Stansberry Research

Doc Eifrig's COVID-19 Briefing No. 8

May 14, 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 back to conversation – or as I like to say – COVID conversation number eight.

Hard to believe, Matt. It's been two months we've been sitting here, not moving, just working. We are socially isolated.

I'm Dr. David Eifrig and with me is Matt Weinschenk, senior analyst. And we're going to dive into it here.

I just want to remind people if you're interested and have questions, send us a note to We read all those things and we respond to some of them. This week, we're going to dive into many of those questions folks have. And then again, thanks for sharing this. People are sharing with their friends and family. I hope that if you haven't yet, please do.

Tell them to sign up at That's our free content that we generate on a daily basis. It's a mix of health and wealth. And we'd love to have people share that and then from there, people might decide to join up as regular listeners do to our subscriptions. We sell because we think our content is fantastic.

So, Matt, any comments on that at all?

Matt Weinschenk: Uh no, I was just going to say this week we will get into a lot of questions. It feels strange to say it's been a slow week of news, but I don't feel like there's been anything too wild. So we'll kind of check in on some of our charts. And move on to answer subscriber questions.

Because we do get a lot of questions, we kind of abbreviate them here, but we have a lot of people who send in long questions with proof of different things and asking about this and that. A lot of them are really enlightening, so we love to get them. And that's what we'll work through in this one.  

Doc: Great. So, I want to warn people that this week I'm a little bit agitated, caged animal. Getting more and more upset. I want to start out with this… I want to… And this week's theme for me will be about all the things that these experts, political folks, and people you don't know in the health space and wellness and medical space.

I'll show you… I'll attack it from many many angles. But the first one is this…

This is from mid-March, the end of March. The New York Times reported and said, "Virus Deaths Mount, but N.Y. Avoids Predicted Surge at Hospitals So Far." And this is true. So when I argue with physician friends of mine about how bad it was Italy and how bad it was in New York City, I don't deny that we have friends and family who have died. And I will also tell you that we all of us will have friends and family who will die. And we will die.

And it's not a question. It's a question of how you want to die, the level of dignity with which you want to die, and what we want to do between now and that point, and how much freedom we want, and how much we want to have that constrained.

We're counting on officials predicting that 140,000 are going to happen and 140,000 beds will be needed. And they only needed 20,000. We've got to stop listening to those officials. End of story.

Matt, next slide.

Matt: Yeah, and so just onto the regular data…

The death rate in the U.S. has continued to decline. Three-day rolling average there is looking pretty good.

And this, Doc, this was a chart that you found through some controversy.

This is… You know, we've shown some of these doubling time charts before and this is kind of highlighting the last two weeks here on each of these.

And you can see the U.S. is getting flatter. We've gone from 58,000 to now, this would be about 80,000.

Doc: Yeah, I think it's 83,000. Folks, know this… I threw this curveball to Matt about an hour ago. I started poking around on, which I think is a fantastic site. A fun site. You can dive as deep as you want. But this is a chart where we're trying to show and talk about the worrying about how fast things are doubling. We've shown this chart before. It's gone out.

I cut it out to just show you in colors for these countries a two-week period, about 15 days actually. It looks like the point – and Matt, correct me if I'm wrong here – is between, on the far left at 53,000, is between every three day and every five days of doubling where it sits right now at the arrowhead on the right.

That suggests, when it was at 53,000 that within four days it was going to double. But this is 15 days later and we haven't doubled. We've only gone up by about 60% in 15 days.

So I started going, I'm thinking, "Oh my god, Matt, help me out here. You're an econometrician. You know what's wrong with this data." So it wasn't fair for me to throw this to you and we tried to figure it out. But it's a sign of lots of stuff, for me, isn't making sense.

You've had a little more time to contemplate this. And not to put you on the spot, but have you come up with a –

Matt: Yeah, no. There's no way to get from 60 to 80 on the doubling every five days line in 15 days.

Doc: Yeah.

Matt: So we will try and sort this out. The only thing I think is maybe the European CDC is the source, so this maybe is not up to 83 yet. I don't know. That doesn't really hold up. So we'll have to see.

Doc: It's true for the German's stuff too.

Matt: And either way, five days… In 15 days, it should have doubled three times.

Doc: At least.

Matt: I think you're going to see this theme, like you said, there's a lot of mystery in these numbers and that's because it's hard and because it's a fast-developing situation.

Okay, so here's another mystery…

We've been going back and forth on this, Doc. The blue lines here are confirmed COVID deaths on a given day. So you've got 600 on this day. The light blue is suspected COVID deaths. So they weren't tested, but maybe they had the symptoms. For whatever reason, that's what they think it was.

It's good to see that we're keeping those separate. We're not lumping in one. We're saying confirmed and probable. But this black line is the number of excess deaths over this period. So the CDC looks at home many people normally die through April. Then you say, okay, we're way off trend. There are more deaths here. There's something else going on.

So this is the number, these are the deaths – the white area – that are excess people who have died, but they're not listed as COVID for some reason. So what is that? Is that, as you said, Doc, is this suicides because of the economic recession? Is this people who had COVID but we're confirmed? I'm sure you can think of 10 other things they might be, but the answer really is we just don't know. But something doesn't add up, right?

Doc: And again, it goes to the simpleness of the idea that it's this big, evil COVID. And I know you wanted, because we talked about this for just a second beforehand, you want to make it the black line and just say, "Doc, come on. You're missing it. It is COVID and it's terrible."

I want to make the case that other deaths are happening. And also make the case that because people are afraid, that's leading to more deaths outside of hospitals, including heart attacks and strokes that aren't making it in. But they're still being recorded as dying.

I really want to remind people – and I know you, Matt, and I have a sister that does quite believe me when I tell you that even the dark blue set here, according to what the CDC writes and says, even what are called confirmed deaths is a number that's probable. It's not even fair to delineate these two that are probable and confirmed. And I say that because they're not testing many of these confirmed deaths for other co-infections. Instead of there being – and I've talked about this elsewhere and in today's Retirement Millionaire we'll talk about it – you might have a death that has multiple contributing factors: stroke, heart attack, cardiovascular disease. A whole bunch of things go into it.

If they make their way into the hospital and happen to test for COVID and die the moment after they got tested for COVID, when that test comes back positive, people are slapping COVID-19 on for the cause of the death when it might be their third heart attack. It might be their fifth stroke. And it happens more often than not partly because people are lazy. Partly because the CDC wants to make sure that, and society wants to make sure that we're not missing this surge of COVID-19.

But it really is incorrect… improper. But there are enough people – and I know physicians – pressured to put down COVID-19 even when a test comes back positive and that wasn't the reason they came into the hospital.

How much this is? How common? How often? It's going to take a really good scientist and researcher to show this and figure it out. And we'll know six months or a year from now facts. But my geschalt on this is there are more and other deaths happening beyond and above the confirmed, probable. And that's the black line. And that's worrisome to me because that's the fear. Not just the economic toll, but the psychological toll people.

We could dive into stories about people that die during tragedies that happen in society. We could go on and on and on about this pop in excess deaths, but I leave you with that.

Matt: And then here's just our normal case chart…

Cases still rolling down a little. I don't know, do you call that a plateau? Are we getting off the plateau? I don't know. It looks pretty good though. We've had a downturn here. So that's just the usual update.

We've talked before about the virus spreading at a restaurant, an office in South Korea. This is from a choir practice in Washington State. Sixty-one people went in, there was one patient. They had a practice – these are days and this is when the symptoms onset.

They had a practice. Now this patient started showing symptoms. This is the one they believe infected everybody. They had another choir practice and then everybody started getting sick. So let me… The numbers are, there were 61 people at this rehearsal. There were 32 confirmed cases and 20 suspected. So it really got everybody almost… 88% if you count the probable ones.

That doesn't sound very good, but it really kind of goes against – well it does back up the thought that you really need to spend some time with people. You don't get it brushing past someone in the grocery store. You get it sitting down to dinner and spending time with someone. You get it at an office. And here you get it being all close, having your mouths open, and singing to each other. It is not a good situation.

But that's kind of really the contact you need to have to have this sort of spread because more of the stuff I'm seeing show that it's a little bit more extensive contact that you need to spread it. But I feel like this is going to be one of the thing that's we're highlighting now just because I find them interesting.

Doc: Quick question for you. Do you recall the age group on this choir?

Matt: It did have the age group. They were mostly older, but I don't remember the breakdown. We can check the study.

Doc: Yeah and the other thing I would ask you too… Any deaths from this? Or how severe? It's a pretty large group. Probably an identical strain that spread. It probably didn't mutate in such a short period of time, but I'm just curious.

Matt: I'm afraid I'm mixing it up with a different study, but I want to say there were two deaths in here. But I might be thinking about a different one, so we'll have to check.

So now we're going to get on to some questions specifically about the virus and the spread of the virus and see. Again, these are all good questions from readers and one is…

We have cases, which are affected by testing. We have deaths. But what about people going to the hospital?

For the most part, as we've seen, the hospitalization numbers are basically matching the death numbers as far as whether we're growing or contracting.

So the blue here is new hospitalizations. A little bit of an upslope on this trend line. But pretty flat. Pretty noisy. But still there's no mystery between the number of hospitalizations and the number of deaths.

Doc: Let me just point out this is nationwide. It excludes New York, which excludes New York City, New Jersey, and Connecticut. Large populations. So this is the rest of the country except for a couple large cities. You're not seeing this incredible explosion that everyone's panicked and been worried about, in my mind when I look at this and interpret it. So what's that worth, again, gives me clam and peace, and says, come on people let's get back and doing what we like to do.

Go ahead.

Matt: And now another question. This has become another touchstone is Sweden.

They did not have a lockdown and they're saying it's working for them. What's the deal there and what can we learn from there?

Sweden banned gatherings, I think, over 50 people. So you know, you're not going to theater shows or anything like that, but you can still go to restaurants and smaller things. They've had a pretty light lockdown, if you want to call it that. And there plan was just to race towards herd immunity and then they'll be done with it. We'll see how that happens. They've still got a ways to go.

But as far as deaths per million in the population, if that's your judge here, it's not good. They're doing worse than the U.S. They're doing much worse than they're neighbors. It's a matter of opinion whether that's the right thing to do, right? If you only care about the economy, which no one only cares about the economy, but if you only care about the economy, then yes… You should do what Sweden did.

If you only care about saving lives, then you should lock everything down. But that's a false choice. You have to judge your priorities here. And you can decide if Sweden's doing well or if it's not.

They're economy has suffered even with that little shutdown. And really, we'll see. If Finland, Norway, and the rest of the world have to stay shutdown for five months, then maybe the herd immunity race was the right thing to do. But some people are trying to claim that it's working, and that the death rate is not that bad. But that is not true. I mean, the lockdown in other places has saved lives. But you can judge yourself. What do you think, Doc?

Doc: Yeah, I agree with you, Matt. I think taking the extreme to look for examples in say, Sweden, where they kept it fairly open versus you look at neighboring Norway or Finland where they didn't. But again, they're economy… And they still allowed smaller gatherings or not what I would consider large gatherings to happen. But it wasn't a full, wide open, do whatever you want. It wasn't a lockdown per say, and I think it's, what, if you multiplied that out, we'd lose something like 115,000 people in the U.S. at that rate. And I don't know. Age adjusted, I don't know what this is. And again, numerator… Are they pressured to call everything, even if it was coinfection with another corona and influenza or a different kind of virus like human metapneumovirus and instead they're just lumping them all together?

I don't know. The trend is clear than it's been higher than it has been here per million. But I'd have to dive in deeper. But it looks like it is a tradeoff between what you want your economy to do. And there's has been humming along versus ours, which is collapsing. So it's one of those things you have to kind of weigh.

Matt: Alright, this would be for you, Doc…

The person who sent in this question had a good deal of evidence and links pointing them to that, but what do you think?

Doc: The person who wrote in for this – and there are a couple of folks who have written me numerous times – and you might or might not have seen my stuff that I've written on vitamin D. I don't want to dive too deeply, but I want to explain to people that for me, it's very risky to imagine that a single supplement that you take by mouth that in this case is fat soluble – vitamin D is a fat soluble entity – and imagine that it will protect you and cure you and do everything that you can imagine. The stuff you can see about what vitamin D does is off the charts. It's a magic pill. Truly is to many many people.

Now, I would tell you that if you go out in the sun, you don't produce just vitamin D. You don't produce just this vitamin D3 the supplement, which is manufactured and manufactured cheaply so that they can mark it up and make money. The skin and you produce in the sun multiple multiple what are known as isomers of this vitamin.

We know that sunlight has incredible benefits for health. We know this. So taking out one thing, something that the sun produces when we know this has benefit on immunity and know that and think that. Believe that and tell me and try to convince me that a single pill represents that is absurd. I'll never buy it. I'll never believe. I've got evidence sideways to Sunday to show that it's risky and dangerous.

However, this question did lead me to do a little more research and dive into it. And this one person wrote and cited a study out of someone at Northwestern, my business school Alma Mater, but part of the health side.

And they cited a study that hadn't even been peer reviewed yet. And so that would be like Matt, you and I putting out a study, doing some research, combing – what do they call that, datamining – and putting out a study that is says vitamin D cures unemployment. Like literally, we could show it. But it hasn't been peer reviewed. So people who do the science, know vitamin D, biochemisty, physiology, people haven't read it. Now, I've read it. I've looked at it.

What it also led me to was a really fascinating paper done in the dermatology literature from 2009. Fascinating. And it showed how in the pandemic of 1918, now it's different from corona. It was an influenza. But it showed sunlight – total, whole sunlight – irradiation on parts of the world, that that was inversely correlated with death. So the further south you got and the more sunlight you got, the less likelihood you were to die, just total case fatality rate. Okay, right? Something we're talked about before. But also the bacterial pneumonia which comes at a later time, at a later date.

But these were great health records kept. Both in the U.S., believe it or not, and especially in England that showed this. It's fascinating. I mean, we're talking about Rs that are .7, .8. We're looking at high probably, triple digit, thousandths. I mean, really great, fun paper to read confirming what we've said all along… Getting sunlight, one of the things that will produce and help with, is vitamin D levels. I would tell people…

There are two things I would say and one thing that I would do… If I started to get what someone might think was corona, I personally would get fat soluble versions of it. There's the dry versions of it. And I would probably start to supplement myself in thousands of units a day to try to increase my levels of just this single isomer. But I would also, at the same time, go outside in the sun and lay out even if it was 40 degrees outside up north in my swim trunks in the back to get as much sun as I could on my body to get those other chemicals in addition to this D3.

That's what I would do if I was worried and thought that I was about to get corona or I'd been infected or been exposed to it. My guess is, in this study at really really low levels probably show defects in a bunch of different things as well as lack of activity and then probably not getting D vitamins in food. And so you get that in fatty fish. I mean, the sources of where you can get this vitamin from, cod liver oil for example is a classic one for folks up north. Anyway, that's my spiel. What do you think of that, Matt? Did I surprise you? Shock you? Did I –

Matt: No. I think the vitamin D and the sunlight is good for your immune system. So there's no real downside to making sure you get that, right? It might not be specific to coronavirus in any way, but yeah… Get out there and get the sun. Go for a run or a walk. There's obviously all those things that are immune-boosting.

Doc: Look, there's some good evidence that this thing does help modulate your immune system in a petri dish. You know, taking cells and using vitamin D. There's some great research showing the benefits reducing what are called cytokine storms, which are thought to be related to all of the deaths from bacterial pneumonia in the 1918 pandemic as well as now, some funny features. Leukopenia is where your white blood cells drop. I mean, these are things we know vitamin D levels are connected with… What?

Matt: You just go. You're really going deep on this one.

Doc: I'm going deep, sorry. But here's the thing I want you to understand… There's lots of studies that show correlation. And there's lots of reasons to be worried about taking a single pill. And I want to show you this correlation study… People, take a peek at this. I've shown this before showing the divorce rate in Maine is highly highly correlated with per capita consumption of margarine.

So correlative science, you've got to have mechanism of action, cause. Those are my thoughts.

Matt: Yes, always be careful. Let's see… Here's another questions…

Doc: Someone wrote in about this and talked about a disease called Kawasaki disease. And I remember when I first read about Kawasaki and I remember my first patient I saw with Kawasaki. And let me tell you what, you were scared at that moment about having any kind of viral infection. Taking aspirin was associated with it. I mean, you were like run for the hills. You didn't want anybody, anything. You didn't want Kawasaki.

Same thing here. If we hear about a kid having a bad disease outcome, you immediately extrapolate and think that it's going to spread. These are rare, rare, rare, rare, rare things that happen. They're described and in this day of media and panic, everyone's worried that kids are going to suddenly. And look, I don't want any kid to get it. But out of 100,000 kids, there aren't many that are going to get this. There aren't many that are going to have any symptoms. They aren't many that are going to have bad side effects from this virus. They're going to get immunity.

Same thing with younger, middle-aged adults. So it's always the anecdotes of the extreme. And I don't think personally we should make total lifetime decisions and judgements about an economy based on what I consider as rare events.

So that's my take on it. Again, if you have anyone who's had this happen, my heart goes out to you. I don't want that for anybody.

Matt: And I think what happens here is that this is the way science always goes, right? So let's say you have coronavirus and oh you've heard there may be long-term damage, right? There's some stroke… Young people are having strokes that they don't really have. And there's Kawasaki. And there's all these things that happened in an anecdotal form. And that information comes out, as it should. And then science progresses and tries to test these things and finds out, okay yes, there's a little evidence here. Okay no, that one was just chance. And that's the way that these things always go.

But it's all happening under the public eye now. Each bit of news is reported. So now this Kawasaki thing is probably nothing, but we're watching that thing happen in real time. And it's scary when you hear all the potentials. All the maybes come out. And then it takes time until we get the right answers on a lot of these things. And you'll probably forget about them.

And it's the same thing with hydroxychloroquine and everything. You know, that was the cure and it bounces back. Oh, now it doesn't work. Yes, it does. It seems like it works a little bit. And we're just going to see that thing over and over again both with the good things and the bad things. It's hard to just jump to conclusions.

Doc: Look, and back to the other question and this one, I can tell you things that help and modulate the immune system. And when I say "modulate" meaning that it's a healthy balance of clearing stuff, fighting stuff, without too much inflammation. What are those things? We talked about it over and over again…

Sleep. Eating healthy. You know, you've got to get some green, leafy vegetables, occasional fruit in there. Walking daily… two, three, four miles. As far and as long as you can regularly. Biking. Activity. Weight-bearing. Movement. Sunlight. These are all things that… Meditation, you know?

Those modulate the immune system. Those keep things from reacting. Those are true in children as well. So if your kids are getting… You know, again, I don't have any evidence of this. But I would want to know what diets are in all the people that get these hyper autoimmune diseases. Are they triggered by inactivity and funky diets? There are questions that could be asked because we know what will help. Anyway, next question…

Matt: Let's see, where are we? I'm 73 and healthy. Should I get tested to see if I'm asymptomatic?

Doc: Yeah, this goes back to this question, you and I talked about this a couple weeks ago. I think we differed maybe – I'm curious to hear your answer. But from my perspective, the only reason to test, at least this is what I was taught and I believe, is if there's going to be a treatment. That is, tests are a waste of limited resources, although in the new paradigm we can just make money out of the blue, so hey! Get everybody, let's have everyone get tested around the world. You generally don't need to get tested if you're not going to do any kind of treatment. So here in this case, someone's writing in saying they're healthy –

Matt: Uh-huh.

Doc: They get tested to see if they're asymptomatic. I mean, I think I'm hearing you say you're worried that you might be asymptomatic and spreading it. And again, we don't know how many people really are asymptomatic and spread it. And someone reports that, here's someone who's asymptomatic and spreading it, goes around like hotfire and then everyone's worried that, like you, or whoever this person is, in the exact situation they're in. So I… I wouldn't get tested. I don't think, I mean, it'd be like "eh."

Now, if you're wondering, let's say you're contemplating going to a reunion this summer with friends and family or something. And you, you're worried. You might get, you might pick up this coronavirus, which I think will be out of the way by then. You could get a test that would show whether or not you have produced antibodies, which would be a sign that you're likely immune to the virus. That might be a test you could get for purposes of saying, "hey, I've been exposed, I was asymptomatic but now I'm good." And that would be the same thing that a vaccine would do and a vaccine would show. I'm not going to dive down the vaccine-hole, but…

Matt: Yeah, I would say, I think you're right. What are you going to do differently if they tell you that you are asymptomatic and I think the only… You know, if you're already stay-at-home and doing this stuff it doesn't really matter. If you were in contact with someone who then you knew did have it, maybe then you would consider it. But otherwise, there's no reason to find that out. And also, I don't know if we've talked about this, but the test as of now… until they… it's quite unpleasant, so I wouldn't want to go through that you know, unless you had to with the nasal swab.

Doc: Yeah I mean… The – excuse me – finding the antibodies will be a blood test and…

Matt: Yes.

Doc: And I know a couple of tests that are a couple weeks out from just a finger prick and then knowing, maybe in the comfort of your home, whether or not you've got it within like 15-20 minutes almost, like a pregnancy test. I think those are shorter than that. So those are coming, and… Gosh, I saw yesterday a list of 178 people, this is for the serology, the IgG, the antibody testing. IgG and IgM tests that are in the pipeline – did you realize or know? Was that big?

Matt: Yeah, yeah. Well I think they reduced what you had to do to get them cleared, so, it's almost like a little gold rush.

Doc: Yup. And there are a bunch that were out early, I heard in South Korea, even a lot in the U.S. that were terrible, terrible.

Matt: Yeah, I think there was one that was recently approved, I forget by what body, but it's supposed to be the best – maybe we can find out which one it is and that's –

Doc: Is it by –

Matt: Yeah, I think so. That's another thing. I think that might be related…

Matt: To our next question here. Yes. So, I think I had coronavirus. Is there a reputable source on my chances of reinfection?

Doc: Yeah, again, this is stuff that the science on it is poor and weak. I would remind you that influenzas, which are not this kind of virus, coronavirus, but a virus nonetheless – influenza viruses mutate. And so, we know over the years people get exposed to various influenza viruses. Even sometimes people actually get the vaccine. And it's made for a specific strain. And that strain can mutate over time, a strain you might have been exposed to 30 years ago can come back. We talked about this last week from the Hong Kong flu from 68, H3N2 version. So, you'll have some probably cross-reactivity and immunity, but this corona – we don't know. I don't think it's very likely, but in 10 years from now, if a version of this makes its way back into the world – and we have a slide later that'll show you why it's possible and why you shouldn't worry too much about that either. But I don't think I'm going to tell you what the probability is. I think it's low, personally –

Matt: Yeah.

Doc: Because –

Matt: But yeah when – I think we'll probably have much better answers on that within the next month or two. So no reason to risk it now. You, like you said, you would expect, normally, there's some protection against reinfection, but really we don't know…

Matt: And we'll find out. This is a slide we showed a few weeks ago where they had challenged the experts to predict the number of coronavirus cases by the end of March and they totally got it wrong. On the low end… Doc you wanted to bring this up again, to prove a point…

Doc: Yeah, I just wanted to show a couple things that were… We're letting epidemiologists and… We've got to be careful who we allow to make decisions for us as individuals and for us as a local community, broader communities, countries, and even world. But these are people who claim to be and are willing to go out there back a month ago and said, this is what the CDC will have reported on Sunday, March 29th. And you can see this, just to remind people it's way, way, way, way, way, way, way off and wrong. And wrong sounds derogatory, but wrong and way off means be very, very careful about making decisions based on people modeling COVID-19 when the economic decisions are incredibly risky. That's all I'm saying. But I wanted to bring it back in and just remind people of this – not to get mad about it, to be forceful and speak up and say, no, I want to take the risk to be able to go to a restaurant and I want my restaurant guy to be able to open and sell me food if I want to go in there and possibly get corona and die. Simple as that.

Experts… Next slide.

And this, this goes to this… I thought of this this morning and thanks for stuffing this in here at the last minute, Matt, but what this is is these are coronaviruses you can see from 07 to 2015 – the humps are showing the seasonality of these strains. Let's just look at the red one. And in 07 in the upper left, you can see a huge peak. So that year, that particular strain of coronavirus was all over the place. And scary and risky and dangerous and caused deaths. And now, the same thing, we're facing this new coronavirus and people are saying it's going to come back and get us again the next year. Show the arrow and show the peak of the red in 08. Tiny, tiny, tiny. Show the peak in 09. Show the peak in 10. Three years after a huge peak, nothing. Then a bigger peak in 11. Smaller peak in 12. And not til 13 did you get up there and it was half what it was in 07. 14 a tiny peak. And then 15, a big one again, about the size of 13.

My point is and again, these are four strains, so the blue, the green, and the orange are different strains of coronaviruses. They're seasonal. They come and they go. And we don't know how big they're going to be next year. Matt, go back to the slide above.

We've got good science, people, from coronaviruses that says they go up and down every year and are seasonal. These guys can't even get it right a month out. Okay? Next slide.

Go down.

Talk about you have possibility of opening…

Matt: Yeah, so we're moving on to the economy and market now. And we've been talking about whether, as states are reopening, what's that going to do to the economy? What are we going to see? How fast is this recovery going to be? And what we can see in states that have reopened, Tennessee,  Georgia, Nebraska, Oklahoma, South Carolina, and Utah: Restaurant attendance – this is from OpenTable, the reservation service data. Restaurant attendance went to zero, obviously they were closed, and now they're coming back. But they did not come up like this, they're coming up like this.

So, we're looking for a V-shaped recovery. It's not happening in restaurant data at least. There's some other things that do look good: AirBnB booking data actually looks pretty positive, people are getting ready to move back there and use those kind of services, that's interesting, but…

We're also looking at, if you reopen, again, are people going to go out? So here's some data. So, if you look at consumer spending, small businesses being open, time spent at work, hours worked at a small business. So those lines are on each chart. And in the states that closed early, here's where they closed, but people had already started pulling back 40% on these things. So it didn't matter about the closure, they were already doing it.

Here, these are the states that closed late. People had already decided, no I'm not going out, I'm staying home, I'm doing what I'm going to do. Here, these are the states that didn't close at all. Even them, they are down, hours worked at small businesses, 40% mark. So, there is fear of the virus. It's not necessarily the shutdown, people telling you to be closed, people are – want to be home. Whether they're unjustified in their fears, you can judge yourself. But that's the way it is.

And that brings us to – yeah, go ahead, Doc.

Doc:  Well I just want to say, and then the problem with this is, this chart we showed I think in maybe the second COVID conversation was cash and small businesses and so we're – this is COVID conversation number 8. 8 times 7 is 56… we're off the chart. And so, many of these businesses have and are running out of cash – the buffer for cash is limited at best. You know restaurants were the first to go after a couple weeks. They're in big time trouble unless they've been able to upgrade their to-go orders in a way that at least allows them to keep the lights on. I just wanted to show this that small businesses and cash, that's a problem, that's a real problem. So.

Matt: And this buffer would be 100% decline, which not everybody has really seen that, so you could – you know, if you drop 50%, you could kind of double it. That's why everyone's not quite out of business, you know. This data's still going through, but things like that. But some of these, you know, restaurants are getting some delivery orders hopefully, or they shut down so they're not burning through some of their cash. Yeah, I mean, we're way out on this thing now so hopefully, hopefully things hold up well.

Which brings us to our next point. There is traditionally a relationship between unemployment, the blue line, and bankruptcies, right? So if you look over time, unemployment goes up, here to 9% in the financial crisis. Bankruptcies go up to, call it 4,000. So if you continue our unemployment line, we just made this jump here. This looks like a projection, I think the last number's 14%. So we're up here at 14%.

Doc: Can you show that again with a slower moving arrow? For my old –

Matt: Sure can. So we follow –

Doc: Things are going well.

Matt: Things are going well, bankruptcies are pretty flat. Now this is the move we just made with all the new jobless claims – we're up to 14% of the unemployment rate. So is this going to –

Doc: In the last, in the Great Recession, your point is that the blue line and the orange line – the bankruptcies follow fairly quickly after that line goes up. Is that your –

Matt: Exactly. So just eyeballing this, you'd put bankruptcies at the 7,000 number. And I believe these are corporate, not personal. But we'll have to see… Oh, that's my wife's phone upstairs ringing. I don't think it will hold up that, quite that sharply because that's a big jump, but we'll have to see.

And then moving on to markets, we've noted before… I'm sorry, I don't know what's ringing over here.

Doc: No worries.

Matt: Anyway, so we've talked about this in our Retirement Millionaire issue that came out yesterday, if you're watching this on Thursday. The market is very top heavy and we showed that chart a couple weeks ago. And the big names in the markets, the Amazon, the Facebook, the Google, they have – they're priced very richly. And they're a huge part of the S&P 500. So you look at the S&P 500 and it trades at like 23 times earnings, it looks like 20 here on the trailing. But if you take the S&P 500 and you weight it equally and you count all those smaller companies that are part of it, still large but smaller than the big mega caps, the S&P 500 trades for only 15 times earnings.

So basically, what this is telling us is, there's going to be… yes the stock market's up, but it's up for a very narrow purpose because of these big tech winners. And there's going to be opportunities - there are deals to be had in what most people would call a mid-cap that kind of rate. Some of these businesses are going to fail and struggle, but a lot of them aren't and they're going to be priced better than they had been. This is kind of where we're going to be hunting for deals in the next few months here.

And let's see. Okay. Back to some questions now on the market. How does the stimulus from Congress and the Federal Reserve affect our investment plans?

So the first thing I would say is, there's been people for decades now saying this market, it's all propped up by the Fed, it can't last. And if they've been bearish the whole time, they you know, they say don't fight the Fed, not because the Fed always makes it go up, but if you think the Fed is manipulating things and making them go up, and you want to be a skilled investor, then you have to ride that wave up, right? Even if it's manipulated or fake, that's the way things are going. So that viewpoint sort of says that there's going to be some great comeuppance with some crash bigger than anything ever before. But I don't know if that's going to happen. I'm sure we'll have our normal bear markets in course.

The other thing, so that's sort of the Federal Reserve side. On the Congressional, on the fiscal side, I think… so, I'm not talking about the wisdom of whether we should be spending money or not, whether it's worth it. But if they want to fill the hole that's being created by the coronavirus, they're not spending enough to do that. So I think there's going to be – the economy is going to struggle. I know, I know, that's how much damage is being done.

Now, I'm not saying we should do more – that's not my job. My job is to say, are they patching up the economy and should the market continue to rise and are businesses going to be healthy? I don't think they're doing enough to patch that up if that's their goal. So I think the Fed has kept the market moving, has kept liquidity going, and they've done pretty well with that. And they're not so worried about a big sell – a panic sell-off. But I don't think the economy's going to do well and I'm really starting to settle on the sideways market point of view for a while. So I don't know, Doc, what do you think of that?

Doc: So I just want to point out to you and to everyone listening. So you did just a great, beautiful, true economist move. On the other hand, the market might go up, it might go down, it might go sideways, but I'm going to go for sideways. Yeah, I lose sleep over it. I've spent reading – I mean, first of all I'm reading Homer's The History of Interest Rates. Gosh, since I joined Porter, 12 years ago, it's now going to be my third time I've read it. Interest rates, where they are, they won't be here long. End of story. Over time, do they usually hover back up into the 4 to 8% range, it's a reasonable return for loaning your money out, getting it back in, you know, 20 to 10 years. Price to earnings ratios of super high levels don't make sense to me. Super low levels make more sense. And not fighting the Fed or fighting the Fed… I think what we do and try to do is find businesses that are going to survive whatever happens.

And I think this Fed – and your point is a great one – which pops into my brain once in a while and I'd forgotten about, so I'm glad you brought it up in this 8th conversation. It's not enough money to fill the hole. You need flows and businesses interacting and people in win-win transactions that aren't taxed that heavily, that aren't restricted that heavily, for an economy and people's wealth and things to be produced, created. I mean, that's how – that's what we believe in in capitalism. So what I think is the obvious thing that's missing for everybody here is what Congress has done is exactly what every Congress will do – is right before an election, if the shit's hitting the fan, they're going to spend as much as they can to try to make sure they get reelected. Keep everything on edge enough so like, "hey listen, things are so bad, you don't want to put anyone else in there, keep me in here, because we're bringing it back, we've just spent all this money, put us back in." President Trump, same thing. I mean this is just an age-old trick, over, over, and over again.

I want to add something here that's related but not related and we should go on to our next question. But I don't know if you knew this, Matt, but whose grandfather was killed in the Spanish pandemic of 1918?

Matt: Is it a person we actually know? Or is it a famous person?

Doc: Well, say famous person.

Matt: I don't know, I'm sure plenty of them. I don't know who --

Doc: No? President Trump.

Matt: Oh, I did. I did see that.

Doc: Yeah. I researched that paper on the 1918 pandemic and sunshine and my research discovered that. I was like – and you watch, that's going to swoop the news here and we've got the scoop on it. You heard it here first, people. Yeah. Anyway, next question.

Matt: Just, I mean, one other just interesting thing… you know everybody criticizes the President all the time, but I just find it so strange that when there was Ebola, he was saying shut down the flights, this is coming, everybody's – Ebola's coming. And then now we have another pandemic and he's like, no, it's nothing, don't worry about it. And it's just so strange the way that people – what makes people form their opinions on different things at different times. And you know, there's a lot of behavioral research about – and I think a lot of that doesn't pan out about just you know… You think you're making decisions, but you're driven by your feelings and what is being suggested to you and who knows what's happening. So, anyway.

Another question and this is a bit more on market mechanics. If interest rates rise, doesn't that push the price-to-earnings ratio on stocks down?

Doc: Before you show this next chart, before you show this one, the one you showed last week that's completely overwhelming for many. I want to give a little introduction. This in fact when I asked you to get a chart, this is not the chart I would have preferred but…

Matt: I know, but I had it.

Doc: It's a fantastic chart that you'll have a shot to reexplain after I say this one thing. The reason people ask the interest rate question is, when interest rates are low, right, the value, the price of what you'll pay for a company with cash flow, you're willing to pay much more for that cash flow. When interest rates are higher, in general the rule and the models and the thought is you want to pay less because interest rates discount the future cash flows and make those future cash flows less valuable. Without diving into the formulas. Is that a fair explanation and lead in for you?

Matt: That is and I think I have a way that I think is even more intuitive, right? Because I think it's also a substitution, there's a substitution. So if, stocks, you could look at dividend yield, let's look at earnings yield, right. So if stocks are trading at 20 times earnings, that's a 5% earnings yield, right? Now if you can go and put your money in government bonds and they pay 5%, would you take the risky stock? No, you'd put it in bonds. So that's going to mean that stocks have to get cheaper and price to earnings has to come down because there's a better alternative. Now, if interest rates get cut to 1%, and you look at a stock. Now they're trading at 25, so that's a 4%... You'd say, okay that's still better than that 1%.

So there's a discounting effect like you explained, there's a substitution effect, there's also – I think this is probably the least important – but yeah, companies will pay more on their interest so it'll be harder to finance growth and they'll have lower earnings, so stocks may go down then. So in general, lower interest rates support higher stock prices, yes.

Doc: Okay, and – OH you turned too fast! Go back, go back

Don't want them to see that. So we are, you and I, are evidence guys, right? You show me stuff that's said, Eifrig, you're full of crap. I hope I've shown you a few of those over time.

Matt: Yup. Of course.

Doc: So we're evidence-based guys. So let's look at the evidence of the relationship between them. That's what this is.

Matt: We talked about this, I think it was last week, or two weeks ago – they're all blurring together. But, let's consider this normal times. It's got this weird shape. But these are normal times.

Doc: Slow those arrows down, cowboy, come on…

Matt: As interest rates go up, from 5 to 10 to 15, the forward price-to-earnings ratio tends to be lower, right? Here it's 10, up here it's 20.

Doc: Confirming… confirming what you said. Our model – as interest rates go up, substitution, all this stuff, people, discounted cash flows, people want to pay less.

Matt: That's the general… the general economics 101 lesson –

Doc: Yeah!

Matt: Interest rates on stocks. Now, it turns out, when interest rates get really low, that's because people are scared, the Fed's cutting rates because things are not doing well, so we also see a cluster down here where low interest rates tend to match with low price-to-earnings. So that's why we've kind of got this hump shaped distribution. And we had this last week because we're right here and we're off the… off the reservation.

Doc: Off the… Matt…

Matt: But that's an issue for another time.

Doc: Well but it goes back, it goes back to two questions ago, the Fed question, and seeing this, like… I mean, like, you and I both agree that it's not enough to fill the hole, it's completely distorted, economics of interest and earnings and yields… Yeah. Scary for me.

Doc: Still sleeping well at night because I'm out walking in the sun, meditating. Alright. Should we finish her up?

Matt: And again, this is just a good summary, where are we.

You know we've said we're kind of here at this return to normal. And is there more downside? I don't know. I mean, this is our, our Retirement Millionaire that came out yesterday, is about how there aren't any analogs for this time, right? We've never had like a full economic shutdown like this. We've never had this kind of stimulus. We haven't in the modern economy had a global pandemic, I mean, you could go on and on. We've never had this kind of small business failures, we've never had this be… the unemployment happen this quickly. So who knows? This is the normal path of the market, but it's very hard to tell where we are. We're either… we're either here and we're going to come back down or we're coming back to a real normal and we already had the big blowout.

Doc: Or what if we're at the very top? At the New Paradigm triple exclamation point?

Matt: Maybe we are. That was February 20th I can tell you that with no second thought. So we'll see.

That was our – no real changes to this, we do this every month, but like I said it's been sort of a slow month for news, if you can ever say that anymore. To me, we're in the period where we're seeing the reopenings and we're seeing if they're going to work or not. If they work, boy, the market could really go higher. And if they don't work, it could really go lower. So, place your bets, people, we'll see where it goes.

Doc: Yeah, and again for me on the health side and the corona thing, I'm much more, much, much, much more optimistic. We got to get government out of the way. I don't know if you saw this today, but in the last couple days, people in California are citing the 14th Amendment, have sued the Governor, saying you don't have any right to restrict us from sunshine and outdoors. I have a – my younger brother lives out there, lives with his family, his wife, his two kids. And they went to a golf course the other day trying to golf and they drive together in the car, but they all have to take separate golf carts by law of the state because they need the social distancing.

I understand the beaches have been reopened because the Governor saw what was coming. But craziness. You know the government's talking about taking over hotels and people's property to… you know. Anyway, I'm really optimistic for the virus stuff, I'm super excited that we're going to – I really do think we're going to see this seasonality, and then more importantly, the real question is the economy and if we, as people, just start to say and shout out, say bring it back, we'll take the risk! And those who are at risk for early death – that means you're older, you're not exercising, you're not modulating your immune system, eating healthy, movement, then be careful. Wear masks. Don't go out in public in large groupings. That seems to me to be the sensible thing to do.

Anyway, other topics, anything else?

Matt: I think that's it.

Doc: Write to us again. Matt, you got anything?

Matt: No, I think that's it for this week.

Doc:, people. Please, we'd love it if you shared this with anybody you want to. is our free daily. We thank you. People have been signing up in droves so spread the word and thank you for that, in all seriousness.

Matt I know you're in a fine, white cotton shirt, I'm in a dress shirt as well. The real question I have for people is, are we in our pajamas the rest of the day today? Are you in your pajamas the rest of the day?

I'm outside with the kids, so I at least have some real pants on and a T-shirt. This, this is for you guys though. That's for sure.

Doc: I am as well. I actually called a barber friend of mine and he and I are going to go for a long, probably 4, 5 mile walk this afternoon and he's still in business -

Matt: Is he going to cut your hair on the way?

Doc: No, no, I mean I don't want to force that upon him and I don't really care. I'm kind of leaving the beard going til every state in the United States is opened up. That'll grow and grow and grow. No! Why not, right?

But no, I don't want to force that on him, I don't think… I don't know. He's missing cutting hair, he's probably cut some other people's hair. He's shaved himself completely bald. Normally he's got this Italian guy with this big head of wavy, wavy hair and stuff. That's what I'm doing.

Matt: Alright, it's good talking with you Doc.

Doc: You too.

Matt: Bye everybody.