Stansberry Research

Doc Eifrig's COVID-19 Briefing No. 18

August 13, 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: Hi everybody and welcome to COVID conversation No. 18. I'm Dr. David Eifrig. With me is Matt Weinschenk. We are socially distance distanced again. Matt, welcome. How was your two weeks off?

Matt Weinschenk: Good, good. Just I'm doing the same stuff. We have a Retirement Millionaire that came out today as we're recording. So exciting new recommendation in there, I think. So that was what we've been working on. How about you, Doc?

Doc: Yeah, same thing. Just kind of mucking around and all the stuff I muck around in actually looking forward to this talk. Because, as you know from this talking a little bit beforehand, there's lots of things we've got buried in here. And we're probably going to skip through some things quickly and throw some different ideas out and about and hopefully have some fun conversation with everybody.

And thanks, folks, for writing in. We've had people send notes into rem@stansberryresearch.com. And that's our feedback line as well. So you want any questions you want answered, you want us to research anything, share with us. Folks have sent lots of stuff over the last two weeks. And then again, Health & Wealth Bulletin, sign up there, you get free updates. We do that six days a week.

And anything else we should be saying at the start of this, Matt?

Matt: No. I mean, we do get lots of great feedback and lots of great analysis and opinions that we get from people. definitely appreciate it. Some of its very insightful, I should say.

Doc:  Alright. Seatbelts on. Here we go.

Matt: Yeah. Let's go back to the usual numbers.

Number of cases have turned down. Maybe a little upturn there, but certainly you know, positive from here after the second wave if you want to call it that.

Deaths are climbing. You would think that this climb is just the delay from this climb. Hopefully, that will be the case. But nothing particularly shocking there.

Where the news is extra good as breaking it down by location. You know, this rising group used to be by far the biggest group we have. But all these, you know, flats, not a bad place to be in, especially for places like Texas. Did Florida get to the declining group? So that's great. So, you know, I think that it really seems to me we're sort of over this second wave. You know, there still may be some places yet to have theirs, but I think enough of the population seems to have moved past that.

Is it biological? Is it the natural path of a disease? I'm sure that's part of it. Is it because behaviors or people are, you know, got scared when they have their second wave and are behaving differently? That's part of the too very hard to disentangle but cause for optimism at least so far.

Doc:  Wait, did I hear optimism? That's fantastic.

Matt: Oh, I'm always optimistic, Doc.

Doc: Yeah, you are, you are.

Look, there's some been some interesting stuff in the news. And one of the questions, again, hard to understand and wrap around it. But the quality of a test and the characteristics of the test depend on how much prevalence there is of that particular thing you're testing for, as well as the quality of the test. And it changes if there's a lot of that disease or things you're testing for in the environment, versus there not being that you have false positives and false negatives. But there have been a couple interesting false positives.

That one, Mike DeWine and then Matt Stafford, quarterback for the Detroit Lions. So governor of Ohio, Michigan quarterback.

And this is a problem, right? You suddenly get a false positive. In some countries, Jordan, you're thrown in lockdown for 14 days. And what if it's a false positive, and no one tests you a second time?
So I remind people that, you know, when we're looking at things and deciding what to do with people in humans, I want to trust the individual and the power of the immune system and the power of the individual person, less so government telling me what to do and not to do.

I want to dive into this next shot is just kind of meant to be some fun and playfulness. But I want to talk about pandemic math in the context of models. Matt and later, I think we're going to come to fisticuffs on a couple things, but it's going to be I'm open minded to always listening to Matt, I think he is the same way. But the question is, what's the answer here? What is one plus one equal? And I want you just to take a minute and think about it.

I know you think Doc is crazy.

Everyone wants to say one plus one is two, right? Well, it depends on the model and depends on what you're talking about. For example, let's throw a chicken and a rooster together.

Eventually, one plus one can equal three. How about a chicken and a fox?

Right? I hope you can appreciate the humor, as well as the awareness of what are you modeling. How are you modeling it? How are you testing? What are you testing? This means you have to gather data, and you have to have open discussions about what you have to determine what actually might be going on and testing those hypotheses. So next slide.

We've talked about this before, but I want to point out that if you get sick and you're younger, and then you die when you're younger, when you're – and let's look at the third line down five to 14 years – you have about a 70 year life expectancy. So for every person who dies at that age, we're losing 70 human years. For every person who's 85 years and older, you lose two and a half years of human years. So this has to weigh into the discussion. I know people don't want to have the discussion. How do I know this? I know this because the majority of health care in the United States is spent in the last few months of life, trying to perpetuate a belief and a hope that you could keep on living.

Everybody dies, let's have an open discussion about the value proposition for being older and younger, and resources we devote to that. And again, I just want to throw on the table, I don't celebrate a great grandfather or grandfather passing away other than if they lived a great life I'm going to celebrate at their funeral or at their memorial. I don't want young kids to die. It's tragic and you lose a lot of human potential. I just want to throw that out there.

And have people look at this next chart and realize that this is over the last few years are all the squiggly lines over the course of week one on the left, all the way to week 52. And right now, there's a whole lot fewer people under the age of 18 dying. Now, some people might say that's because they're locked at home and they're not getting into accidents. They're not out playing. You can make a case and argument for lots of stuff. But this is an interesting statistic. Matt, do you make anything of this? What do you think of this?

Matt: I mean, that first explanation that they're there, you know, safer at home, is really the only thing I can think of. I mean, I wouldn't claim to have a good guess at this –

Doc: But it's interesting, right? Next chart…

Let's look at COVID.

And again, I just want to point out, this is deaths from COVID. And if you look over the right column, you can see the first two rows are 00, you don't get to one or two or seven. So 44 years and under it just doesn't really kill young people. So when you start seeing us in the press and seeing examples of it, I just, it's not true. It's not happening.

Now, if we overlay this onto this idea of what they call, quality adjusted life years, saved or lost, we can see what's happened in COVID. From February 1 to May 16, where under the age of 25 it looks like we've saved 154,000 years of life. Whereas when you look at the 65 plus life years lost, we've lost 540 that's a net loss of 390,000 life years. I think it's important to recognize that when there's a lot of old people even though they're not living that long, that's still a lot of QALYs. And QALY is supposed to be used. And when people who are getting their master's in public health start to apply this and think about it. And it really is in the discussion that we started with COVID of what do you do when the ICU is full? Who do you admit when one opens up> Do you admit the young person? Do you admit the old person? It's interesting question.

Matt: Yeah.

Doc: Next slide...

I think this goes into what's happening and a fun model or that you ran into.

Matt: Yeah, just going further with sort of maybe we're past that second hump here. This is just one particular model, not an epidemiologist, but a data science guy. He's got a very open, very well renowned model at that's had a very good track record, which I find interesting, you know, that one of the best models is a guy who's doing it on his own as opposed to some National Health Bureau with an army of analysts and competing interests. But just the point here is that, you know, it looks according to this, which is one good model, this sort of backs up that maybe we've gotten past some of that peak there.

So that's positive. And here's another little chart –
Doc: So I, Matt, I want to just for fun, because it's easy to do to armchair quarterback, if you go to that last slide. I want to say that we're going to be, at least at the bottom of his level there on the far right, November 2020. We're going to be at the bottom.

Matt: So you're saying that deaths per day –

Doc: Are going to be even lower.

Matt: So will you take this cumulative number? You'll take the under on that?

Doc: Oh, no, I think the cumulative number will be… I'd have to look at where you're…. How many deaths is that?

Matt: It's hard to say. Maybe that's 300. 400?

Doc: Yeah, I think it'll be less than that. But okay, deaths per day at the bottom of his current model, is that November 1, is that?

Matt: Yeah, that would be November 1.

Doc: Anyway, just for fun, right? I'm more optimistic even than you.

Matt: All right. I'm gonna counterpoint that in a moment when we talk about some of this stuff, because I have a… Okay.

So here, again, so this is some more positive news. So this is an analysis that takes that the deaths in Florida and rather than treating them by the date, they were reported, which is what essentially everything is, he charts them by the dates that they actually died. So if there's if there's data shifting around, you get a more accurate view of when things are happening. So you can see here, they're really coming off, but also you assume like, you know, you don't have the desk from yesterday or the day before just yet. So this is kind of his model of, of where that's going to be when all the data comes in. But the point is, however you look at it, it lends credence to the view that Florida is over, over the hump. And again, 100 deaths per day is not good. But we might be heading in the right direction.

Doc: But I'd like to point out to that the peak back on July 20, really, when we were talking about this and debating this, and somebody else on this talk with me was a little more worried than I was. So I just I want to just point out.

Matt: That's true, Doc. But I also said there would be a second wave. And you said, there were not. We can go back and forth. You know what, when we both make 100 predictions per week here, we're gonna have one way or the other. Okay.

So, okay, so well, one great reason why the death may be trending down, is that the treatment of people in the ICU has gotten a lot better. They used to die at a rate of around 45%. And now there's 20%, maybe less than 20. Yeah, closer to 15.

Lots of reasons for that, that that I don't have the expertise to go into, but they're doing a better job with the patients in the hospital.

And early on, we talked about excess deaths and how the number of deaths look to be more than the number of corona deaths. So there was something missing there. Just an update on that. Let's see, July 11, there was 180,000 excess deaths and 135,000 coronavirus deaths. So there's a gap of 45,000.

So, that still suggests either an undercount of coronavirus deaths or there are other things. Maybe it's, you know, distress deaths from the economic fallout things like that, but they're not too far off. I mean, 45,000 is not a good number to be missing, but they're still within a general range.

Here, this is from you, Doc, from some excess deaths in Europe.

Doc: Yeah, and so this is not necessarily a counterpoint it's related to this concept of excess death.

And I would just say, highlight the top row and the top lines are for 45 to 64 year olds, and the bottom curve is 65 plus years old. And this goes over 2016 to now and shows you in the winter season where the first red circle is in 2018. And the one below that in 2018 from that different age group. These are excess deaths thought to be during the respiratory infection season. And you can see that back in '18, two years ago, there was a particularly bad, global, bad respiratory season thought to be influenza. But again, unless you're testing for everything, including other weird things like human metapneumovirus, and RSV, anyway, excess deaths 140,000. Today, if you go to the far right, that two totals up to 175 thousand excess deaths. And I'm not celebrating that it's only 30,000 more than it was an '18.

The point is, we do have this natural common period of time where we can get excess deaths. You can see back in '19, there was just a tiny little hump it right over 2019. Do you see that little blue mark? Are you able to highlight that? Yeah, right there. So those are just a little bit over the range of considered normal.

But what's interesting is, and this particular person who's making this argument that in the period between '19 and '20, there were less deaths, that is this blue curve drop down, and we had this period where there were fewer deaths in this period proceeding COVID. The idea being, the hypothesis being that these people were living for whatever reason a little bit longer. And everybody in this group was living a little bit longer than they normally would have making them, I don't want to say right, but that's not the right word. But you know, people make perhaps more susceptible to something like this a new upper respiratory infection to the human population. That's all I got to say about it. It's not that profound and interesting, but I wanted to share that with people. In the excess death category, yeah.

Matt: All right, and then just check in on the public sentiment.

You know, people are still worried about this, you've got this is from the start of August 85%, somewhat very or extremely concerned. 59% very concerned. And you know, this, this one, at least sort of charts or follows that path of the second wave. And you can also see people are starting to see this effect in their own lives. And that's, you know, that's one of the most salient things. We can show people all the data, but when they know someone who has it or know someone who dies from it, that's when they that's when it really, really hits home.

And so the thing I wanted to talk about a bit, and I'll tell you… So there's a new wave of headlines about these long-term effects, right? And that there's, you know, all these stories sort of start off the same that there's someone and they were successful this or that, and they got COVID. And they recovered, but they still have headaches. And it's weeks later, and they're not all the way back and all these things. And those stories are scary to read. And that's emotional. And that's how our brain works with those stories. But we don't have enough. Well, we have some information. That's what we're going to go through. But we don't have enough information to know if those are one in a million cases, or one in 100.

And what got me thinking about this, Doc, I listened to an interview with Nassim Taleb, who's the black swan guy and an expert in risk. Different thinker, he has a lot of good ideas, but I don't always agree with him. But he mentioned you know, we don't know really anything about this. We don't know if we're gonna find out 30 years from now that everybody who gets this is losing 10 years of life expectancy or something. Now he's, that's what he thinks about he thinks about these big risks and these black swan things, and that is not likely. But it's possible. I mean, we really don't know. It took us a long time to find out it was aerosolize. It takes us a long time to find out what the actual case fatality rate is. We're still working on that.

So the point is, this is something we don't know. There's a lot we don't know. And I wanted to figure out what we do know so far. And back to your bet that we'd be on the low end of this. One thing I think we don't know is if there's a seasonal thing in the in the fall where we get another wave there for biological reasons. I don't know. So anyway, let's look at these studies.

I have to get the notes here because we got three of them now. I'll confuse them otherwise.

So this is a study from Italy. This was 143 people who were tested positive when they were in the hospital. 60 days after those positive at the onset of symptoms, they went and checked in to see how they were doing. So you can see, during the acute phase, 80% of them had fatigue. 60% of them had this difficulty breathing, essentially, joint pain, cough. But now 60 days later, 50% still have fatigue. 40% still have trouble breathing. The sort of headline number here is 44% reported worsened quality of life. All right. But what? Go ahead, Doc, what do you have to say?

Doc: I was just going to ask you what percent reported worsening quality of life?

Matt: 44%.

Doc: Yeah.

Matt: So now what we've talked about before is all these all these studies depend on who's in that study and why you picked them, right? So these were people who must have had a pretty bad case because they went to the hospital. They are people who knew they had COVID and were tested positive. And we've sort of seen that the number of actual people who have COVID is maybe five or 10 times like the tested number, somewhere in that range. So if you're going to say 44% have worsened quality of life, but maybe the real number is 10 times this, but then you're only talking like 4%. So it's still a lot we don't know here. But these are some… it's one number to try and think about it. All right.

Doc: Before you do the troponin table, go back this a second…

Doc: Because what came into my brain on this was… growing up as a kid and my, my dad was a doctor, and you know, you'd say something like, "oh, man, my, you know, my joint still hurts or I'm still tired or I still feel a little short of breath or have a cough." And I just remember this repeatedly. He looked at me like I was from Mars. And he'd go, "Yes. You just got over a bad upper respiratory infection." Or "yes, you broke your ankle; your ankle is going to hurt you the rest of your life when the air pressure is a certain air pressure. Get over it, dude." And I don't know it brings home like the humaness of…

And this, you said this was an Italian study?

Matt: Yes.

Doc: Yes, so and again I'm… I'm making this up but these guys, this group is you know, half men half women it looks like 56%. You know Italy, the median age was 82 so these people if they did get COVID - well they did, you said they had - you know so these people probably also lost their parents in this lap so yeah, man they're feeling like crap. And I'm not saying I would do this study or add on to and then control for, "Did you also lose your parents" but it's like… it's gotta be culturally and socially devastating in a place, in a country notoriously known for famiglia. Yeah, you know, so I just throw that out there. Sorry. Go on and…

Matt: And moving on to this next one.

Matt: So just to, like you said, even before we get into this, there's a lot of things people are talking about. There's this brain fog thing, which is… it's not measurable, right? People might say they have it, they don't you know, are you do you have fatigue, you know, everybody has fatigue these days.

And there's reports of kidney damage, which is kind of hard to report. So these are only small aspects of it. But the good thing about this one is these are measurable levels. And this relates to a couple weeks ago, we talked about how it looks like the COVID disease is an epithelial disease, it's not attacking the lungs, it's attacking the blood vessels and there's all sorts of indicators.

Doc: I mean… We talked about this before. And if I did say yes to epithelial, it's endothelium.

Matt: Endothelial, you're right. Sorry.

Doc: Yup.

Matt: Sorry. So endothelial disease, so there's all sorts of cardiac issues. So this is a German study, 100 patients, this is 71 days after their COVID test, and 80% of them still had what's called cardiac involvement, which means some sort of sign from one of these markers that they are having heart trouble. And 60% still had myocardial inflammation. So these are the markers. And what I like about this one is you can see the people who had COVID with a home recovery and the people that had COVID and were hospitalized have higher levels of this native T1 and native T2. I like that those are broken down because it kind of separates. It gets us further from, "hey, are you only looking at the worst cases?" No, you're looking at some of the reasonable ones. And this troponin which is essentially an indicator usually used as an indicator of heart attack. I'm not saying these people had a heart attack, but there's cardiac inflammation at much higher levels for these people. 

Matt: And then…

Doc: It's a, it's something that leaks out when you have a heart attack and people, to rule out a heart attack, that troponin level is tested over sequential, fixed amount of time to see, here's what it is now. You wait a little bit, you take a second one, and even a third one. And if it's increasing, you know, there's damage and it's actively happening. So that's a great test for inflammatory process and myocardial dysfunction is a strong word because it's not a functional test. But yeah, fun, fun, interesting test to look at it a little closer to my arguments, which had been for a long, long time since 1999, 2000. That cardiovascular disease is a post inflammatory infectious process, and maybe multiple infections like a coronavirus or other viruses.

So I, I'm excited to see this research. I love this stuff.

Matt: Yeah, and most of these, I'm saying long term, it's only been two months

Doc: Right, right.

Matt: And most of these are somehow related to either ongoing inflammation or a huge inflammation, a huge inflammation response to either pneumonia or the virus. And that's where all these things are coming from. Okay, so now let's try and widen our net. Bigger, right? So this is in the US. This is a phone survey. They talked to 271… 270 people who had been diagnosed as an outpatient, right? So these aren't the worst cases, you're ideally getting a pretty good and broad sample here. 270 is not that much. But this was also only two to three weeks after the tests. And in this case, 65% of people said they were at their usual state of health. 35% we're not. So you know, the bigger you cast your net, you see that number coming down a bit. So that's good news.

But, you know, we don't… we don't have an answer here. We're trying to put together the pieces. There's definitely some ongoing things for some people. It may not be that big a number, but it's certainly not zero. You know, I think SARS did have long-term pulmonary and some like bone-density issues for people who got it. So, so we'll see.

Doc: Yeah, that's, you know, for me, it's the excitement, it's a little bit hard for me to see on the screen. But you really… your point is the light blue and the dark blue is the light blue is things and symptoms and complaints at the time of testing, and then the darker blue is post that recovery. So you've seen a little bit of recovery in these things and some of them a whole lot of recovery.

But still… long term challenges and sequelae. But again, I hear my old man in the background going, "Yeah, you, you just, you've been sick. This is your body's natural process of trying to get you back up and eventually yes, you will die. You will not actually one of these things you will not recover from." So I say…

Matt: And, you know, so that's the thing. We're two, three months on these things. We're going to be seeing studies, a 10 year follow up study or a 20 year follow up study and we don't know what's gonna be in them yet. Yeah.

Doc: All right. Yep. 

 

Doc: So next slide. To switch gears for a second here. I want to show people that masking is not a new idea. Folks in 1918 were doing this. Here's a big huge outdoor event where you can see folks are wearing stuff. 

Doc: The question is, when you look at the research, and here's a study out of Hong Kong looked at 10 RCTs and found no significant reduction in influenza transmission. Now this is a different virus, as you know, from corona. But the use of facemasks across these 10 randomized controlled trials.

I saw a different meta-analysis like this, I think it was seven RCTs. Six of them showed no difference. One of them did and a couple of these RCTs were randomized control trials were in both of these. But I just want to point out that it's not straightforward. I've been in an argument with one of my sisters recently about all masks are going to cure everything. And I was like, you know, ah, not sure. Another thing that I found interesting has just come out…

Doc:  That, you know, people early on, I think in our second or third conversation we had started everyone's like vaccines! Vaccines! let's throw hundreds of billions of government dollars which will be taxes from the future and throw them towards vaccines. And I remember vividly, you probably do, me saying, "Gosh, what if this thing mutates?" And you know people are like "ah it doesn't mutate, the virus doesn't mutate." Guess what, folks? The virus, coronavirus, does mutate and that changes the effectiveness as you know of the coronavirus. It's why people have to get a different influenza shot the next year and even when we try our best to match it up with what's going on in the Southern Hemisphere. Sometimes you see in the press, it only matches up to 20, 30% of the influenza that's flying around. So I want to remind people, again, the individual in the power to fight and battle with things like a coronavirus, and we'll do it and it fights and battles to try… Anyway. This is good news because as they mutate, they tend to get weaker and weaker. So I just kind of wanted to throw that in and share it.

 

Doc: I also wanted to… And I'm going to prep this, you can jump in if you want Matt, but I… this is a cheap shot of me to throw in and say, you know, I found this in a Lancet study. This little line that had to do with lockdowns and border closures because I got some people that are writing into us and wondering about Sweden and U.K. and you know, blah blah, blah. Anyway, the one line in here that I cherry-picked. Are you okay with me saying that I cherry-picked it?

Matt: Sure, of course.

Doc: Yeah. That said, that the border closures lockdowns of widespread testing were not associated with increased mortality. I'm happy to leave it there unless you want to comment on that. Because you saw the study and I think you…

Matt: I do and it's not a… it's not a poor quality study. It's a good study, but that line doesn't really reflect I think what the rest of the study concludes.

I'm trying to think how deep to get… The short answer is the study found that lockdowns are associated with lower numbers of cases. Okay, so it is good to prevent the spread of cases. Now when you look at the mortality, it didn't have a relation, righ? So the number of people who died. So that seems a little strange, right? Generally, more cases has meant more deaths. And I would attribute that to… so this was a study of 50 countries. 45 of them.

Doc: Okay, well, I want to stop you right there. You said generally, more cases means more deaths. But I want to ask this question, and it occurs to me, do you think that the biology of this is different in Italy than it is in Sweden than it is in the UK than in the United States? That is, if you just let this loose, spray it around the world… Do you think the case fatality rate or the infection fatality rate would be identical or nearly identical and…

Matt: Well, I don't think it was. I think this is this will actually kind of support where I was going. I don't think it would be that different place to place. Okay, so are you asking specifically as strict… as far as strains of the disease? Or are you talking about the healthcare response?

Doc: No, I'm talking about like one of the one of the assumptions is that human, we can control this. And, the initial discussion, government wise was, I think a pig in a poke. It was like, "Alright, let's open up all these hospitals. Let's give $150 million to Cuomo's buddies and open up these MASH emergency centers. Let's send up the Navy ship so Trump can look like he's supporting it." And we didn't use those hospitals. We didn't use that ship. We never got to overflow capacity. We flattened the curve. And the question is, let's make… you know, you're gonna make lots of assumptions, but we flattened the curve. So what do we do now? Do we think that this virus will die out? Do we think we're actually going to cure it and prevent it and have it disappear like smallpox? Like, what's the… what's the plan and goal now? Is it still to flatten the curve? Because that's to me, that's the million dollar question. Right?

Matt: Yeah. Okay. No, I think I would have I think I have an exact answer for that. So I think mortality, it's not going to be the same in Sierra Leone as it is in, right the US, right. There's different healthcare systems. So that's, that's part of it. But I think an even bigger feature was just the timing. I think Italy had such a high case fatality rate because they get… and in early China… because they didn't know anything about the disease. They're sick. They didn't flatten, but they didn't have a chance to flatten the curve. Their healthcare systems were overrun, they had too many people couldn't, not enough health care workers, and they couldn't take care of them. And so that's why they had such high case fatality rates. And now we have such lower ones because people have flattened the curve.

Now, can we flatten it forever? You know, can we stay on lockdown for 10 years as we keep it, you know, get to herd immunity on a tiny, tiny basis? No, we have to bet on a vaccine, which may or may not work. I'm more optimistic about vaccines, I think I was thinking that might be a topic for the next… the next talk. So yeah, we have flattened the curve, we've taken it from what was like a 5% death rate to a half percent death rate by flattening it. And now we're going to buy time and hopefully get a vaccine.

Also, we have seen the spread start to come down, we've made some progress. We've got the R0 down. And you know, things aren't locked down like they were those first two months. We've got, you know, we want to see the economy get back up, but things it's not the same as locked down life that people were living when it was nothing but you know, Netflix and one grocery trip grocery store every two weeks. So, I mean, I think, you know, the plan… And the plan is working in that regard.

But just to, back to this study. There were only five countries that were not locked-down countries, there were 45 that were so that's too small a number of non-lockdown countries to make broad assumptions about what lockdowns do. And if you see they did help with cases, but they didn't help with mortality. It doesn't seem to make sense unless there's some sort of odd thing there. So when you talk about those five countries, you're going to see, you know, Italy, Sweden, all these sort of oddball cases that may have had lower mortality or higher mortality for vastly other different reasons.

Doc: Yeah, fair enough. And I'll um, yeah, let's go on to the next slide. And we'll be careful to not dive in too deep because we're running low on time.

Matt: We sure are aren't we. Let's go here.

Doc: This was something I know you didn't like this. And I'm making fun of conversation or your words or making light of it. What I want to show here is only… and whether you and I know you said when we discussed this earlier… that you're still not happy with the U.K. and Sweden. You think these are high levels and deaths per million is not good and what I want to just have people highlight that there was a slight difference in lockdown versus not locked down. And although this is not something necessarily to be proud of, these shapes, even with different slight differences between the two countries are similar in deaths. That… Are you okay with me just showing this and not focusing on whether it's locked down or not are locked down?

Matt: Yeah, yeah, for sure. Deaths go up and then they come down.

Doc: Yeah.

Matt: And maybe that's a natural thing that we it's not up to us.

Doc: Perfect. And humans futzing around with it might not have made any difference. It might be high in these countries' deaths rate because they haven't devoted resources to other… haven't devoted resources to actually testing case rates which might ultimately when research is done a year from now, two years from now, that will be the same as everywhere around the world. I guess that's my driving hypothesis that will discover that.

Doc: All right, next slide. Sweden's pandemic, I just… this is just to point out that even in Sweden, the same thing is happening. There's no deaths under the age of 29. And it's old people who are dying.

Doc: And then I threw this in the next slide about the economy and just that they and the only thing to see here in my mind is under Sweden, which is in red, and the lower boxes for these countries and the EU 27. The blues say negative GDP to the left. And to the right, Sweden just reported a slight positive increase in GDP. And there are some people talking about that as being a positive thing. And it's good that we're okay that we had this death rate. And because the economy has moved forward or is now positive, and you and I talked before a little bit; what's your… Give me you had a great line about that. You said?

Matt: Yeah, I said it, maybe people you could probably realize we do most of our arguing before we start recording. But I said, you know, so Sweden has…

Doc: Argue? We don't argue.

Matt: That's the fun part. Sweden has 10 times the death rate per million of Norway and twice what the rest of Europe has. Okay. Norway just being, you know, one similar. So and they had a 9% decrease in GDP versus for EU a 12.

Doc: Yeah. And you said is that your words were you weren't ready, you don't think you would make that sacrifice - the deaths per million for…

Matt: Yeah, so I mean, that's, you know, that's not one person's decision to make. That doesn't seem, you know, that doesn't seem like a great reason here to double your death rate. So we'll see the story is not over. You know, I've argued Sweden's not a success case, but it's not a total disaster, either.

And we'll find out as time goes on for the next pandemic.

Doc: Fair enough. This next slide is just as we as we segue into the economic section, this is just to point out how different this is on a chart in drop of real GDP from these past recessions, right? I mean, this is…

Matt: Yeah, this, this red one was the great recession.
Dave: Yeah.

Matt: And you know, this yeah, definitely coming off a high peak.

Matt: All right. So we'll speed up maybe a little bit. We're only getting into the economy. Last week, we talked about job openings. We got some new data there. And we did see a tick up. So that's a sign of positivity. It's about the only one I think we'll see during this Economic Review.

Matt: The recovery. This is a bunch of what you call like alternative real-time data compiled into an index that shows how people are moving and spending. You know, the recoveries have plateaued. The U.S. has this one hidden in light blue here, and it's about 60% of what, you know, normal activity is and we saw recovery and now it's flattened off.

Matt: This is… this is last year up here. This is people shut down, started getting on planes again and now we see it turning back down.

Matt: This is consumer credit card spending. And again, recovery and flat still about 10% what it used to be.

Matt: This is… you know what, if you go below, you can see these charts and look at them longer if I'm going too fast, but it's below on the transcript. This is the misery index. The misery index is a combination of unemployment and inflation. If both of those are high, that's unpleasant for people in the country. The U.S. is ranked 25th, doesn't even really show over here. But you can see it's made a huge jump from 2019 to what 2020 looks like. Unemployment went much higher and we didn't really ease off on inflation at all.

Matt: So it's tough for people who aren't working and still seeing inflation happen.

Doc: Yup and you know this is just a highlight on a chart with… going back a few years. How much government spending – non-defense government spending – has exploded upwards in the first quarter while business spending, next chart…

Doc: Is showing you that business investment has plummeted. And again so, I'm… I remain still concerned and worried especially as things are starting to roll over as we go into the fall. I don't know if you are, Matt, but…

Matt: I'm actually… I'm actually less concerned. As far as investment and market-wise, I wouldn't say I'm bullish, but I'm not as concerned as I was, but you know…

Matt: We'll save the market for maybe another, maybe another talk.

Doc: Yup.

Matt: It's still not a fully formed opinion. So this is… we've got two charts here that just show again how strange things are right now. You can see each country here had – these are developed nations – had a big decline in GDP and a subsequent decline in disposable income. That's what normally happens. The U.S. between government transfers and other stimulus things actually saw GDP decline and disposable income go up. Which is wild. And I mean, I think what you're going to see is a lot of this went to savings rate because spending certainly went down. So we'll see where that ends up.

Doc: And this is… this is anecdotal but I have not seen that. So spending, you're saying, has dropped?

Matt: Mmm-hmm.

Doc: I got this story from a restauranteur. And he said he's seen people he's never seen before in his restaurant and they're acting like and seem to be taking the $600 they got and just spending it willy-nilly.

Matt: Yup.

Doc: Like ordering strange combinations of things, strange drinks that he never gets ordered, never gets ordered with that combination of food. And he feels like, huh? And he asks them, where are you from, what do you do? And they're like, "oh, no, lost my job. We're out spending our $600 check."

Matt: Well, that's what we want them to do, isn't it? Anyway, that's what it's there for.

Doc: I thought it was to get somebody reelected. Oops.

Matt: Everybody reelected.

Doc: Yeah, right.

Matt: The Phillips Curve is a sort of theory that says the more people are employed, the more wages will rise. It used to sort of be – we've talked about this before – used to be unemployment and inflation. And that sort of has broken down. But employment to population ratio and increase in wages, that matches up. And it makes sense. And, of course, here's where we are today…

Doc: So before you do that, before we go to "here we are today"… So this curve that has a function to it and described in an equation down there. This is as the population of people employed, as the prime age goes up, on the left now, private wages and salaries goes up. Okay.

Matt: And now we have a huge drop.

Doc: Wow.

Matt: But wages growth is still at 3%. And a big part of that is that so much of the job losses were on the low end of income, that when you cut those out, the average income, the average wage rate goes up. Even though no one got any raises or anything like that. So this might be just an off artifact of data. Also, I'll point out this guy on Twitter. I think he was with the Treasury before. He has the best stuff on labor. He's got amazing charts and really interesting.

Doc: You know, Deschi's got a really fun winery in Napa. And that's a whole other story…

So you're saying this curve, that orange dot, should be down at the lower left, like way down at 72 or something, right?

Matt: In theory, if you have a weak labor market where only 72% are employed, there's not going to be a lot of wage growth.

Doc: You're saying because most of these jobs that have been lost have been lower paying, lower levels jobs like retail and restaurant? Yeah. Huh.

Matt: Yeah, the average wage jumps up. But this is going to drift downwards as people… Presumably in a recession, people won't be getting as many raises and things like that. Or promotions. So presumably that's going to drift down. The suffering is going to be on the wage growth side. And hopefully, you know, we can move back over that way a little bit.

And not a lot of news on markets this week. The stock market just kind of edging up. But we did point out last week about all the moves in the chaos hedges like gold and silver. And how strange that would be. And this was just a chart I found that shows back in sort of the crisis days here, people had sort of 6, 7, 8% of their ETF holdings in precious metals. Right?

And now we see this huge run in gold. Everybody's buying gold. It's still only a 2%. So this could go three or four times over if people get to that level. There should be support in those gold prices. Maybe not in the short term, but at least for quite a bit longer.

Doc: Awesome. Alright, well, thanks, Matt.

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Thanks, Matt.

Matt: Thanks, Doc.