COVID 9/11

  • Retrospective: Pandemic turns one year old
  • Tyrannical, unproductive lockdowns (CA vs. FL)
  • Economists on a “zero-risk” society
  • The Florida safe-haven myth
  • Alan Knuckman on market correction or “consolidation”?
  • WallStreetBets set and $1,400 stimmy checks
  • (Bienvenidos) Mexico embraces legal pot
  • A “die-hard progressive” on the great American Rescue

Statistical curiosity: Americans are leaving home more frequently now than they were before the stay-home orders began kicking in a year ago.

Researchers at the University of Maryland have quantified the number of daily trips per person based on the movement of a mobile phone more than one mile from the owner’s home. During the first week of March, the number of trips was 13.6% higher than a year ago.

“The number of daily trips per capita has climbed even as an estimated 22% of the country continues to work from home,” says a Washington Post summary of the research. “That’s because the number of nonwork trips, such as running errands, has jumped, on some days by as much as 20% compared with before the pandemic.”

But that’s just the number of trips, not distance. Overall distance is still down, according to separate figures from a data research firm called Inrix.

Yes, it differs from place to place. In 15 of the 100 metro areas Inrix tracks, miles traveled are up compared with a year ago. We’re talking places like Boise and Knoxville. Most places, it’s still down. Nationwide, the number of miles driven is still about 90% of pre-pandemic levels.

“It’s… hard to avoid the label of tyrannical policy today when still talking about lockdowns a year into this pandemic,” asserts George Mason University economist Veronique de Rugy, writing in her syndicated column.

The Establishment media seem to have settled on today as the first anniversary of the pandemic — presumably because it was a year ago today the World Health Organization finally got around to calling it a pandemic. (More than two weeks prior, we were wondering what was taking the WHO so long.)

But it didn’t take a formal proclamation from a body that botched one thing after another with COVID for Americans to realize everything had changed one year ago today.

One year ago tomorrow, we declared the previous evening was a sort of COVID 9/11. Within the space of one hour, President Trump banned incoming flights from Europe, the NBA suspended its season and Tom Hanks revealed he’d contracted the virus.

To be clear: You don’t have to believe the virus is a “hoax” to conclude the lockdowns are both tyrannical and counterproductive.

“Nor,” writes Ms. de Rugy, “does one have to make the claim that doing nothing would have worked wonders in controlling this nasty virus. All you have to show is that lockdowns do not control the spread of the virus any better than less-draconian alternatives.”

And so however you measure it — cases, hospitalizations, deaths — heavily locked-down California is little better off now than comparatively “free” Florida. (If you want comprehensive evidence that lockdowns are ineffectual, our own Jim Rickards devotes a chapter to it in his latest book, The New Great Depression.)

“In fact,” de Rugy adds, “when all costs are considered, such as the short- and long-term health, educational and psychological harms the lockdowns caused, their costs far exceed their benefits.”

And the damage doesn’t end there…

“Perhaps the greatest cost of the policy reactions to COVID-19 is that it will have left Americans believing that governments can and must do anything to achieve a zero-risk society,” de Rugy writes.

The bait-and-switch came early: “Three weeks to flatten the curve” quickly became “Must hold out for a vaccine.” As New York Gov. Andrew Cuomo said near the outset, “If everything we do saves just one life, I’ll be happy.” (Here at The 5 we knew lockdowns were going to be dialed up and down at whim, weeks before the mainstream figured it out.)

The mindset “entails a worrisome tolerance for intrusive policies,” says de Rugy, “such as vaccine passports, daily symptom surveys in schools, a permanent mask mandate in planes and many other forms of hygiene socialism, regardless of the merits of these policies.

“Yet as economist Steve Horowitz recently wrote to me on Facebook, ‘The reality is that we can never achieve’ a zero-risk society, and ‘the costs of trying to are enormous, in terms of both material resources and human freedom.’”

Indeed. The analogy isn’t original to us, but it’s both valid and profound — and it brings us back where we started today. We could slash the number of highway deaths by mandating a national 25 mile-an-hour speed limit. But we don’t — because there’s an unspoken consensus that the trade-offs are unacceptable, even if they would “save lives.”

One more pandemic statistical oddity before we move on: It helps explain a head-scratcher on this map we shared a couple of weeks ago…

Migration to the Midwest

[Click to enlarge]

Obviously, as we said at the time, big cities lost population last year as people sought refuge first from crowds and later from civil disorder. But what’s with the deep red on that map of Florida, depicting an exodus? Didn’t like half of New York state move down there?

Turns out that was clever marketing, says The Wall Street Journal: “Florida politicians and real-estate developers have promoted the narrative that hedge-fund execs and tech workers, in search of warm weather and low taxes, are abandoning New York and California en masse and putting down roots in Florida.”

The numbers vary depending on the source you consult. But even the state government’s own figures reveal population growth last year to be the slowest since 2014. Meanwhile, Atlas Van Lines says as many people are moving out as moving in.

“Florida, it turns out, isn’t for everyone,” says the Journal. Not everyone, it turns out, likes the heat. Or the hurricanes. And if property values are on the rise, why not bail while you can?

The major U.S. stock indexes look a bit like a relay race this week — the Dow taking the lead one day, the Nasdaq taking it the next.

Today it’s the Nasdaq’s turn — up nearly 2.5% as we write at 13,356. But the Dow’s no slouch — adding nearly 1% to yesterday’s record close. And the S&P 500 is up 1.3% or 52 points — into record territory at 3,950.

While there was much ado earlier this week about the Nasdaq falling 10% from its peak — the word “correction” was all over financial TV Monday afternoon and Tuesday morning — our floor-trading veteran Alan Knuckman stayed cool: “It’s happened more than half a dozen times in the last years,” he tells us.

“I term these as nothing more than profit-taking pullbacks and a healthy sign when other sectors can assume leadership once in a while.”

The tech sector had basically doubled off the corona-panic lows a year ago. Of course it was going to take a rest sometime. It’s “consolidation and retracement,” says Alan, and it “just sets up more bullish reward to risk.” That is, the next leg up.

Helping matters along, surely, will be the next round of “stimmy” checks, right?

Drone Strikes Saudi Oil

“An online survey from Deutsche Bank showed that young retail investors plan to use around half of their stimulus checks to invest in stocks,” says our Greg Guenthner.

“With a newfound interest in the stock market and $1,400 burning a hole in their pockets, could young investors help fuel another pop in momentum stocks this spring? I wouldn’t bet against it.”

But here comes your weekly reminder that the stock market and the economy aren’t the same thing.

The little chart of horrors shows first-time unemployment claims totaling 712,000 for the week ending last Saturday — a drop of 42,000, which you can see on this chart if you look real close.

Look Closely

We’re nearly a year past that gigantic spike… and the weekly number still can’t get below the worst of the 2007–09 “Great Recession.” Oy…

Pot positive: Legal recreational cannabis is close to reality in Mexico.

The lower house of Mexico’s legislature has approved legalization. Passage in the Senate appears nearly certain. President Andrés Manuel López Obrador is on board. “This would make Mexico one of the world’s largest regulated markets for cannabis,” says the BBC.

Pot negative: It appears the cannabis industry is anything but “carbon neutral.”

Researchers at Colorado State have done some complicated modeling of the industry’s carbon output. They’ve concluded Colorado’s cannabis industry generates 30% more greenhouse gases than Colorado’s coal industry — thanks to all the electricity and natural gas required to grow the stuff indoors as Colorado law requires.

Hmmm… In many U.S. states where weed is legal, cannabusinesses were deemed “essential” during the lockdowns. But in the event of a “climate lockdown”? Forget it, apparently.

“I’ve worked in the hospitality industry for half of my working life. We were the first to be laid off and will be the last to be rehired,” writes a reader reacting to our take on the $1.9 trillion spending bill the president will sign today.

“My state is still at 50% capacity for indoor dining. Few of my co-workers have been able to return to work. I am immunocompromised and have been sick very often even before the pandemic, but loved my job and continued to work. Now I can’t work anywhere till I get vaccinated.

“I’m a die-hard progressive, especially after having lived in Canada for a few years. I know that the COVID bill has a lot of pork, but for those of us forced to stay home this past year, the unemployment and stimulus money have been a GODSEND.

“Please don’t belittle us. Our job is physically and socially demanding. It’s a job that’s very consequential when you look at how many people with higher incomes can afford to take vacations and eat out. We all love to do that. I personally won’t receive the benefits of the stimulus package that will lift many families out of poverty in the short term. However, it’s important since the lowest-income people have been hit the hardest, while the top incomes have gotten wealthier during this pandemic.

“All of my co-workers are looking forward to getting back to work. We know that conservatives hate all of this but it won’t go on forever. A lifeline has been extended to all of us and we are very grateful to have it. I thank you, WE thank you, and soon all of the rest of you can get back to your favorite restaurants, bars, hotels, resorts. And we can get back to our favorite restaurants too.

“Love The 5!”

The 5: To be sure, there’s an argument to be made that under the Takings Clause of the Fifth Amendment, businesses and their employees are entitled to some sort of redress if government forbids them from plying their trade.

We wish you the best as 2021 goes on… and we thank you for your polite, heartfelt feedback and your continued readership.

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. One more note from a reader: “Just a FYI, my wife and my ‘stimmy’ money will go straight to my TD Ameritrade account, where I follow the recommendations of your options gurus and will double it SOON!”

Heh, that’s the spirit! We have several outstanding options services, but one in particular is on a roll right now. Check it out at this link.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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