James M. Jackson's Blog, page 2

Stock Market Volatility in the Time of Covid-19

To believe newscasters, stock markets rise when there are more buyers than sellers and fall with the converse. To consummate a transaction, there must be both a buyer and seller. It is more proper to say that stock markets rise when more people are motivated to buy shares than sell them at a given price. To balance that optimism, sellers require more money to part with their shares. Similarly, price declines reflect that to induce people to purchase shares, they must lower prices. Whatever...

Projecting Deaths from COVID-19 (an update)

On April 2, I published a blog (here) analyzing available information to put in context the 100,000240,000 U.S. deaths then being projected. More recently, the government has reduced projections to 60,000The modification from the initial range resulted from two major components: how many would become infected in the U.S. and what percentage of those affected would die. Dr. Faucci, in announcing the reduction to 60,000 projected deaths, suggested the...

Projecting Deaths from Covid-19

In my blog on Covid-19 last week (here), I suggested we could use rates of reported cases per million of population to standardize numbers across countries and gauge the trajectory of infections based on those under the gun for a longer period. Thursday, April 2, we recorded the one-millionth case, and the official death toll crossed 50,000. That day alone the world recorded nearly 6,000 deaths and almost 80,000 new cases.

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The COVID-19 Trajectory

On Thursday, March 26, the United States took over the top spot for the number of reported COVID-19 cases, exceeding 85,000. Its important to recognize that reported cases are an inaccurate proxy for actual cases. Some countries may deliberately under-report their rate of infection. Some countries do more testing than others. Regardless of the statistics flaws, its what we have available.
Being number one is not a status wed prefer, but its one we are likely to keep for a time. Ultimately,...

What Are We Trying To Accomplish?

The trouble with not having a goal is that you can spend your life running up and down the field and never score. Bill Copeland
Without goals, and plans to reach them, you are like a ship that has set sail with no destination. Fitzhugh Dodson
The United States has not articulated a goal for dealing with the coronavirus that leads to COVID-19. Without clarity, we continue to mis-allocate and squander scarce resources and to sow distrust with conflicting information. In short, we will fail to...

Why the U.S. Should Let the Airlines Go Bankrupt

Some corporations or industries are so intertwined in our national economy that if their going out of business would cause catastrophic dislocations in our economy. The automobile industry is one; banks are another; airlines are a third.
Without governmental intervention, it is likely that most, if not all, U.S.-based airlines will be forced into bankruptcy. Their cash reserves are dwindling; new revenues are shrinking, and they have huge fixed costs. Unless these firms can arrange new...

Why Comparing COVID-19 to the Flu is Flawed

Comparison to the number of flu deaths (say 30,000 a year) and the current number of COVID-19 deaths misses several major points when viewed from a national or international level. Humans have been exposed to various flu viruses for many generations. Many have partial or full immunity to certain strains; large percentages of older folks in the U.S. get annual flu shots
Flu spreads widely, but because of vaccines and partial immunity, slowly. Last...

It’s a Bear Market. Now What?

On March 11, 2020, the Dow officially entered a bear market when it closed at 23,553.22 more than 20% below its all-time high of 29,9551.42 on February 12, 2020. It took less than a month for the bear to appear, but bear markets are often quick and steep, whereas bull markets are longer, sustained rallies.
While the Dow gets the headlines, I prefer looking at the S&P 500, which is also on the precipice of reaching bear territory. This morning markets dropped 7% (and triggered a second...

Fighting the Next Recession Using a Squirt Gun with a Spray Nozzle

As I write this, it is unclear how large the coronavirus effect will be on worldwide economies. It will be negative; we don’t know how bad. Nor do we know how long the direct effects will continue. Parts of China have already returned to work, but many places have not reopened. According to Bloomberg news, pollution levels are still 20% lower there than at the same time as last year.Italy has essentially self-quarantined, the country forbidding public gatherings including postponing all...

The Dow Makes an Orderly Retreat

Headlines screams we’ve just suffered the worst lost in the Dow EVER. True, only if your measurement is points, which misses the . . .er . . . point.
To compare relative losses what counts is the percentage drop not the number of points. Losing 100 points if the Dow started at 1,000 hurts exactly the same as losing 1,000 points if the Dow is at 10,000.
Given that, how did February 27, 2020 stack up? Not even in the top twenty percentage points lostI remember very well the worst day for the...