is, if this thesis is correct, do you feel lucky? Is the urge to BTFD/FOMO greater than the hazard of the falling knife? Best of luck to all parties involved.

      Dirty Harry, 1971
      Harry Callahan: “I know what you’re thinking. ‘Did he fire six shots or only five’? Well to tell you the truth, in all this excitement, i kind of lost track myself. But being that this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: ‘Do I feel lucky?’ Well do ya, punk?”

      1. “Is the urge to BTFD/FOMO greater than the hazard of the falling knife? Best of luck to all parties involved.”

        That’s the $10 trillion question! I can say that my FOMO is definitely in check, but the central bankers’ standing threat to do an even bigger quantitative easing than last time has me dazed and confused.

        And may the odds be ever in your favor!

        1. So negative rates are on the table, despite their having FUBARred the global financial system.

          All-star economists urge Fed to use QE and ‘new tools’ to fight next recession — just move sooner and go bigger than crisis
          By Greg Robb
          Published: Feb 21, 2020 10:16 a.m. ET
          Central banks should be humble about likely effectiveness of these tools
          MarketWatch photo illustration/Getty Images, iStockphoto
          The tools the world’s leading central bankers used to fight the financial crisis were insufficient most of the time, a paper by leading economists concludes.

          The Federal Reserve should use the same tools to fight the next recession that they developed during the financial crisis, even though the controversial strategies only achieved so-so results, according to a new paper released by a group of all-star economists Friday.

          Global central banks won’t be able to rely on their traditional policy tool of slashing their benchmark interest rates to fight the next recession because rates are already low or negative.

          The paper said policymakers should use some mix of tools, including:

          • QE, or quantitative easing, which is buying assets and expanding the central bank’s balance sheet to push long-term interest rates down;

          • Negative interest rates, to make it expensive for lenders to sit on cash;

          • Forward guidance, or telling the market that rates would stay low for a specific period of time so that rates don’t spike at the first sign of a recovery.

          • Yield curve control, which extends the maturity of interest rates that the central banks target.

          Policies used during the financial crisis, some of which are part of this new prescription, were controversial. In the U.S., congressional Republicans strongly objected to the Fed’s QE programs, for instance.

      2. Is the urge to BTFD/FOMO greater than the hazard of the falling knife?

        The hazard of the falling knife was diminished in HB 1.0 by principal reductions.

  15. Longboat Key, FL Housing Prices Crater 16% YOY As Sarasota And Manatee County Housing Market Turns Radioactive

    https://www.zillow.com/longboat-key-fl/home-values/

    *Select price from dropdown menu on first chart

    A distinguished economist quipped, “Why buy a house when you can rent one for half the monthly cost. Buy it later after prices crater for 70% less.”

  16. Bernie is winning by 20 points. Warren is now claiming to be Jewish to compete with Bloomberg and Sanders. Jk on second line.

  17. Bloomberg is serving a useful purpose.

    Instant Insight
    Edward Luce
    Bloomberg is enabling Sanders to keep winning

    The billionaire distracts the democratic socialist’s rivals and validates his arguments

  18. Have you been enjoying the flight to quality rally in bonds and gold?

    The Financial Times
    Markets Briefing Equities
    Government bonds rally as concerns drip back into market
    Global stocks are set to record their first weekly declines of the month
    Philip Georgiadis in London and Hudson Lockett in Hong Kong yesterday

    Investors have piled into government bonds, sending the yield on the US benchmark Treasury below a key level as concerns over the impact of the coronavirus on the global economy drip back into the market.

    Sovereign bonds rallied alongside other traditional haven assets including gold on Friday, as investors turned to areas of the market prized for their relative safety in times of economic stress. Stocks were set to record their first weekly declines this month.

    A cluster of cases in Beijing and a jump in the number diagnosed in South Korea has unnerved investors and led some to reconsider the possible disruption from the disease, analysts said.

    On Friday, the yield on the benchmark US 10-year Treasury fell as much as 5 basis points to trade below 1.5 per cent, its lowest level since September.

    Bonds across the Asia-Pacific region also rallied. Yields, which move inversely to prices, on 10-year Australian bonds dropped 6 basis points to 0.934 per cent and those on the equivalent South Korean securities fell 8 bps to 1.416 per cent. Yields on 10-year Chinese sovereign bonds dropped 3 bps to 2.841 per cent.

    Chinese bonds have dropped to four-year lows in response to the outbreak, with some investors predicting they could push lower as Beijing seeks to mitigate the impact of measures to contain the virus. On Friday analysts at Nomura wrote in a note that they expected yields on China’s 10-year sovereign bonds to decline further, “possibly revisiting the 2016 lows of 2.6 to 2.65 per cent”.

    Other traditional safe assets gained, with gold rising another 1 per cent to trade at $1,635 a troy ounce, its highest level in more than seven years.

  19. Italy seems quite a ways from Wuhan City. How did they end up with a bevy of cases?

    A dozen towns in northern Italy are locked down after coronavirus deaths
    Doug Stanglin | USA TODAY Updated 11 hours ago

    Schools, businesses and restaurant were closed in a dozen northern Italian towns Saturday following reports of two deaths tied to an outbreak of the coronavirus in the region.

    A female resident in the Lombardy region died only hours after a 77-year-old man succumbed near Padua, in the Veneto region, the ANSA news agency reported, citing health care sources.

    Italy reports a total of 62 cases, many of them representing the first infections in the country via secondary contagion, that is, not directly from a visitor to China.

    The deaths come a day after health officials at the World Health Organization warned that attempts to contain the virus that erupted in China in December were at a crisis point.

    1. You can safely ignore the news of an explosion of coronavirus cases on Europe’s doorstep, as our resident expert assures that all is well, and only Chinese people die of coronavirus.

    2. The Wall Street Journal
      World
      Italy Grapples With Worst Coronavirus Outbreak Outside Asia
      More than 130 people in Italy had tested positive for the virus as of Sunday morning, with Milan’s schools set to close and other public events canceled
      By Eric Sylvers
      Feb. 23, 2020 9:05 am ET

      MILAN—Part of Italy’s economic heartland woke up under a quarantine on Sunday with more than 50,000 people not allowed to leave their towns, as the country began to grapple with the worst coronavirus outbreak outside of Asia. Trade shows, soccer matches and other public events were canceled. The mayor of Milan, Italy’s second-largest city with about 1.4 million residents, said the city’s schools will be…

    3. Venice’s famed pre-Lenten Carnival canceled to stem spread of coronavirus
      By Associated Press
      Published: Feb 23, 2020 9:20 a.m. ET
      Italy now reportedly home to greatest concentration of COVID-19 cases outside of Asia
      Associated Press
      People wear sanitary masks as they walk near the Duomo in Milan on Sunday.

      CODOGNO, Italy (AP) — Scrambling to contain rapidly soaring number of new coronavirus infections in northern Italy, authorities on Sunday stepped up measures to ban public gatherings, including stopping Venice’s famed carnival events, which has drawn tens of thousands of revelers to a region that is now in the heart of the outbreak.

      “The ordinance is immediately operative and will go into effect at midnight,’’ announced Veneto regional Gov. Luca Zaia, whose area includes Venice. Carnival, which draws tens of thousands of visitors to the lagoon city, would have run through Tuesday. Museums, schools, universities and other public venues will be shut as well in Venice and the rest of Veneto. The shutdown is expected to last at least through March 1.

  20. GOING GLOBAL
    Coronavirus containment is looking less likely amid surprise outbreaks in Iran and Italy
    February 22, 2020
    By Anne Quito
    Even small changes in China have global effects.

    Last month the World Health Organization issued a warning that the novel coronavirus epidemic in China could turn into a global health crisis. This week brought evidence that supports its worst fears. Despite massive efforts to contain Covid-19 in the outbreak epicenter Wuhan and surrounding areas, new cases have been reported in seemingly improbable places like Iran, Lebanon, and Italy.

    “The window of opportunity is narrowing to contain the outbreak,” warned WHO director-general Tedros Adhanom Ghebreyesus in a press briefing in Geneva yesterday. “We have to prepare at the same time for any eventualities because this outbreak could go any direction.”

    Indeed, the most recent numbers reflect an increasingly complicated global picture. According to the WHO’s latest situation report (pdf), over 76,700 confirmed cases of infection have been reported worldwide, mostly in China but also now in 26 other countries. Seoul reported an eightfold increase in cases over four days, with 430-plus people in South Korea now infected. Two fatalities in northern Italy and four in Iran added to the grim death toll, now over 2,240 globally.

    “Although the total number of cases outside China remains relatively small, we are concerned about the number of cases with no clear epidemiological link, such as travel history to China or contact with a confirmed case,” Tedros said. In effect, transmission is now happening between other countries independent of China and its containment efforts.

    1. Professor Bear,

      I got sick for about 12 hours the other day. The regular flu is still out there. I don’t think you got the China virus. I wouldn’t be caught dead going to a doctor’s office right now because that might be a higher risk.

      1. You have a point. It’s more likely that my family members and I caught a strain of the seasonal flu that wasn’t covered by the vaccine.

  21. Are people who suffer from the delusion that “real estate always goes up” victims of the Gambler’s Fallacy?

    1. The simple maths error that can lead to bankruptcy
      Psychology
      The “gambler’s fallacy” – which can affect everyone from athletes to loan officers – creates deceptive biases that lead you to anticipate patterns that don’t really exist.
      By David Robson
      17th February 2020

      Fifteen years ago, the people of Italy experienced a strange kind of mass hysteria known as “53 fever”.

      The madness centred on the country’s lottery. Players can choose between 11 different wheels, based in cities such as Bari, Naples or Venice. Once you have picked which wheels to play, you can then bet on a selection of numbers between 1 and 90. Your winnings depend on how much you initially bet, how many numbers you picked and how many you got right.

      Sometime in 2003, however, the number 53 simply stopped coming up on the Venice wheel – leading punters to place increasingly big bets on the number in the certainty that it must soon make a reappearance.

      By early 2005, 53 fever had apparently led thousands to their financial ruin, the pain of which resulted in a spate of suicides. The hysteria only died away when it finally came up in the 9 February draw, after 182 no-shows and four billion euros worth of bets.

    2. This get rich quick idea is one of the most destructive
      trends I have ever seen. Ponzi schemes everywhere you look. Debt being used to fuel this house of cards.

      This faulty investment world reminds of Wall Street 1929.

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