Morning Coffee: Ex-Goldman Sachs executives' dubious coronavirus advice. Joy of flying during the virus
As the virus brings out the latent armchair epidemiologist in us all, ex-Goldman Sachs executives who might otherwise be found buying entire trays of lasagne in the Hamptons are dispensing advice on public health strategy. Both ex-CEO Lloyd Blankfein and ex-COO Gary Cohn have taken to Twitter to make recommendations. Similar in substance, each are arguably suspect in their implications.
Cohn went first and could be accused of egging Blankfein on. On Sunday he tweeted that it might be time to start, "discussing the need for a date when the economy can turn back on." Businesess need clarity, said Cohn: if not, they "will assume the worst and make decisions to survive."
Blankfein followed with his own Twitter-thoughts yesterday. "Extreme measures to flatten the virus “curve” is [sic] sensible-for a time-to stretch out the strain on health infrastructure. But crushing the economy, jobs and morale is also a health issue-and beyond. Within a very few weeks let those with a lower risk to the disease return to work," LB declared.
The two men have been echoed by Donald Trump, who is himself also champing at the bit to get life back to normal and is already questioning whether it's time to ease quarantine restrictions even though they've barely begun.
The response, from a strictly commercial perspective might seem to be yes. If restrictions are lifted, most people can engage in standard economic activities, the infected will get infected and the virus will burn out. So far, so Dominic Cummings - except that, as American physician and former FSA commissioner Scott Gottleib, also pointed out on Twitter yesterday, there can be no normal as long as the virus rages uncontrolled. While the virus flies, "older people will die in historic numbers, middle aged folks [will be] doomed to prolonged ICU stays to fight for their lives, hospitals will be overwhelmed, and most Americans terrified to leave homes, eat out, take the subway, or go to the park," said Gottleib. "The only way to return to a stable economy and restore our liberty, is to end epidemic spread of covid-19."
If Blankfein and Cohn remain unconvinced, they could also browse the recent modelling from the UK's Imperial College, which said that indefinite relaxation of quarantine restrictions after twelve weeks will simply lead to a second and worse virus outbreak this winter.
Blankfein has also been taken to task by 'one of the smartest guys in the investor room.' Hedge fund billionaire Bill Ackman, said last week that he had already been in lockdown for over a month due to his father's compromised immune system, and has been urging Trump to do more. In response to Blankfein, Ackman yesterday Tweeted what looks more like the solution: "A coordinated Federal-led shutdown for 30 days and then a gradual reopening with testing testing testing so we can kill the virus when it reappears."
Until a vaccine or reliable method of palliation appears, the solution to the virus is the 'hammer and dance' strategy - strict lockdowns followed by an ongoing 'dance' of social distancing, vigorous testing and public hygiene, with the hammer reimposed when necessary. It won't be pretty and the end is not definitive, but after the next few weeks in New York City even Blankfein and Cohn may come to agree that this is the only way.
Separately, the chances are that there won't be many bankers flying around while the coronavirus rages - particularly as the U.K. government yesterday issued an edict for its citizens to come home. But if you do happen to be taking a trancontinental (or even national) flight in the next few weeks, there may be some advantages. One consultant who flew from Chicago to Dallas told the Wall Street Journal that it's never been easier to get an upgrade. “Everybody’s upgrade cleared. I’ve never seen that happen before,” he mused.
How bankers (and everyone else) move around China after the virus. An app tracks your health and you need a green light to move. No one knows how the green light is determined. (Bloomberg)
Some high speed commodity trading advisors (CTAs) have done well with returns of 18% or more. Algorithms have had to be amended though. “You need to be thoughtful in terms of how you build your algos, so you’re not just plowing the market with volumes that it can’t handle.” (Bloomberg)
People in Hong Kong are fed up with returning expats who don't wear masks and are spreading the virus again. "They thought they were escaping the virus and now they’re bringing it back with them. It really annoys me. If anyone is masking up, it should be the people who left and came back. We stuck it out and stayed." (Bloomberg)
Carlyle has been lending its technologists to portfolio companies to enable their employees to work from home. (Bloomberg)
Systematic clients on Credit Suisse Group AG’s prime-brokerage platform have slashed their equity positions by 45% this month compared with the end of last. (Bloomberg)
Santander chairman Ana Botín took a 50% pay cut to donate to a €25m medical equipment fund the Spanish bank is creating to help counter the coronavirus. (Financial Times)
Citigroup is giving $1k to its employees on salaries of less than $60k. (Reuters)
A Santa Monica pediatrician has been selling COVID-19 tests for $250. (LA Times)
Bankers fleeing to the Hamptons may have made a mistake. Local medical services aren’t geared to meet the needs of the peak summer population in normal times. The population at least triples in many places in the summer. (WSJ)
Chess players keep touching their faces. (WSJ)
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