Stansberry Research

Doc Eifrig's COVID-19 Briefing No. 11

June 11, 2020

Editor's note: You can find a full transcript of Doc and Matt's briefing, complete with slides, below the video. If you'd like to view a pdf of the slides, click here.

Dr. David Eifrig:  Hello everybody and welcome to COVID conversation number 11. I'm Dr. David Eifrig and with me is Matt Weinschenk. We are socially distant still although getting out and about. And I'm about ready to travel west to winery land. How about yourself?

Matt Weinschenk: I'm not going any wineries but yeah definitely get out a little bit. My wife went to go out to dinner, but I had to stay home with the kids. But that's about as far as we've gotten.

Doc: All right, as usual folks, if you have questions, send them to rem@stansberryresearch.com for questions. And then healthandwealthbulletin.com. Many of you have been sharing our stuff. Appreciate it. Thanks for that. Keep up the good work and don't hesitate.

This one should be an interesting one. And Matt, any other thoughts? Comments? Want to dive in?

Matt: No. Yeah, let's get into it. So we'll start with the usual. We'll just hit our first few charts…

daily deaths in the U.S. three-day rolling average down to about 50-, which, you know, it's certainly good news from where we were.

Definitely, you know, you can't deny that that is heading in that in the right direction. So that's very good. And you know, no upturn. At the start of May things started opening here, no, no uptrend there. So that's great. New cases?

You know, plateau then come down. Maybe it's a little a little flat over these last few weeks, but certainly, headed in the right direction. And you know, that test-positive rate has been on the decline, which suggests we're testing enough and the decline is actually real. So that that looks pretty good, too.

So reopening going well, overall.

Doc: And I just want to point out… If you do a rough, you know, now we've got this long slope over a long period of time, a month, at least, where the number is between 20 and 25,000 and deaths are at 500. This this again goes back to looking like half of a percent, which is right around where the flu is. So
just kind of remind people is sort of interesting.

Do you see that? You feel that when I say that?

Matt: Yeah, yeah, absolutely. And so yeah, so like, if you look death down, down, down. Cases kind of flat, suggests we're catching more people who are not ending up hospitalized and maybe looking at the mortality rate a little better.

And the other thing, the other sort of number you can infer from these is if you look, you know, flat is much different than up a little bit, right? We want that R not to be at one or less. So if you're if 20,000 people here, in fact, 20,000 people here we're staying flat and there's no growth. So that's real important. You know, for this to be flat, or even a little down, or even just a little bit of up could mean trouble for down the road. So that's good.

But breaking it down state-by-state. Last week, we showed this. There were a lot more states in the flat category. A few of them moved up to rising and a few to declining. So you know, you can see so let's look at rising first. You know, you can see the reopen on some of these charts and Texas is a big state that's 78,000 cases. There's a spike Florida, there's a spike North Carolina. I mean, they never even slowed down at all Arizona. You know, big jumps on some of these. So those are concerning. But at the same time, Illinois, totally fallen off. New Jersey's coming off… Massachusetts, Pennsylvania, Michigan, you know, coming way down.

You know, Maryland I know was, I think flat last week and that's where I am and now it's now it's coming down. And Maryland's been reopening slow phase reopen county by county. People are definitely doing things. And it's still going down.

So there's a lot. You know, there's a lot going on, you know, Doc, we talked about seasonality. Well, up here we got Arizona, Florida, you know, you would love to see those have cold, you know, warm weather having to go away. But that's not happening. So I don't know. Is it behavior? Is it masks? Is it tests? It's all sorts of things.

Doc: Do you do you know, like, Southern California data set on March 1, what the actual raw number is versus the current number? Is that a is that really sloped that high and that bad? Is it just, you know, is that up like, you know, one 1,000,000th of a percent but it's of rising category?

Matt: I think that's pretty much starting. So if you're talking March versus starting pretty close to zero. I can get the numbers. I don't know them. I don't have them open right now. But I mean, that's the full, I think is zero to 136 or very close to zero. You know, 136. You know, you can be talking hundreds of cases at the at the middle of February.

Doc: But when I look really close, it looks like the last couple ticks it's turning down. Anyway. Okay, could look at the raw data, where I jumped to that all these states are blown out of the water with tons and tons of folks.

Matt: But, yeah, so. But again, the point is, it's mixed. It's different in different places, you know. And if some of these states decide to close again, you know, that's going to be that that would really spook the market. But at this time, it doesn't seem like anyone's talking about that. So we'll see.

In virus news, there was quite, I don't know if scandal is the right word, but there is a flurry of information this week. First, the WHO came out and said asymptomatic spread of coronavirus is very rare.

That sounded like great news. It would totally change the way people are trying to deal with this. And it would totally change what we could do to get back out if that were true. But then they almost immediately had to clarify. I don't know if they use the word retract, but they essentially retracted that. They have a study based on some self-reported instances in China of people who sort of said, well, here's who I thought I caught it from. It such a weak study, I that, you know, they have some evidence there, but the strength of what they came out and said did not match the evidence whatsoever.

And considering all the things that have shown that there is some asymptomatic or pre-symptomatic spread, you know, you really need to get some evidence on the other side, you know, if you want to update your Outlook. But it was, I mean, just with all the bundling of communication throughout this whole thing I was so surprised to see them do that, you know, at this late at this late stage.

Doc: Yeah. And to me, that's another example of institutions and folks who are running around in this area, sort of not really knowing what's going on. It's so frustrating for me because… How do I say this gently?

It probably is true. I would put my money on it. That asymptomatic spread is very rare. Right? I would go with the first thing. But because someone came up probably somebody legitimate scientists, because they like raises their hand in the backroom says, um, my research showed this. And then of course, the WHO leaders are like, whoa, we can't do that. We need more funding. The US government's about to spend billions of billions of dollars more. We can't say that we come on stop. And so whoa, we're not really sure we need, you know.

And then the bottom line and all this research that's coming out daily. That's garbage. We need more money. We need more funds to research this. The answer is not clear. We have to study it more. This has been my pet peeve all of my life people like their concluding statements are, we're really not sure. But we need to do more work.

It's like, I mean, that's true of everything. I'm really not sure I've made the greatest and best wine ever. I got to make more wine. Come on, people. Stop it.

Matt: Doc, did you? I didn't plan on talking about this. So I wish I had it here. Did you see the baldness paper?

Doc: No.

Matt: Okay. So there is a paper that you know, and so one of the things we've talked about, there's a lot of preprinted or not peer reviewed stuff coming out really fast and it's good to read but you have to take everything very carefully. And so there was a paper that came out that said, I forget if it was you know, infections or mortality I think it was mortality. Coronavirus mortality is related to baldness. And there was a paper came that out and like there was this, it didn't it wasn't the biggest news of the day, but there are people talking about it. And then the paper was updated with a special note that said, "We are adding a clarification that we did not control for age in this study."

Which can be a known contributor to COVID mortality. So, I mean, it's the most obvious it's the most obvious control you would put in there. I mean, you almost if you do a study like this, you just put age in every time. It doesn't matter. Right. So anyway, if you're bald, don't worry. You're not at greater risk.

So the yeah, be careful with what's out there.

So in the spirit of not reading preprint on peer reviewed papers, here is one from the CDC. This was just interesting. They're I think 1,700 service members on the USS Theodore Roosevelt and they had an outbreak in COVID. I think the number was 64% ended up testing positive either via, you know, a real time PCR or a serology test later on.

So they went and they surveyed these people and they tested them and they tried to find out what could help explain who got in who didn't get it. It's obviously a very close environment. And the takeaway here for me, they did a bunch of research on the symptoms people had, but the prevention behaviors is what I found interesting. They asked people were you washing your hands more? Did you use hand sanitizer? Did you avoid common areas? Did you use a face covering?

And of these, the one that has the best ratio of infection to no infection is face covering. Everything else, I mean, that one is way off the charts, compared to the others. So it's another vote for using masks.

You know, I know people don't, I'm not going to say you have to be forced by the government to use a mask. But it's like holding the door for people these days, Doc. And you might have a different opinion, but just be a nice person and help other people who might be at risk even if you're not. That's my theory.

Doc: Yeah, you got me going here. So what this says is, you know, this is a ship, this is a great experiment on, everyone's packed in and not everybody got infected. That's the most important thing to notice. And then what is true is if you were using a facemask and reported such your likelihood of getting infected, is lowered by 70%.

And so you know, we could dive into the data on another day more depth and talk about it. But
it says two things one… Unless you told me that everyone on a military ship, I find it hard to believe that everyone wasn't ordered to wear the masks all the time. And so that's an interesting thing. But still, yes, it's true that lowering your exposure to number of virus and bacteria particles improves the odds that you won't come down with an infection. And this has been true before COVID. It's true now. The question is, what's the likelihood you're going to get it just wandering around holding the door, opeingn the door. And I don't think it's that high anymore because of the nature of both the seasonality, but also because the natural immunity that the human body has rids us of lots of things all the time, year after year until we get older, or we have poor immune systems.

So my tirade here or my run is yeah, okay, this is a respiratory illness. Wear a mask. This is true when you go into someone who's got tuberculosis. Don't wear a mask, you're at risk to get tuberculosis. Not everyone did. Not everyone does. Not everyone will. But you will definitely lower your chances. And yes, it feels obvious to me. So I'm not laughing at you. But I'm just saying, I don't think it should shape both law as well as people worrying about it. I was just talking to a Mason, who was talking about someone who's driving down a country highway and a lady came out wearing a mask to go get her mail out of her mailbox and ran back in and he kind of thought to himself, hmm, now, is it really that dangerous and bad? And the answer is no. That that is not the time you want to use a mask. But if you're sick, or you're feeling a little under the weather or someone around you, let's say you on an airplane or it's flu season, yeah, wear a mask. You're going to get exposed to less of that stuff.

You're also not going to be exposed to less of that stuff. And so your immune system is not going to make you immune to things for later in life when you want to be able to fight them off as well. So there's a trade off. Do you want to not get sick now? Maybe get worse sick later if we don't have vaccines for these things? Anyway, you it's just kind of early slide eight to get me going.

Matt: All right, well, this one will calm you down.

This is from the same study. This is just a list of symptoms. And if, you know, if you report the symptom, how did that affect your odds of having been infected? So just interesting point here, because we had talked about this before loss of taste, smell or both, is really off the charts. If someone said, oh, yeah, I had that they were 10 times more likely to have been infected than not whereas things like sore throat vomiting, runny nose, they were not much different. So just sort of the symptoms and numbers, you know, fatigue, nausea, cough, and then that I had a loss of taste or smell, or the ones that really jump out.

Doc: Yeah. And so, you know, keeping with this, there's an interesting paper that I was just reading about last night on children. They're trying to figure out why do children have, it seems like they're less infected and less affected. And it turns out that in the nose, some of the receptors that this virus uses to attach and get into you are less prevalent in children. So that's, that's an interesting fact. And a mechanism that makes sense. Why children don't get that affected. The other part of it is, when you do have this thing, get in your nose and start to do it, the reason smell and taste go away is true with all the other respiratory viruses because they get in there and cause inflammation and that nerve path gets inflamed and so you lose that sense of smell. And taste is intimately related to smell.

In fact, you know, I've heard stories it said that 70 to 80% of our taste is actually from smell. The mechanism makes sense. Yeah, these herbs that go back up into the brain get inflamed. So yeah.
Matt: Yeah. So it and like you said, loss of taste doesn't necessarily distinguish from some of the other diseases you may have had, but it certainly is a sign of something. Interesting.

So, you know, I'm thinking about this from an economic perspective too. You know, if the situation is not getting better here in the U.S., it's not getting better globally, especially South America.

And I mean, I can't even imagine you know, the next chart shows some things on that. But I know Brazil sort of on a runaway trajectory right now. And those are places that don't have the same capacity, they certainly don't have the same financial wherewithal to weather or, you know, a recession or shutdowns the way that maybe we don't have the financial wherewithal either, but we're trying to muster it. So will a larger international expansion cause problems? I don't know.

This is cases and thousands, you know, we are here's our advanced economies. We're doing well. China had theirs here. This is developed emerging markets. It's a classification from I think, this the World Bank. So still, you know, not over in those places. And again, testing there is less than here. So who knows, you know, what the real number may be. But also they may be late to testing. Maybe they've had a surge here, and now they're just catching up with testing. So again, we've talked about it a lot, the numbers are all questionable. And that's what's happening.

So on to the economy, right? We've talked last week about the shapes of recovery. And we saw a chart like this going around, you know, we had a great jobs report. They're all blended together. That was this week. Was that on a Monday or was it last week?

Doc: It was Friday.

Matt: It was Friday. Yeah. So yeah. So amazing jobs report, blowout number of jobs growing. So you see this kind of chart and people are saying, look, this is a V, this is a classic. I lost my point here. This is a classic v.

But this chart is the change over the, you know, the number of jobs created over that period. I mean, here is the total number of jobs, right?

That is not a v. So we're looking at this again, the same jobs report, we're looking at the change versus the level. This is a textbook v, but that's an unfair chart. That is not an honest chart to show people. This is what we've done.

We lost 30,000 jobs? And we got what was it? 4000 of them back something like that?

Doc: And did you? I don't know, if you followed up on this, but there was discussion on the weekend of that data being awry. And there were some problems with how they were analyzing, reporting it. That there were some things… Did you dive into that? I didn't bother because you know, you don't know if it's a news story. I'm not going to figure it out until it comes out.

Matt: So there's a few different conversations I saw going on, you know. Some people are just questioning whether you can trust the BLS. And I mean, I think, I think that you can. I think these things are very transparent. And I think that they show all sorts of, you know, there's a one big number here, but they show how they get there. They share their methodology.

So I think you can trust them. I think they're doing honest work. But what's difficult is this is a survey and two things. I actually almost put a chart in here, but I didn't, that the response rate on that survey has been declining for a while, right. And during this COVID, the response rate has plummeted and I don't know particularly why but it is way down.

And number three, you know, when you are doing surveys, and when you are sampling things to find a number, it works well in normal times, and it doesn't work as well in predictable times where all your assumptions are things that you need to go back and question. So, you know, to me, the number half is the smell test, right? If things reopen and we call back restaurant workers and things like that, you're going get a number go up. So I mean, is it exactly you know, it's never exactly right. I don't see a reason to really question… to really say no, this this thing's not right and I don't trust it. I think it seems like it's fair. There'll be revisions, and we'll get that we'll get a better number, but I'm not, I'm not that skeptical.

Doc: Yeah. Yeah. Yup.

Matt: Okay, so going further into jobs. So, you know, we're fine… found some of these numbers on the white collar recession and how these job losses are spreading from some of the frontline workers or the I should say the P, the places that were shut down to some of the higher-paying and what you would consider more stable jobs. And the reason to look at that is because there's a two - there's a two-stage thing here. There's people who lose their job because of the shutdown, and then there's people who lose their job because of the recession. And the shutdown is the shutdown. The recession is something we're still trying to gauge and it's hopefully not that large. So is that job loss transferring higher up the chain to white collar workers, and here's the number so far, you know. Over 22 so call that 23 lost say, a half million, three quarters of a million. Employment, professional services, management, finance, insurance, real estate media and technology has fallen 5% since February, so it is moving up the chain.

That's not the worst number. I could have seen it being worse, but it's definitely

Showing that the recession could be spreading. And this one is really shocking. Doc, I showed this to you. And I said, Look, hiring rates in professional business services are down 4%. And you said hold on a second. It's four standard deviations off the pre-virus average, this is four standard deviations. So that is, so the rate of hiring is absolutely dropped. So maybe…

Maybe only 5% of people have lost their jobs.

But there are no new ones coming even in those white-collar industries.

Doc: And, and I just want to point out too, behind there, very close to four, three and a half deviation is the restaurant and hotels. And so you've got professional which is more than four standard deviations. But restaurant or hotel is right behind it at like three standard deviations.

Matt: Yeah. So quite… Yeah, just jockeying numbers there. So we're again, we're checking in on the reopening.

And we looked at the Google mobility data. We talked quite a bit about this last week, but just to check in, you know, the business retail and recreation locations were still down 20% from what the baseline would be. But trending up you know, this is not a V-shape. This is not coming straight up to here, but the trend continues. So people are getting out there and doing things.

Doc: Yup.

Matt: Manufacturing. This is a manufacturing survey in the blue.

Doc: Yeah, I just wanted to throw this in. Manufacturing is a small piece of our economy, but it's still an important part. And if you're, if you're going to hop on the bandwagon that says we should be manufacturing more in the United States and bring back stuff to our shores, which I don't think makes any sense from… financially, but this thing has plummeted.

And just so people know, when it's below the 50 mark, that means things are decreasing. And so both non-manufacturing and manufacturing in the Institute of Supply Management Index, so it's not just manufacturing that's down, but it's non-manufacturing, as well. And maybe a little bounce back up. Non-manufacturing hasn't reported for the… for the next bump up, but that makes me nervous.

Matt: Yeah. And so this, so and also… So this is still under 50. So that this point that we're at here is still shrinking manufacturing, right.

Doc: Yeah yeah.

Matt: But it's shrinking at a less brisk rate than it was last month. So.

This is the same survey and this is a breakdown within that data. And it measures what's happening. You know, usually you can find some sign, something that's working is the backlog of orders increasing, are inventories increasing, are factories hiring, but all these things contract and contracting, slowing. Inventories are growing, which is not such a good thing, all these things are headed in the wrong direction. So there's no signs of light inside those manufacturing numbers yet, although we'd love to see it, but it's not there.

Which is probably related to the number of bankruptcies, Chapter 11 filings. This is through May 27. So that's pretty recent. You know, big spike here we got 25… call it 27 bankruptcies with over 50 million, which is pretty large, and that's hitting levels that were pretty close to that…

Doc: And those aren't businesses doing 50 million in sales. Those are businesses that have that much in debt. So.

Matt: Yeah, you gotta have a pretty big business to borrow 50 million.

Doc: Yeah, yeah. So that's a…

Matt: And here's another. Yeah. And also, you know, look last time… So March 09 was the bottom in the market. And you know, that was just after the peak. So if you're going to… if this has peaked, you know, the bottom would be here. We haven't got there yet. But you know, that probably has not peaked if you ask me.

So if you wanted to carry that across, it would be different. Doc, this one's from you. This is about recovery rates on different loan types.

Doc: Yeah. So one of the questions that I think you have to ask or at least explore is in the junk bond market, the debt market. And that slide before says, look, people with 50 million more in debt, there's 27 companies that have now filed bankruptcy in the last month.

There's a whole other category of debt. And when you think about debt, you're worried about in a
bankruptcy, how much you're going to recover from that debt. And so on the vertical axis on the left, is - those are dollar amounts. And you see it's around 20 bucks and about 50 bucks for the light… for the green and blue respectively. And those are unsecured bonds. And then first lien loans.

So those are further down in the debt structure. And those things are making people worried. This is from a conference that I've just attended in the last couple days out of the New York Society of Security Analysts, and it's from Moody's. That's got me nervous, and that's got people there sort of going wow!

I mean, much, much lower than you would have expected and moving in the wrong direction. So this is kind of got some folks quite nervous, quite honestly. So sort of, not all time lows, but getting there in the last cycle.

Matt: So yes.

Doc: That's got me uncomfortable.

Matt: Even an unsecured bond you want a chance to recover more than $20, 20 cents on the dollar. I mean that's almost… that's equity at that point.

Okay, so now moving on to the markets a little bit. The story of this week is sort of the craziness with retail investors, you know non-professionals going into their brokerage account and knowing things. And sort of the poster boy of this is this Robin Hood free brokerage. No commissions, you know, it's geared towards younger folks maybe who do it all on their phone. So the number of accounts at Robin Hood has just been exploding. And you know, you can see there 250,000 accounts holding the mega cap growth stocks and 50,000 accounts holding some of these smaller stocks and just that that ramp up from last fall is just huge. So if you want to talk about there's a lot of reasons why Microsoft and Amazon and the big mega-cap growth stocks are going up. But there's a lot of you know, everyday investors going and actually buying the stocks getting out of their index funds, and they're buying these stocks.

And this is a measure of the total positions count in Robin Hood. This is only through May 6, and it seems like this has grown, but just people are bored at home and they're buying stocks. Which is, I mean, five months ago, the concern was, hey, everybody's just indexing anymore. Is the market even going to be able to find prices for stocks anymore? Everything's just an index account. And now of course, everybody's saying, oh, the stock market's crazy. And it doesn't make sense because all these people are buying stocks. But you know, this goes back even going back to that bankruptcy thing, Doc. Have you seen how the latest darling of these stocks are, is the Chesapeake Energy and Hertz and the companies that have declared bankruptcy are now going up 100% on the day, right, because and it's all, and it's all these Robin Hood buyers.

And I mean, you know that's a game you can play like you can sometimes find value in a bankrupt equity, but it's almost never. Very rare. And it takes so much work, so much work to go and go through those financial statements and you say, "You know, I think there might be some equity leftover after everything gets paid out." But you do so much work and you almost never find anything and let me guarantee you, these people are not doing that work, because there's no way these things you'd be doubling on bankruptcy announcements. And I think I saw one of them, Hertz or Chesapeake, was coming back down to earth today.

But just the 2020 markets are... I'm not gonna say they're wrong or crazy, which is kind of the impulse a lot of people have, but man they are unpredictable.

And maybe this is part of it. This is the excess liquidity in bear markets. So if you want to take… So excess liquidity, they would essentially be money supply beyond what is necessary for growth or inflation. So let's look at the black line in here, 2007. Bear market starts here, Fed doesn't do much, doesn't do much, okay, ramps it up. This was the biggest you know, financial intervention in history, biggest and fastest.

Now look at this one. Just you know, the Fed did not hold back on the cannon whatsoever, just completely blasted out there in the market. This, you know, this just shows we're in uncharted territory. Very hard to see the long-term consequences or even the short-term consequences of this. But it's a different, it's a different market.

Doc: Yeah, it's funny, I when I look at this chart, and I see that excess liquidity. I'm like this, I have double fingers crossed, right. I just hope that it works out. It seems like an incredible extreme.

And if you look at the black line, which like you said was from the 07, 08, 09 crisis versus dot-com bubble and bust down in the gray, you know, people were panicked and worried that the Fed was doing too much then. And sure we had a nice run in the stock market and the economy got to all-time best highs and employment and like… What is this, this red thing straight up? And I don't want to be the guy that says it's going to end badly because I could see a story where it's controlled and managed and as things start to get up… It's just that government, the Fed, politicians, people in power and control of tax money, and let's be real, let's call this what this is. That's future tax money right there. I just, I don't have faith that it's going to be spent well. Let's just put it that way.

And so is this the last hurrah is this will this go down? Will we look at this 50 years from now? And say, Yep, this was, this was the time that that old country called America did this. And now there's this, I don't know, I'm making it up, a global economy, there's a different… China's in charge… That whatever happens 50 years from now, are they look back at this, or is it possible in the day that time is compressed and information flows? Can they manage this decrease assets and debt as the economy kicks back up? I don't know.

The Fed… it's weird, right? Because the Fed has this. They're… they are the currency of the realm. They - it's still fiat money. And it's the U.S., America. Freedom, right, all this stuff. So, um, what makes me nervous and if we're done with this chart, I can like lead in right to the next chart. Do you have more thoughts on this?

Matt: Yes, I will, I would say so. You know, think back to 2007. Right? Fed came in, did all this, you know, and people were worried about it. Oh, is this too much? Is this too much inflation? Is this going to lead to inflation? Now what happened in the end was, this was not a problem, right? And looking back, we had a long, slow recovery. And the lesson was, look, if we did this faster and bigger, probably wouldn't have been an issue. Right? So the lesson from this one was go bigger and go harder, and now that's what they're doing. But, you know, there is some point where it's too much, but so far. That's the lesson that the profession took from this. And now they're following that lesson. And we'll see. I don't know.
You know, that didn't turn into a problem. Maybe, maybe this won't? I don't know.

Doc: Yeah. But my question is, where does this money go or the future flow of that money? mean the Fed hasn't started really buying up equities yet, but it's probably a matter of time.

Matt: Yeah.

Doc: And then you're supporting these markets and capitalism with a false… You've got your government controlling that flow. That's, I don't know.

Matt: Yeah.

Doc: Crazy, crazy time ahead. What's got me nervous is the Fed doesn't have to balance the budget.

 

But many, many, many, many states do have to balance the budget. And I just would point people to the dark red. These are states, even the oranges, but these are states, California, Colorado, New Mexico.
These are states New Jersey, they're in trouble. They're going to see decline in revenues. And they're not going to… that's not going to change, right? I mean, and their revenues are from a mix of Fed, a mix of taxation. So that's problematic, and it's one of the reasons in Retirement Millionaire we've talked about… We have an annual or I don't know, it seems like we do about every 18 months, we put together a report and say, you know, get out and move out of these states. Man, if you thought California taxation was bad now, just wait. If you thought Illinois was bad, just wait. New York, same thing. They just can't… you know, the money.

Well, up till now the Fed has not been able just to print it and give it to the states and say, Ah, don't worry about it. You didn't balance it. Here's a… it's Corona. This is Corona money.

Matt: Yeah.

Doc: I… then what does the money mean? It doesn't mean anything. It's… it's not work. It's not related to efforts not related to anything. It's just given for… I don't know. What do you make of this chart? I just threw this in the last minute this morning.

Matt: Yeah, you know, this is a place where, you know, the numbers don't always dictate, right. There's, there's people involved and there's policy involved. So, you know, if you were to… So let's say California had to budget their… balance their budget every year and they lost 20% revenue, and then you'd say, okay, well, they have to cut 20%. But that's not the way it works. They can, they can borrow, they could get bailed out, they can raise taxes. And there's so many levers there…

Doc: Or declare bankruptcy. Right?

Matt: Or declare – yeah, apparently. So it's so hard to figure out what goes on here, now. You know, the muni bond market is very calm. Right now, right? Those spreads are not rising. They're not worried.

Doc: But that's because, that's because the Fed's been saying they're gonna buy up some of them.

Matt: Exactly. That's because of the search for yield. It's because the Fed is maybe going to backstop some of these things. You would, and I still think that the federal government will be bailing some of these out depending on, you know, just depending on where, when and who's in charge.

But it's, it's just a lot when you look at stuff, it just does not add up on its face. Why are these muni bonds not reacting to these huge tax declines? And there's you can think of five or 10 reasons and you have to figure out the, you know, sort of the weighting between those. So I don't know, I mean, these governments have the power to tax, which is why people will loan money them. And I'm thinking from a muni bond perspective, which is why people will loan money to them so cheaply but uh, you don't want to be the one there getting taxed, it's certainly not a good deal. Yeah.

Doc: All right.

Matt: So now you know again, virus news: good, economic news: not so good. Sorry to, sorry to be a downer.

Doc: Yeah. All right, folks. You got questions rem@stansberryresearch.com. Free updates in our daily healthandwealthbulletin.com, check that out. So mix of both health and wealth. And, Matt, I don't know any reader questions? We have a couple minutes to go but… Any final thoughts? Anything? Questions you have?

Matt: No, just watching the watching the reopening and we'll see how things go. You know, the market finally had a big down day on Tuesday. But otherwise it's there's just people have no fear of any risk.
And we'll see if that returns.

Doc: Yup. Fantastic. All right, folks, I have seen a couple questions on vitamin D and that sort of thing. We've written about it. Hop into Retirement Millionaire and read what we've written about that in our health sections. Fat-soluble vitamin, the risks of that are as obvious to me as they are, they regulate calcium. A couple other questions on our take on stuff… This is our take on stuff. We do this kind of gathering some charts, talking about it, trying to figure out along with you and look for Retirement Millionaire to come out later. Well actually when this comes out, which is tomorrow, so we'll be out. Retirement Millionaire just came out and then Income Intelligence next week, our income letter. And then Retirement Trader will be out as well. So we're busy and thanks for it and Matt, have a good rest of your day.

Matt: Thanks, Doc. You too. Talk to you soon.

Doc: Thanks, folks.

Matt: Bye, everyone.

Doc: Bye.