Today is a trees day more than a forest. Most of today isn’t news, it is a report on where we are on the upward curve.

KNOXVILLE: Mayor Kincannon issuing her own “safer at home” order in addition to the order issued by the county health department. Kincannon’s order is specific to the city of Knoxville but gives the city enforcement authority.

“The number of COVID-19 cases in Knox County has doubled in the last few days and is rising daily. Too many people are not taking this seriously. I issued this order so our codes enforcement officers, Parks and Rec employees, KFD inspectors and KPD officers will be empowered to enforce this life-saving order,” Mayor Kincannon said.

Mary Kincannon

Knox County COVID-19 Cases
Source: New York Time data, chart by JM Addington

We already wrote earlier in the week that, anecdotally, the safer-at-home order didn’t seem to be being followed. So what? Cases are still rising and leaders are reacting. We expect that more will follow suit if the voluntary orders aren’t followed. We’re not panicking, just observing that (1) social distancing appears to work, (2) our community isn’t doing it well, (3) policymakers are doing their best to avoid turning a bad situation into a true crisis.

It’s not complicated. If we can all manage to actually stay at home for the time this doesn’t have to be worst case. If we can’t manage that it’s going to be worse.

Models: For the third day in a row the feds issued updated models, this time with an estimate as broad as both of the last two days’, 100,000 – 240,000 deaths. If there is news here it is that the medical community seems to be coalescing around the 100k-200k number. This is better than before. The early estimates went (roughly) from 1,000,000 to 10,000,000.

Testing: At least two governors separately said this week that testing isn’t widely available yet. That means that we may still see a jump in cases, comparing them with deaths will remain important to understand the trend.

Hospitals: Four hospitals in the Boston area report to NPR high levels of staff COVID-19 infection. We’ve seen at least two reports today about hospital staff across the country being disciplined for speaking out about the lack of PPE. So what? We wrote last week about how flattening the curve is about avoiding systemic failure in the healthcare system. And this week about how images of overrun hospitals will affect policymakers. We are beginning to see what that would look like, at least in areas with dense populations.

Forbes has a good primer on getting your stimulus check. If you filed taxes this year or last year the IRS will use that data for your tax return. Your author is working to expedite his 2019 return to ensure that the IRS is aware of his newest dependent. You can file a tax return even if you don’t owe anything and you might want to consider doing so if you are not on social security or another federal plan where the IRS would already know where to deposit the stimulus money.

The IRS sent most employees home yesterday but hasn’t said how it will affect taxes or stimulus payments.

The San Francisco Bay Area is reporting that social distancing there is working. If you remove Santa Clara county (h/t FollmerK) you can see it in the data. The chart is for total cases, you can see that new cases are steady, instead of increasing.

Bay Area COVID-19 cases w/o Santa Clara county
Source: New York Time data, chart by JM Addington

China is going to officially report asymptomatic cases. This could result in the worldwide case count taking a jump for cases from February and early March. It also decreases the case mortality rate for China. China’s manufacturing is also bouncing back with a PMI of 52 (growth) in March. However, malls and theaters remain empty even as people are allowed to return. We expect the US return to look similar: even after stay-at-home orders are lifted we don’t expect people to return to large group activities in mass.

In Hong Kong there are rice shortages being reported, as Vietnam put export controls in place. We expect that we’ll feel those effects in the US but it isn’t clear how the global trade will balance out yet. We expect that, practically, this will be a bigger issue in Asia than the US.

For Businesses (and non-Profits)

New guidance from the SBA on the EIDL loan: if you applied before with the old COVID-19 application you must re-apply. It took us about 15 minutes to get through the new form at https://covid19relief.sba.gov/#/

Even if you don’t end up being accepted for the EIDL you may be eligible for a $10,000 grant.

Secondly, the best information we have on PPP (see yesterday’s post) is that you can use it with along with an EIDL. However, you have to use the money for different purposes, you cannot use both of them for payroll for instance. Our bookkeeper has gone so far as to recommend that we set up separate accounts to receive the funds if necessary to clearly show how they are used.

The PPP is even available to non-profits and sole proprietors, independent contractors.

PPP Applications Available

While we were writing today’s post we got an email from one of my bankers with information on the PPP. You can download a sample copy here. It is identical to the copy we received from our banker.

Read the best summary of the CARES Act we’ve found here. If you own a small business read it right now.

Generally, the amount of the loan is capped at the lesser of $10 million and 2.5 times the average monthly payroll costs incurred in the one-year period before the date of the loan.

National Law Review

Intuit is matching GoFundMe’s setup for SMBs, you can find out about it at https://quickbooks.intuit.com/smallbusinesshelp/

International Numbers

Italy’s new cases are still dropping:

Source: Worldometers

Today’s new cases are currently set to come in around yesterday’s. It’s a great sign that the social distancing measures that Italy imposed (late, and progressively instead of suddenly) are paying off. There is a subtle warning in the data as well, the US also implemented social distancing measures late and progressively. Our daily new cases may also take time to level off. We don’t watch Italian deaths at JM Addington because of how the Italian attribute deaths to COVID-19.

Other

Thanks to those that have shared kind words or liked these posts. We’re doing out best to put out data-driven analysis, each one of these takes about 2 hours. It’s helpful to know that they are being read.

If you are or know a math-whiz that can answer a question on exponential regressions with time series data we’d love the help.

What we are watching next: The things we are internally focusing on next are: (1) what is going to happen in hospitals: we expect that if hospitals are overrun, that will trigger new responses from policymakers. (2) How long is COVID-19 going to be around in a significant fashion. We believe we need to update forecasts just to run our own business but expect that we need 5-7 more days worth of data at minimum, and 10-15 would be preferable.

Governer Bill Lee issued a “safer at home” order today. Like what we have in Knox County already, it isn’t a mandated “stay-at-home” order but closes “non-essential” businesses. Page 7 of the order and after defines Essential Services in the executive order, it appears to be the same list we linked to from CISA last week. Religious institutions are explicitly listed as essential.

Outside of closing some obvious businesses like salons, barbershops and entertainment venues statewide we’re not sure what impact this will have. The list of essential services is incredibly broad. For instance, the manufacturing section reads:

25 . Manufacturing, Distribution and Supply Chain for Critical Products and Industries. This includes, but is not limited to: manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as pharmaceutical, technology, biotechnology, health care, chemicals, sanitization, waste pickup and disposal, agriculture and agricultural products, food and beverage, household consumer products, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, defense and national defense, and communications, as well as products used by or component parts of other Essential Services;

TN Executive Order 22

That sounds like every business that does business for other businesses, or close to it.

Yesterday Dr. Fauci was publicly talking about 100,000 to 200,000 deaths. Today, Dr. Birx reminded the country that the worst-case scenario is closer to 2,200,000 deaths and she seems to think that 200,000 is a lower bound.

Texas is mandating and enforcing a two week self-isolation quarantine for anyone coming in from out of state. Rhode Island put in a similar measure yesterday. Florida has been requiring this for New Yorkers for a couple of days. These mandatory self-quarantines based on travel have been a staple of other places such as China & Hong Kong. We believe that like the statewide shutdowns — which were new less to two weeks ago! — travel based quarantines are likely to spread much more broadly.

Also, don’t be surprised if they don’t discriminate based on where you’re from. Legally, it seems, states are in safer territory by making it all-encompassing. For residents on state borders that regularly cross over this could have a dramatic effect.

CNN ran an article today reporting that President Trump was moved by the hospital situation in New York City and that impacted his policy response. That is significant because we don’t think he is a unique leader in that way: we expect leaders at all levels to become more protective as we progress towards the peak.

For Businesses (and non-Profits)

Remember that these SBA programs apply to businesses AND non-profits!

It seems that most of the headlines we’ve seen about the help that’s on the way is still being figured out. First, we have the Paycheck Protection Program (PPP) which is part of the CARES Act. Download a FAQ on it here.

  • It goes through an SBA lender
  • “The loan is forgiven at the end of the 8-week period after you take out the loan”
  • You may not take out an EIDL and a PPP for the same purposes. Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan.

The bankers I spoke with today were clear that they didn’t know how this was all going to work out, even though they are the ones who will be orchestrating it. It seems like guidance from banks is days out and funds are likely weeks out (through the SBA programs).

The SBA EIDL has been updated to include a $10,000 one time grant. That grant doesn’t have to be paid back even if you are denied the EIDL. Also, the new EIDL application site is up at https://covid19relief.sba.gov/#/ The EIDL is direct through SBA instead of going through another lender.

If you already have an EIDL in progress, “For loans submitted prior to the new process, you will automatically be included in the up-to $10,000 Advance loan that is ‘supposed’ to be distributed within three days. As I understand, even if the loan is declined, the Advance will still be paid. The Advance will not need to be repaid.”

We absolutely cannot recommend the TSBDC highly enough in their help and knowledge about the current SBA loans. The TSBDC at PSCC – Knoxville Chamber of Commerce has been phenomanal answering all of our questions.

Intuit is matching GoFundMe’s setup for SMBs, you can find out about it at https://quickbooks.intuit.com/smallbusinesshelp/

Mortgages

We missed an announcement from Wells Fargo, Saturday, already rolling out mortgage grace periods nationwide:

Mortgage customers: If you’re unable to make your payment due to COVID-19 related hardships, we’re offering a 90-day payment suspension. To request this assistance, sign on to online banking and email us through our secure Message Center. We’ll respond to you within 3 to 5 days. You can also contact us by phone at 1-800-219-9739. We are experiencing high call volume, resulting in longer than normal hold times and ask for your patience and understanding as we work to serve all of our customers.

US Numbers

We’re really not as focused on the specific numbers as we were a couple of weeks ago. We believe that a strategic mindset is more focused on the next two to four weeks than than today. However, for comparison, we’ll continue to visit these. Be sure to note that cases are on the left axis, the one with the big numbers.

Source: COVID Tracking Project, chart by JM Addington

Overall, new cases are starting to level off. New deaths are not yet doing that. We can break this down into two charts for a better look:

Source: COVID Tracking Project, chart by JM Addington
Source: COVID Tracking Project, chart by JM Addington

New York continues to be the clear lead, however, in both of these.

Source: COVID Tracking Project, chart by JM Addington
Source: COVID Tracking Project, chart by JM Addington

International Numbers

Italy’s new cases are finally dropping.

Source: Worldometers

Today’s new cases are currently set to come in under yesterday’s. It’s a great sign that the social distancing measures that Italy imposed (late, and progressively instead of suddenly) are paying off. There is a subtle warning in the data as well, the US also implemented social distancing measures late and progressively. Our daily new cases may also take time to level off. We don’t watch Italian deaths at JM Addington because of how the Italian attribute deaths to COVID-19.

Source: Worldometers

Spain is also looking better than it was last week. France and Germany’s data are not as neat, we’re going to pass on them today.

Tennessee

Tennessee remains on an upward trajectory, if not nearly as steep as some other states. The top several counties continue to make up the vast majority of the cases. This, of course, could change.

Source: COVID Tracking Project, chart by JM Addington

Source: COVID Tracking Project, chart by JM Addington

Knox County cases are small, relatively, but clearly headed on an exponential trend still. The age distribution shows that most confirmed cases are aged 50 and below.

Source: WBIR
Source: TN Department of Health; Chart by JM Addington

Other

What we are watching next: The things we are internally focusing on next are: (1) what is going to happen in hospitals: we expect that if hospitals are overrun, that will trigger new responses from policymakers. (2) How long is COVID-19 going to be around in a significant fashion. We believe we need to update forecasts just to run our own business but expect that we need 5-7 more days worth of data at minimum, and 10-15 would be preferable.

It’s hard to write any one of these and feel that we’ve covered it adequately. There is a lot more analysis that could be done just on the topics we touch on here today. Consider this update a look at the forest more broadly than the trees.

Just this evening President Trump extended the social distancing guidelines from Easter all through April. Since Mid-March we’ve been using 6-10 weeks (total) as an estimate. This update takes us to the shorter side of that estimate. Dr. Gottlieb is publically supporting shutdowns through April as well.

This morning, Dr. Fauci was estimating 100,000 – 200,000 American deaths, in total, due to COVID-19. This is mixed news. The CDC estimated that the last flu season killed 34,200 Americans. An early study out of London suggested that 1,000,000 to 2,000,000 Americans could die from COVID-19. Dr. Fauci’s estimate clearly lands in a serious but less apocalyptic zone.

Hospitals

COVID-19 patients in CA ICU beds doubled overnight (March 28th). New York is starting to share ventilators, which was not a thing until now. You can watch a clip at the bottom that shows an Italian ICU using SCUBA gear as a makeshift ventilator.

A not-yet peer-reviewed paper and website has been set up to predict hospital supply and demand, including vents, over the next 4 months. There is more than one key takeway, lets look at their projections for the US as a whole:

Source: IHME

Yikes, that’s a lot of needed resources. At this level, however, it looks like the shortage is in the entire US. They are kind enough to let us download their data, let’s look at just that date, April 14th, and see who needs beds. [1]

Source: IHME, Chart by JM Addington

Basically, on the nationwide peak data (projected) there are 4 states with critical hospital bed shortages. The data is more nuanced than this, total hospital beds are not the same thing as ICU beds and ICU beds still need vents. The goal here is to highlight that the data shows different parts of the country getting hit very differently.

Source: IHME, Chart by JM Addington

Ok what about Tennessee?

Source: IHME

As far as global pandemics go, we are looking pretty good. This model has us peaking nearly three weeks out and landing at around 1,550 COVID-19 deaths by early August. We think that is a long way out to predict, however, it gives us an idea of where the next month is headed.

What we don’t have is county by county breakdown for these projections. If we look at TN counties with more than 10 cases it is clear where they are located right now:

Source: TN Department of Health; Graph by JM Addington

Nashville & Memphis are going to have a much different experience than most of the rest of the state.

Mortgages

New Jersey is following CA in allowing 90-day grace periods on mortgages. Anecdotally, I’m hearing that people outside of CA & NJ are getting grace periods on a case by case basis. Let’s talk about this for a moment because it is really important.

A typical recession, such as 2008, has at least two things common to it that our current situation lacks. First, there is some sort of structural problem with the economy. Too much debt, overinvestments, outright fraud, a combination of the above, etc. Second, it’s beginning and endpoints are unclear, especially in the middle of it. So, if you are a bank or a mortgage company and you have customers that are failing to make their mortgage payments on time you do what you always do and take the house back.

In 2008 this caused massive problems. We’re not going to rehash that, but suffice to say everybody lost. No one wants that today. First, there are not known structural issues like in 2008, 2000, 1982, whatever. Second, it’s really clear when this started and kinda clear about when it is going to end (weeks or months, not years or decades).

I was on a conference call with other Knoxville business leaders last Thursday, including a commercial realtor executive and a bank CEO. Both of them made it clear that no one wants to be taking properties over. The landlords don’t want to take over strip malls and the banks are getting encouragement from the FDIC is help people make it through, including giving people grace periods on mortgages.

All of this matters because the alternative is a cascading failure of banks, mortgage-backed securities, the housing market, construction and more. NOBODY WANTS THAT. Because we know that this won’t last forever the major players seem much more interested in ensuring that there is a healthy, functioning market on the other side of this.

If making your mortgage is going to cause you problems call your lendor. Today. Also, expect to see more of these deals announced: we’re don’t think that the big banks would commit to them in CA/NJ without being ready to commit to them everywhere.

How we are shifting our thinking

The data that we have had time to analyze suggests that COVID-19 is going to play out in different areas of the US very differently. It may be more helpful to be thinking of COVID-19 responses in stages: shutdown (weeks), soft-open (months) and longer term effects (2-3 years), and to consider that different areas of the country may hit these stages at different times.

We really don’t if that will be the case, current policy is being made primarily at the state and federal levels. However, the vast differences in how this is already playing out would suggest that different policy responses could be anticipated.

Other

What we are watching next: The things we are internally focusing on next are: (1) what is going to happen in hospitals: we expect that if hospitals are overrun, that will trigger new responses from policymakers. (2) How long is COVID-19 going to be around in a significant fashion. We believe we need to update forecasts just to run our own business but expect that we need 5-7 more days worth of data at minimum, and 10-15 would be preferable.

Side note: the report about Advil worsening COVID-19 has been pretty much debunked.

Below – see a two minute clip inside an Italian ICU. Why does this matter? This is a recent clip but similar ones have been circulating for around a week. If NYC and LA end up like this you can expect much bolder changes from US policymakers, at least in the areas with the biggest projected hospital shortages.

[1] We are simplifying the model here, don’t miss that. Different states will peak at different times.

Today is a highly abbreviated update: we are going to take a day or two to step back to make sure that we can see the forest for the trees.

Numbers: The US, Italy, NY, and NJ are all up yesterday and today. Moreover, testing still seems inadequate in many areas, at best. We keep hearing more stories about people that ought to be tested and either aren’t or it is medically safer for them to ride it out. We’d much prefer to have hard data on this than stories but no one is counting “not tested people,” so quantitative data is impossible to come by.

The lack of quality data will continue to hide two critical numbers: the total cases — how far has COVID-19 spread — and IFR, how deadly is this. Missing those numbers have real effects on the ability of policymakers and medical professionals to make sound decisions.

Tennessee Cases: At 1,200 we are still at exponential growth as a state. Which is the same thing as yesterday.

Hospitals: New York is sounding the alarm bell as loud as they can about how their hospitals are at capacity and close to being overrun. They are attempted to triple beds available inside about three weeks. So what? Your local community had better be watching NY to get an idea of what is coming next. Or take much more drastic actions than we have seen to date.

The Stimulus Bill is now Law: Read Axios’ summary of it. At 873 pages we’re pretty sure that there is going to be a lot more to learn than the summary. Be skeptical of anyone telling you to do something to get your check! The reporting — so far — is that it will be direct deposits without tax payer input. We’ll update you here if we see that change.

Social Distancing: Like non-testing quantitative data is impossible. Your author drove around West Knoxville today and observed that many places — especially gardening stores — were slow for a Friday but not that slow overall. This will show up in the case numbers, eventually. Exponential growth won’t stop with halfway-social distancing, that’s not how the math works.

What we are watching next: The things we are internally focusing on next are: (1) what is going to happen in hospitals: we expect that if hospitals are overrun, that will trigger new responses from policymakers. (2) How long is COVID-19 going to be around in a significant fashion. We believe we need to update forecasts just to run our own business but expect that we need 5-7 more days worth of data at minimum, and 10-15 would be preferable.

US cases are at 83,200, up from 65,650 yesterday. New York continues to make up about half of those cases, with a significant jump in New Jersey.

Tennessee is up to 957 cases from 784 yesterday. Knox county moved up to 28 from 20. We continue to expect that the real number is higher.

Before we jump into anything else let’s mention the one thing we won’t talk about yet: the stimulus bill. It’s passed the Senate but not the House. We know that there are calculators and bill run-downs already. It’s still a bill and not a law.

Update Summary

US cases are up, a lot, half still in NY which isn’t really slowing down yet. Italy, at best, is easing up on the gas pedal, definitely no brake. The Department of Labor has a summary page on the new required COVID-19 sick leave. We take some time today to explain how to understand cases, deaths and hospitalization rates together, instead of separate.

We’re going to continue to back off on the things that are not new: the US will have lots more cases tomorrow and so will New York. We’ll do our best to shift our focus in time forward to what happens next.

Different Numbers and their Relevance

Let’s take a minute to talk about the different terms and statistics that are getting thrown around. First, we have confirmed cases, which is, exactly what it sounds like. The number of cases we know that we know. The problem with cases is that (1) tests take 4-7 days for results and most people still aren’t tested without symptoms, so there is an inherent lag between confirmed cases and actual cases, (2) without randomized testing they really don’t tell us about the broader population. I.e., 83,000 cases in the US really don’t tell us the total number of people infected.

Second, is deaths. Deaths are important because (1) someone died and that’s the big thing we are trying to avoid, and (2) deaths don’t wait on a test to be counted. There is less of a lag. If you know the infection fatality ratio (IFR, deaths / actual cases) you can figure out roughly how many cases there are. For instance, if the IFR is 1%, one death would indicate roughly 100 cases more generally.

What we can do with confirmed cases and deaths is compare how the two are moving: if they are both going in the same direction that ought to indicate real progress. If they are moving in different directions that indicates an issue with the underlying data, or a lag at minimum.

Third, we have hospitalizations. These are important because (1) a high number of hospitalizations can overrun the entire healthcare system and drive up mortality rates across the population, not just COVID-19 victims, and (2) if you know the hospitalization rate you can, again, take a guess at the broader number of cases even if they aren’t tested.

Here is the real rub: the IFR and hospitalization rates are both calculated ratios that require you know at least 2 of the 3 numbers. I.e., IFR = DEATHS / ACTUAL CASES but we don’t know ACTUAL CASES, we know confirmed cases. Hospitalization rate has the same problem. The case fatality rate (CFR) is DEATHS / CONFIRMED CASES, and is the one ratio we can know, but we can’t extrapolate anything further from it.

There are real questions as to how big of a deal COVID-19 is or will be. There are some articles that try to answer that question by taking an IFR from another country and applying it to the US. For instance, if you look at Germany’s 0.6% CFR[1] and New York’s 385 deaths you might conclude that New York’s actual number of cases is closer to 65,000 rather than 37,000.

There are a number of people using this kind of math[2] to demonstrate that COVID-19 may not be as bad as is reported. We don’t think they are wrong, and we don’t think that they are right. We think that the unknown variables make it pretty much impossible to extrapolate from the data in this way. In other words, the guesses are about how big or small COVID-19 are right now are just that: guesses.

A couple of final notes for those of you reading headlines about fatality rates, Italy’s skews high because of the way they attribute deaths to COVID-19. China’s rates skews high as well because they didn’t count everyone who was infected as being infected. That means the generally reported 3.4% case fatality rate is the worst-case scenario based on current data.

So Where Are We Today?

US confirmed cases continue upwards. They’ve actually dropped below the trend line, which would be good if that was from a lower infection rate. It’s probably from test lags or not enough testing, or both.

Source: COVID Tracking Project, chart by JM Addington

Above will be the most interesting chart we have today, the height of that arrow is the same as the increase in cases in the last week. If we look at hospitalizations we find that follows a similar trend. Most of them are in New York (6,800):

Source: COVID Tracking Project, chart by JM Addington

New York continues to lead the US in cases by far and away. However, we can see both that all other US cases are increasing faster than New York’s, but New York isn’t doing great. The best you can say is that the last five days look better than the five before it, in terms of how fast things are accelerating. Our own notes are that New York went into shutdown on March 20th, meaning that “social distancing” effects to decrease cases shouldn’t be observed for at least another week.

Source: COVID Tracking Project, chart by JM Addington
Source: COVID Tracking Project, chart by JM Addington
Source: COVID Tracking Project, chart by JM Addington

Tennessee is in roughly the same bucket, but with far fewer cases:

Source: COVID Tracking Project, chart by JM Addington

It’s an interesting comparison, the exponential growth rates of both TN & NY are close to 0.36 but NY’s overall increase is about 20 times higher than TN.

International

Italy’s new cases are going to come in at least at 6,200 for today. That’s not what we want to see. Deaths also are set to come in at over 700.

Remember earlier we said that cases and deaths moving in the same direction would indicate that’s really where things are going? If you overlaid the trend from the peak to today on both of these it would be only slightly pointed down to the right, so, decreasing, but not by much.

Source: Worldometers
Source: Worldometers

If there is a bright spot that data would still come out of China, where both new cases and deaths would have a similar trend after their peaks around February 15-18:

Source: Worldometers
Source: Worldometers

However, the caution here is two-fold: (1) we’re getting close to finding data to support what we want to see, and (2) China went into a much harder, more sudden lockdown than anywhere else we’re aware of.

Other Headlines

Families First Coronavirus Response Act: Employee Paid Leave Rights: The Department of Labor finally put up a great summary of what rights you have as a worker to paid sick leave related to COVID-19. In short, two weeks at full pay and 10 weeks at 2/3rds pay. If you have to stay home with the kid because school/daycare is closed that counts as well. Only applies to companies with less than 500 employees, companies with less than 50 employees can ask for an exemption if they’d go bankrupt following the law.

Companies: find a post for your breakroom Microsoft Teams channel here.

A private company called Unacast is combing “location data” [your cell phone data] to put together a dashboard on how well the US is doing with social distancing.

They grade the US a B. We think that’s optimistic if the target number is closer to -100%:

Source: Unacast

The big banks in California have agreed to a 90-day mortgage grace period. We believe that is incredibly significant and expect other states to soon follow suit in the same way they have issued stay-at-home orders.

More states are shutdown, spoiler, almost all of them have something in place:

How We Are Adjusting

Our time horizon is still floating at 6 to 10 weeks out (so, late May at latest for the end to mass shutdowns). We’re beginning to feel that ten weeks may be optimistic based on the slow measures taken by the majority of the country.

Our biggest adjustments ahead will depend on where we believe cash will be in 4-5 weeks. We don’t believe we will have adequate visibility into late April until later this week.

Notes

[1] This is technically a CFR. However, the general reporting is that Germany has tested widely enough that their IFR and CFR are probably closer than any other population we have measurements for.

[2] The linked article is calculating the IFR by estimating the total infections, which only shifts the uncertainty from one variable to another.

US cases are at 65,652, up from 52,900 yesterday. New York continues to make up about half of those cases.

Tennessee is up to 784 cases from 667 yesterday. Knox county officially moved up to 20 from 13. We continue to expect that the real number is higher.

We don’t have much to say today, so we won’t say much. So far, the cases are doing what the models suggest, going up exponentially.

Where are things today?

We doubt that it is news by today, but cases are up everywhere. Comparing NY to all the other states and territories, except New York is interesting:

Source: COVID Tracking Project, chart by JM Addington

The US as a whole follows a fairly steady curve, whereas you can see when New York starts to accelerate. On the one hand, great news, NY is driving this whole thing. On the other hand, this curve still leaves out of hospital and ICU beds inside of 7 to 10 days. It’s got to get significantly less steep to avoid that scenario.

How is Tennessee today?

Source: COVID Tracking Project, chart by JM Addington

Less flat than yesterday. The Department of Health has actually been actively lowering expectations, letting the public know that they still expect cases to increase. Total tests are still somewhere around 11,000, which amounts to about 1/7th of 1% of the population.

Here is a snapshot of how TN is shaping up geographically:

Source: JHU

The thing you notice right away is that denser populations have higher cases, which isn’t a surprise in and of itself. The issue that is less obvious is that cases spread faster, faster in more densely populated areas. Also, this map appears to use the county center as the place to put the circle: the cases are not perfectly spaced apart.

International

Italy continues to be down from its peak, today’s data will probably end up close to the 24th:

Source: Worldometers

This is what we hope to see if social distancing and lockdowns are indeed effective.

SBA Loans

The advice we’ve gotten both from the local SBA office and a reputable firm that specializes in SBA loans is to apply for both the disaster relief (EIDL) and a traditional SBA loan. Then see what comes back faster and take that. The SBA said that that the EIDLs are 2-3 weeks plus another 7 to 10 days to process. The local SBA also said that we were ahead of the curve and that they expect this time to increase as we get further into this.

It sounds like loans are broken out in tiers from $0 – $350,000, $350,000 – $1,000,000 and over $1,000,000. Online research says that over $350,000 typically requires some level of security.

Of course, the current bailout making its way through Congress may offer additional relief. Our view is that we’re not locked out of anything until we take a loan, however, waiting to apply could effectively close that door due simply to timing.

Other Headlines

The big banks in California have agreed to a 90-day mortgage grace period. We believe that is incredibly significant and expect other states to soon follow suit in the same way they have issued stay-at-home orders.

More states are shutdown:

How We Are Adjusting

Our time horizon is still floating at 6 to 10 weeks out (so, late May at latest for the end to mass shutdowns). We’re beginning to feel that ten weeks may be optimistic based on the slow measures taken by the majority of the country.

Our biggest adjustments ahead will depend on where we believe cash will be in 4-5 weeks. We don’t believe we will have adequate visibility into late April until later this week.

For the last few days we’ve been preparing internal reports twice a day for staff. We’ve decided to release these publicly to help you plan.

US cases are at 52,900, up from 42,400 yesterday morning. New York state makes up nearly half, coming in near 26,000 alone. New Jersey is the state closest behind at 3,700. Both of these are still on a very steep curve upward.

Tennessee is up to 667 cases from 615 yesterday. Knox county officially moved up to 13 from 12. We expect that the real number is a lot more.

We’re dropping the AM updates until there is new news. The last few mornings have just been more cases, more shutdowns, more crazy stock markets. We expect more of the more.

Where are we at?

Yesterday we went over a rudimentary model that said cases are following a curve that is:
y =91e0.3026x

In not-math language means that cases are increasing each day, by an increasing amount. If the number of cases is our speed then the curve says we are going faster faster.

As a whole, the US actually overshot the curve which predicted 52,440 cases today. The day isn’t over and we’re north of 52,900. Half of those are still in New York, which is coming up on 26,000 cases. New Jersey is second at 3,600 cases.

Source: COVID Tracking Project, chart by JM Addington

The above is meant to give you an idea of how fast things are progressing. Can you remember what you were doing a week ago Wednesday? US cases had started to surge but unless you were in NYC, LA or WA you might not have been paying much attention. Today’s case count is off of the chart compared to what we were using 2 days ago.

Let’s forecast that out 7 days again:

Source: COVID Tracking Project, chart by JM Addington

Again, don’t take our Excel forecasts as deep expertise. These are quick and dirty and there are a lot of factors at play. Here’s the rub, if nothing changes then this forecast is probably more right than wrong. Also, because New York has so many cases it may overweight the series.

Alright, what about Tennessee?

Source: COVID Tracking Project, chart by JM Addington

Hey! Who likes good news? Our forecast says we should be 1,000 cases and instead we’re only at 667. This is exactly what flattening the curve means. For Tennessee, one day isn’t enough to declare victory. Why it dropped mattered and we — at JM Addington — don’t have enough information on the underlying testing to determine why it dropped. Maybe we just tested all the sick people up front and now we’re on to healthy ones. Maybe we hardly tested at all today. Maybe the labs were just late reporting their numbers.

All of the graphics we’ve shown so far are total cases, they can only go up. Of course, the thing we really care about is active cases, who is sick today. For active cases to decline we need people to get better or die faster than new people are getting sick.

Here is China on both of those counts:

Source: Worldometers

Ignore the one giant spike. China began hardcore lockdown January 22, by early February new cases started dropping and by mid-February total cases were in decline. That is flattening the curve.

Italy is also showing evidence of flattening the curve:

Source: Worldometers

March 24th will probably show an increase from March 23rd, but below the peak. Italy is a top place to watch because they are entering the critical period where the expectation is for the curve to flatten. If it doesn’t there will be important questions as to why not.

Why is this a big deal?

It’s not clear to a lot of people why COVID-19 matters. OK, so it’s a deadlier cousin of the flu, why don’t we just go about daily business like they did in 1918?

Well, first, to state the obvious it isn’t 1918. In 1918 it took weeks to cross the ocean, not a few hours. We were barely driving (less than 0.2 cars per person) and we didn’t have freeways. In 1917, the year before the Spanish Flu, the life expectancy in the US for men was 48 and women 54.

We could go on but you get the picture. 1918 isn’t a good comparison.

Let’s talk about systemic failure, points I am going to largely summarize from Tomas Pueyo.

What is systemic failure? The failure of a system. When your power goes out, that is an incidental failure, a storm brought down a pole, the pole gets repaired and your street gets power back on, not a big deal.

When your entire state has rolling brownouts because (1) it is hotter than normal increasing demand, (2) the grid can’t redistribute electricity fast enough and (3) local providers are unable to increase supply fast enough you have a systemic failure. The whole thing is broken.

That’s what is happening in Italy, and what Gov. Cuomo of New York is so concerned about.

The curve for New York looks just like the curve for the US above, except that it is only half as far along (26k cases instead of 53k). 7-8 days out looks like nearly 300,000 people infected. As of yesterday, about 1 out of 8 COVID-19 positive New Yorkers were being hospitalized for the virus. That comes out 37,500 hospitalized in New York state alone a week from today.

The state only has 50,000 hospital beds and, guess what? They already use most of them in non-pandemic times. Only 3,000 of those 50,000 are ICU beds. “Health officials estimate that the state will need 110,000 beds and 18,000 to 37,000 ICU beds.”

Let’s assume that they can’t get that many beds (6x ICU beds at minimum) inside a week, or even two. Then what happens?

The hospitals get completely overrun. As they get overrun, doctors, nurses and other healthcare workers in the highest demand ever start to get sick, and some die. Possibly while cases are still increasing as a whole. So the demand on the system is past its capacity and its capacity starts to shrink in response.

We can run the same scenarios for ventilators and oxygen machines but it amounts to the same thing. Our healthcare system isn’t built to handle a once in a hundred years pandemic.

As the system is overrun the mortality rate increases because of the shortage of beds, staff and critical machinery. People die that would not have otherwise because there just isn’t enough to go around.

And it won’t just be COVID-19 patients. Anyone who needs access to doctors, nurses, ventilators, etc., will find them hard to come by. 20 year old in a car wreck needs a ventilator? Get in line. Have a current medical issue that is manageable but needs management? Get in line. Every sick person that exceeds the capacity of the healthcare system has a higher chance of dying than when the system is operating within capacity.

In IT we call this a cascading set of failures, as a failure in one area causes failures in other areas, like dominos.

This, of course, would not last forever. Eventually, it would die out. However, it’s really hard — maybe impossible — to estimate what the cost and impact on society would be.

This also is at the heart of “flatten the curve,” the entire idea is to keep cases within the capacity of the system. Plus, the math of exponential growth is that the faster you cut off exponential growth the less pain you have to go through.

Headlines

Gov Bill Lee calls for Schools to be off until April 24th. We applaud the governor for finally making a call that parallels our reality, even if it isn’t popular. Our $0.02: we still think that’s tad optimistic but we’ll watch the data. If our TN curve stays flat then we just might be able to have life back to kinda normal in a month.

India is entering lockdown. We are unable to keep up with the number of states in shutdown, or in some level of shutdown. The NYT is tracking that well.

There are prominent voices talking about when to end the shutdowns. Our read is that the facts on the ground are guiding actual policy over what we wish was happening. NY, the US, and the UK have all reversed course at this point after the number of cases spiked.

Bill Gates still thinks we’re on a 6 to 10 week shutdown time horizon.

The Smokies are closed: this isn’t a surprise. If you follow Tennessee’s progressive shutdown, the “next” place is continually where people go to after the last place was shutdown.

Two Sunday Required Reads

I’m reposting this, you really should read through both of these to understand why we’re all staying at home.

The Hammer and the Dance” does an amazing job mapping out our different options on how to react to COVID-19. A completely separate effort from academia, highlighted in the NYT, reaches the same conclusion,

How We Are Adjusting

Our time horizon is still floating at 6 to 10 weeks out. We’re beginning to feel that ten weeks may be optimistic based on the slow measures taken by the majority of the country.

Our biggest adjustments ahead will depend on where we believe cash will be in 4-5 weeks. We don’t believe we will have adequate visibility into late April until later this week.

For the last few days we’ve been preparing internal reports twice a day for staff. We’ve decided to release these publicly to help you plan.

US cases are at 42,400, up from 26,900 yesterday morning. New York state makes up nearly half, coming in at 20,900 alone. New Jersey is the state closest behind at 2,800. Perhaps the most troubling number is that NY has tested 78,000, which equates to a 27% positive test rate. Either they are getting a lot better at testing people, or a lot more people are testing positive. We are going to return to this point below.

Tennessee is up to 615 cases from 505 yesterday. Knox county officially moved up to 12 from 5. We expect that the real number is a lot more.

It’ll be a Rough Week

At this point, you should mentally prepare to have a pretty rough week of headlines. Here is what to expect.

1. Cases will continue to skyrocket.

[Edit 8:20PM, each time period below should say through March 22, and forecast out through March 29]

Here are total US cases through yesterday. The trend line is dotted and it’s a very good fit.

If we forecast it out another 7 days it makes our current state look pretty mild:

That leaves us just shy of 250,000 cases in the US alone. Could we really jump 200,000 in a week? The world jumped 100,000 cases in 4 days. In either event, the point is that the number of cases are about to skyrocket, even if the specific number we end up at is unknown.

In Tennessee, specifically, our curve is slightly less steep but nothing like you what you want a pandemic to look like:

A 7 day forecast brings us out to a little under 8,000 cases.

Again, there are very rudimentary forecasts, the kind of thing you studied in high school even if you don’t remember it. We’re not aiming for precision so much as demonstrating why you can expect it to be much worse before it gets better. By cases, we are only a few days behind Italy whose curve is close to our own.

Source: Worldometers

2. Governments will react accordingly

The UK followed Germany’s lead today in putting the entire country on lockdown, including gatherings of more than two. Domestically, we are up to nine states in some form of lockdown, MI, OH, LA, DE, CA, NY, NJ, IL and CT. It’s possible that more are in place since I began writing this post. Knox County released such an order at noon, effective at midnight.

We still see some people questioning whether all of this is worth it, would it be better to let hundreds of thousands or millions of people die than grind our economy to a halt?

We don’t have answers: but we’ll note that everywhere the virus surged reacted the same way. Unless you believe that the Chinese just hate making money, as do Italians, Germans and New Yorkers it is worth considering that maybe the view from inside the storm is different than the view outside of it.

Also, if you want to know what your locality is going to do next, look at the cities/governments/nations ahead of you in cases. Tennessee, New York was at 524 cases on March 14th, 20,000 today.

3. The Worst Economic Numbers in History are about to come out

Unemployment numbers will be updated this week and Wall Street putting out projections for how much the economy will shrink the second quarter. Comparisons are already being made to 2008, 1982, The Great Depression, you name it.

We’re not a fan of these comparisons.

The modern economy has never, ever, ever had the pause button pressed on it. This is something new.

We’re not sure if it’s better or worse. There are more moving parts to the economy than any one person can comprehend, much less adjust. Put in my industry terms, we’ve never tried to turn this economy thing off and back on again. It remains unknown if we can actually do that.

So, this week ignore the headlines with comparisons. We don’t even have something to compare this to. If you want to read some genuine analysis go at it.

Is there any Hope?

I have a lot of hope. Let’s start with data.

Source: Worldometers
Source: Worldometers

If ever a country had been designed to fall under the weight of a pandemic it would be China. A country roughly the size of the US, with four times the population that, practically speaking, only lives in the half the space due to the geography of wide swaths of the country.

Hubei sits just outside the more densely populated area of the northeast.

If China can defeat this thing inside of three months there is no reason that the rest of the world — especially the West — can’t either.

But it isn’t guaranteed.

Source: China-Mike

We still aren’t anywhere close tot he lockdown measures that China put in place. No one would be on any of the beaches if there were the case. Wuhan went into hard lockdown on January 22, they are coming out of it two months later, slowly.

The chart below maps out in yellow official cases of COVID-19 while the teal shows the actual number of cases, figured out in retrospect. You can see that there is an 11-12 day lag between when the testing catches up with the downturn of actual cases. That means, be patient, this staying at home thing really stops the virus but our detection methods take awhile to catch up.

Source: Tomas Pueyo

We promised to return to New York’s numbers earlier. New York went on lockdown on the 20th. It is entirely possible that the number of new cases in New York is already dropping and the testing is still catching up. We won’t know for sure until April, give or take.

History – a different form of data – gives me hope as well. The one charted thing about being in uncharted waters for America is that we are always going into uncharted waters. From our beginning as a grand experiment with democracy, to our involvement in winning the two largest wars in human history to overcoming the Great Depression or eradicating Polio we are extremely adaptable.

None of the forecasts given above are inevitable, and we continue to expect that people will make rational decisions — after running out of other options.

Two Sunday Required Reads

I’m reposting this, you really should read through both of these to understand why we’re all staying at home.

The Hammer and the Dance” does an amazing job mapping out our different options on how to react to COVID-19. A completely separate effort from academia, highlighted in the NYT, reaches the same conclusion,

How We Are Adjusting

Our time horizon is still floating at 6 to 10 weeks out. We’re beginning to feel that ten weeks may be optimistic based on the slow measures taken by the majority of the country.

Video only this morning.

If these updates are helpful to you do us a favor and like the post wherever you saw it posted. Also, if you have a question feel free to put that up, we’ll answer it if we feel we have enough internal expertise.

For the last few days we’ve been preparing internal reports twice a day for staff. We’ve decided to release these publicly to help you plan.

You can always count on the Americans to do the right thing after they have tried everything else.

Wintston Churchill

US cases are up to 32,400 from about 26,900 this AM and 24,100 yesterday PM. While I need to jump data sources for comparison, it looks like New York makes up nearly all of those cases. (10,400 yesterday, 15,200 now).

Tennessee is up to 505 cases from 371 yesterday. Knox county officially moved up to 5. We expect that the real number is a lot more.

I’m sure that most of you have seen that Gov. Bill Lee issued an executive order prohibiting more than 10 people from meeting, restricting restaurants to takeout/delivery and shut down bars, salons, etc. So what? Keep watching how states with more cases are handling COVID-19 to understand how Tennessee (or whatever state you are in) is likely to.

At the same time, just as testing is ramping up on the coasts the healthcare strategy is changing to “test less” because there aren’t enough workers and PPE to test everyone. We’re not sure how that will change the response more broadly.

[Edit, 8:39 PM] Delaware, Lousianna and Ohio join CA, NY, IL and PA in issuing mandated shutdowns.

The Problem with the Models

We’re starting to see a lot of headlines about the millions that are going to die or that global depression that’s coming. We don’t want to minimize that it is going to be rough, really rough, for awhile. However, most of the doom and gloom scenarios ignore something really important: people adapt.

When cases are low government is reticent to make big, bold, sweeping changes. As cases shoot through the roof these actions happen swiftly. Similarly, if the economy starts to tank in a way that it looks like it can’t rebound from you can expect government to react to prevent that.

The headlines that show “we all die” or “we are all jobless” present a false dichotomy.

Two Sunday Reads

The Hammer and the Dance” does an amazing job mapping out our different options on how to react to COVID-19. A completely separate effort from academia, highlighted in the NYT, reaches the same conclusion,

How We Are Adjusting

So far, we haven’t made major changes to our response at JM Addington since Monday. We’re working on the SBA loan because it’s just good sense.

Tomorrow our president intends to take a lot of time calling customers and other small businesses to see how they are doing, and where help is needed.

Can Tennessee Force Businesses to Close?

I asked Dustin Landry from LA Law this question, and here was his response:

It is possible that a mandated shutdown would be upheld. The U.S. Supreme Court imposes various tests in evaluating restrictions related to equal protection and freedom of speech, assembly, etc. If challenged under equal protection, the courts would likely apply a rational basis test to the policy, i.e., if the regulation is reasonably related to an important public policy and is the least restrictive manner upon which to meet that need, it will likely be upheld. If a mandated shutdown is challenged as a violation of freedom of speech or assembly, a strict scrutiny test will be applied, and the court would again have to determine if the time, place and manner restrictions are reasonably related to the underlying public need and whether or not there are less restrictive options available. Unless and until someone were to challenge a regulation legally in the courts and prevail, the state can certainly enact these measures and enforce them.

In reality, a challenge to any government imposed shut down in the courts may actually take longer than any of these temporary shutdowns would be in place, so we may simply be at the government’s mercy for the time being.

If these updates are helpful to you do us a favor and like the post where you saw this. Also, if you have a question feel free to put that up, we’ll answer it if we feel we have enough internal expertise.

Family Life

My wife put out a vlog on what’s changed and what’s different at the Addington household, you can see her video below.