Category: zerohedge

Authored by Cyril Widdershoven via OilPrice.com,

The current optimism of analysts and the media that an end to the ongoing OPEC+ oil price spat is near is entirely unjustified.

The ongoing oil market volatility, the battle between leading producers for market share, the logistical impossibility of enforcing U.S. production cuts, and the continued demand destruction caused by COVID-19 are not issues that can be solved by an OPEC meeting.

Immediately after Trump’s latest OPEC twitter offensive, Saudi Arabia and Russia came out with critical statements about the impact and influence of the US president on the matter. While Putin and Mohammed bin Salman are reluctant to bash Trump, the real power when it comes to the oil market does not lie with the U.S. President.

The tweet by Trump claiming that MBS and Putin would agree to a 10+ million bpd production cut shows not only his overestimation of his own power over the two countries, but also shows a lack of knowledge about the underlying market fundamentals and the current demand destruction worldwide.  As former US president George W. Bush stated during his election campaign, which did not end well as we know, “it’s the economy stupid” that matters in the end.

Trump’s tweets and general approach to this matter suggests he and his administration are out of touch with reality.

Even if a Saudi-Russian combination would cut 10 million bpd, the oil price reaction would be minimal and very short-lived. At present, leading oil market experts such as Vitol, Trafigura and Goldman Sachs are warning of a total demand destruction of 20 million bpd or more. When looking at the cuts in global refinery runs, we have already hit levels of -17 million bpd or more. Downstream companies are cutting back on all production as demand from industry and consumers worldwide collapses. Lockdowns in more than half the world are having a major impact, hurting demand for oil, gas and other kinds of energy. Cutting 10+ million bpd of production is not a real solution and it could even cause markets to react negatively.

When production cuts fail to send oil prices up, the fear in the market could hit historical highs, causing oil prices to fall to levels below $10 per barrel in the coming weeks.

The upcoming “OPEC+ and Friends” meeting is going to be a very tricky one.

There is the very real possibility of the meeting failing as the targets that have been set are totally unclear. Saudi Arabia, probably supported by Abu Dhabi, called an emergency meeting, not only of OPEC+ members but of all oil-producing nations. That means that, at least according to Western media, the US is invited and will likely attend. In inviting the U.S., it seems that Saudi Arabia has called Trump’s bluff because by attending the meeting Washington will be implicitly stating that a possible production cut agreement would include the US. When looking at the US upstream oil and gas sector there is one thing you can state without any analysis….Washington and US oil and gas operators are not on the same page.

Suggestions of Washington being able to control or even force US oil to cut production, even via legislation, are ludicrous and would end in a mammoth legal battle. Even if only Texas representatives attend, oil companies will be unlikely to comply, it is simply not in the US oil and gas DNA to work together on an international level. Free market economics is a cornerstone of U.S. society and business.

The second major threat at the Monday meeting is that Saudi Arabia not appear to be at all convinced that it needs to change its current tactics. Its targeted goals of regaining market share, forcing Russia to come to the table and bringing non-OPEC producers such as U.S. shale to their knees are working well. Several Saudi officials have stated that they are willing to discuss a new agreement but only under the conditions that potential production cuts will be on the shoulders of all, not only Saudi Arabia, Russia, and UAE. In this light – Trump’s demand for a more than 10 million bpd cut from Russia and Saudi Arabia is unrealistic, to say the least.

Russia’s position has, until now, remained unclear. While Putin is still acting as though he has nothing to worry about, Russian oligarchs and the Russian leader are happy to debate any options that are on the table. For Russia, the current position taken by Trump is being seen as an opportunity to get some gifts from the U.S. very soon. Russia might consider cooperation with the U.S. if Washington agrees to bring an end to Russian sanctions. But that is not as important to Moscow as a strong relationship with Riyadh and OPEC going forward. Future opportunities with Saudi Arabia are more attractive to Putin than a positive relationship with a President that may not be re-elected this year. 

While all eyes will be on Washington, Riyadh, and Moscow in the coming day, there is a fourth group that is going to be vital at Monday’s meeting.

In order to reach a 10 million bpd cut, OPEC will have to convince all other oil-producing countries to contribute. At present, convincing such a large list of independent nations to join these efforts seems unrealistic. Countries such as Libya, Iran, Iraq, Brazil, and Canada, are unlikely to agree at present to cut production.

This is yet another reason that the OPEC meeting will likely fail on Monday.

The real fear for markets at the moment should be sentiment and expectation. After Trump’s tweet cited a 10-15 million barrel per day cut, oil prices have soared and anything less than that will be seen as a failure. After what is looking set to be a fairly quiet weekend for energy markets, a Monday failure with plenty of media attention is likely to drive markets into a frenzy. This fear, combined with continued demand destruction could serve as a serious problem for oil markets next week. 

With this in mind, the rational short-term approach of OPEC+ should be, especially for Riyadh and Moscow, to not move at all. Don’t increase production, stand on the quay and watch the US shale and non-OPEC VLCCs fill oil storage to the brim. If OPEC+ cuts without the assistance of other nations it will lose future leverage and markets may crash anyway.  By doing nothing, Saudi Arabia and Russia can maintain the illusion that a production cut from OPEC+ would save markets.

The Navy captain who has been at the center of controversy for penning a scathing letter to the Navy’s top command over a lagging response to coronavirus ravaging his crew aboard the USS Theodore Roosevelt nuclear aircraft carrier in the West Pacific — now docked at Guam amid the emergency — has tested positive for COVID-19.

The New York Times reports that two Naval Academy classmates of Capt. Brett E. Crozier’s who are close to him and his family confirmed the diagnoses even as the US Navy remains mum. There are currently at least 155 confirmed cases of Covid-19 among sailors aboard the aircraft carrier, according to the Pentagon.

“The commander began exhibiting symptoms before he was removed from the warship on Thursday, two of his classmates said,” NYT reports.

He had been relieved of command but kept his military rank after the letter was leaked to The San Francisco Chronicle. He expressed in writing that the Navy’s prioritizing military readiness at a moment the virus threatened to spread across his close quarters crew of some 5,000 total sailors was putting lives at risk. 

“We are not at war. Sailors do not need to die. If we do not act now, we are failing to properly take care of our most trusted asset — our Sailors,” Crozier had written. If the Navy focuses on being battle ready, it will lead to “losses to the virus,” Crozier had said.

The firing has unleashed a torrent of criticism against Trump, while others argued that in the military, following your conscience often means losing your stripes.

The Pentagon, however, framed it in terms of irresponsible utilization of “chain of command” and unclassified communications systems, putting national security at risk.

The Times reports further:

Thomas B. Modly, the acting secretary of the Navy, said he had lost confidence in Crozier’s ability to command the ship effectively as it dealt with the evolving crisis after Crozier sent the letter on an unclassified email system to 20 to 30 people.

Sending such a letter, Modly said, caused unnecessary alarm about the operational readiness of the ship and undermined the chain of command. “In sending it out pretty broadly, he did not take care to ensure that it couldn’t be leaked,” Modly said. “And that’s part of his responsibility.”

The controversial firing was capped Friday with a dramatic sendoff given by hundreds of sailors as Crozier disembarked from the ship for the last time.

Watch this video of the send off of Captain Crozier, commander of the aircraft carrier USS Roosevelt who was fired yesterday for sounding the alarm to protect his sailors. Tells you everything you need to know about the type of #leader he is. pic.twitter.com/z9q3pTJpgZ

— Amber Smith (@AmberSmithUSA) April 3, 2020

Video showed a crowded deck as the carrier was at Guam – where infected and quarantined individuals have been removed to the naval base – chanting Crozier’s name in an emotional show of support as the now former carrier commander waved goodbye.

Ten days after Boris Johnson was first diagnosed with the coronavirus, moments ago a Downing Street spokesman said that the UK Prime Minister is being admitted to an undisclosed hospital for tests due to “persistent symptoms” including a high fever.

“On the advice of his doctor, the Prime Minister has tonight been admitted to hospital for tests.”

“This is a precautionary step, as the Prime Minister continues to have persistent symptoms of coronavirus ten days after testing positive for the virus” a Downing Street spokesperson said in a statement.

“The prime minister thanks NHS staff for all of their incredible hard work and urges the public to continue to follow the government’s advice to stay at home, protect the NHS and save lives.”

Johnson remains in charge of the government, and is in contact with ministerial colleagues and officials.

On Friday morning, around the time of the dismal payrolls report which was not only the first negative print in a decade ending the longest streak of positive jobs reports in history, but was 7x worse than consensus, as sellside desks scrambled to update their daily apocalyptic GDP forecasts, Morgan Stanley did two things: it released a Q2 GDP forecast of -38%, the most depressionary of all investment banks…

… but more importantly, it killed the still lingering idea of a V-shaped recovery for good, warning that the level of real activity in its forecasts remains below its 4Q19 level until the end of 2021: a sharper loss of real GDP compared with the 2008 recession.

So if the economy will take at least 18 months – in a best case – to get back to normal, what does that leave for that 1st derivative of the broader economy, namely corporate profits.

The answer, according to a new report from Goldman’s Peter Oppenheimer, is that it would take roughly 4 years for earnings to get back to where they were at the start of the year.

First, the Goldman strategist lays out the bank’s forecast for SXXP EPS for 2020 through 2022, which shows a cataclysmic plunge this year, when nearly half of corporate profits are wiped out, which however is followed by a sharp rebound of 50% and 11% in 2021 and 2022 respectively.

Incidentally, the 2020 contraction will be nearly twice as bad as the global financial crisis, which means that a few years in the future, we will no longer be saying “since Lehman” because “since covid” will be the new catchphrase.

And speaking of “Lehman”, back then EPS plunged 48%, so Goldman’s 45% forecast for the current year may end up being overly optimistic.

So going back to the bank’s near-term forecasts, which a 50% rebound may sound impressive, consider that after a 50% drop one needs a 100% surge to get back to breakeven. And sure enough, even with Goldman’s aggressive optimistic outer year predictions, the collapse in 2020 means that EPS unlikely to return to previous peaks until 2023. Ironically the 2023 “recovery” EPS will be the same level that was reached all the way back in 2007. In other words, between the global financial crisis and the coronacrisis, some 15 years of earnings growth has been wiped out!

To justify it’s dismal outlook, Goldman looks at history and finds that after a crisis, it normally takes 3 years to get back to previous EPS levels.

Finally here is a breakdown of which sectors will be impacted the most from the bearish coronavirus scenario.

It’s worth recalling that in 2019 earnings were essentially flat as a result of the whole trade war spat with China (remember that?), in other words, between 2018 and 2023 there will be no earnings growth.

Finally, considering that Goldman now anticipates a 50% plunge in stock buybacks…

… which as Goldman’s David Kostin said “will have a significant impact on the equity market”, and suddenly any bull case forecasts for the next few years look incredibly shaky.

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Starting in the Obama administration the U.S. increased its full spectrum dominance campaign against Russia as an extension of its goals to destabilize the entire Middle East.

Russia’s intervention into the war in Syria after the so-called Arab Spring across North Africa emerged over an eighteen month period as the demarcation line between the unipolar moment of U.S. hegemony and the beginning of the multi-polar world now well underway.

From the moment President Putin brokered an agreement to halt the U.S. invasion of Syria over the chemical weapons attack blamed on Syria’s President Bashar al-Assad Putin has been the main focus of U.S. foreign policy.

That focus has shifted now.

The thwarted invasion, helped by the betrayal of the U.K. parliament of Prime Minister David Cameron, set the stage for turning the Maidan uprising in Kiev into the ouster of Ukrainian President Viktor Yanukovich and the bloody war to prevent Donbass secession that has raged since then.

That led to Russia’s reunification of Crimea and the worst strategic defeat for the U.S. since Vietnam.

Now, I bring up this history not to pedantically repeat myself but to remind you of how deep the roots of U.S. policy are and how hard it is and how long it takes to turn the ship of statecraft and point it somewhere else.

Because we’re nearly seven years since Putin stepped in to help President Obama save face over his ‘red lines’ in Syria. We’re six years and a month since the Crimea vote which the U.S. still refuses to acknowledge even though Crimea is healthier, happier and more prosperous despite sanctions than it ever was as part of Ukraine.

Events of the past few weeks have shifted the narrative significantly thanks to COVID-19 and the Coronapocalypse it has engendered. The escalating back and forth between the U.S. and China over this pandemic I would normally dismiss as typical statecraft and bloviating between rivals looking to create a small gain here or there.

But this time I don’t think that’s the case. There’s something much more serious happening here. Donald Trump has been making his pivot to China as the real threat to the U.S.’s future world standing a priority since the day he was elected.

And he has been hampered and dogged in this the entire time by the Democratic Party and its Clintonista and Obamaite holdovers in the CIA, State Dept. and both sides of the legislature who clearly work for the globalist oligarchy I love to call The Davos Crowd.

One could easily make the argument that RussiaGate itself was an extension of Chinese influence over the Democrats, which has been China Occupied Territory going back to the Clinton Adminstration.

And that has had the disastrous effect of putting the U.S. at odds with everyone who Trump thinks looks at him cross-eyed. The die-hard neoconservatives want him to finish their encirclement of Russia and secure Israel’s future as an energy exporter to Europe and destroying Iran.

The globalists of both Clintonian and Obaman persuasion want him to continue cozying up to China, outsourcing America’s productive capacity and propping up the failing European Union.

And he’s been focused on realigning our foreign policy towards China to reverse the globalism and decouple the U.S. economy from China. He’s used the crudest of tools, trade wars and tariffs, but there’s little denying what the goal has been.

And with the Coronapocaplyse coming on the heels of bitter confrontations in Hong Kong, Iraq, the Philippines, Kashmir, and Iran Chinese/U.S. relations have hit a new low as both sides openly accuse the other of a bio-weapon attack via COVID-19.

It doesn’t matter if the accusations are true or not. Likely neither claim is true. What is relevant is that both are using it to justify fundamental shifts in rhetoric to justify shifts in policy.

So, in contrast to the bitter words between the U.S. and China over COVID-19 and the growing propaganda operations by both governments, we have a pivotal phone call between Trump and Putin which seems very well timed.

Beginning with helping Trump save American lives with a plane-load of aid and expertise and potentially ending with a tacit agreement to keep oil prices from cratering further to assist Trump stabilizing the finances of his domestic oil and gas industry on which both his re-election campaign and the future of the U.S. rests.

So Putin now emerges as someone Trump can do business with when the chips are down. He found out Putin’s character when presented with a real crisis while MbS reacted with belligerence and, worse from Trump’s perspective, incompetence.

MbS has been incapable of wrangling OPEC into any kind of regional force. He’s started a price war while Trump is paying for defense of his oil fields from Yemeni attacks.

So, right now it seems to me the perfect opportunity for Putin and Trump to put MbS and the rest of OPEC in its place and dictate terms as to how the oil markets of the future will look. 

I’m not suggesting that Putin and Trump will bury the hatchet or anything, but they need each other in many ways. And they will need to tone things down on a number of fronts, especially the Middle East and Ukraine, if Trump is going to successfully pull the U.S. out of China’s economic orbit.

Putin’s partnership with China, his friendship with Chinese Premier Xi Jinping is an asset which Trump can use to broker deals between all three nations during his second term if he survives this Coronapocalypse.

But he has to get through this summer and the concerted effort on the part of The Davos Crowd to destroy the U.S. economy through mismanagement of this pandemic and the insane power grab that is on the table.

It’s more pronounced and obvious in Europe, which I’ve talked about at length in previous posts (here and here), but it’s a real concern in the U.S. Riders on all of these stimulus bills will see the Democrats getting some of their worst ideas made manifest at the national level even after we see broad usurpation of power by officials at the state level.

And I have to wonder, now, just what these people were thinking in trying to stop the use of hydroxychloroquine to treat the disease, especially in light of real hinckey circumstances in France and the overwhelmingly positive results doctors are getting with the treatment.

This, by all accounts, is a cheap and effective solution to the virus, which can be treated for around $20. And when people truly realize just how thoroughly ideological hacks like Bill DeBlasio, Andrew Cuomo, Emmanuel Macron of France and the media tried to kill their loved ones for their political gain, their anger will be explosive.

The attacks on Trump from all the usual suspects in the media after he let it ‘slip’ at that infamous press conference that the drug could be promising are a dead giveaway that he broke containment on the severity of the crisis.

If Trump did that against everyone’s advice it may turn out to be the most influential act of his presidency.

Becuase, there’s something not adding up about this Coronapocaplypse. I’m becoming more and more convinced this is a naked power grab during a crisis by The Davos Crowd to retain control while the financial and political systems fail.

The sheer speed we’ve gone from it’s just China’s problem to cries of the need for global government, gun control, nationalization of industry and financial repression has given even the most paranoid of us whiplash.

And if Trump suspects that China was assisting his political enemies in withholding treatment for COVID-19 to do damage to him politically, true or otherwise, this will forever change the nature of the U.S’s relationship with China.

He already believes they purposefully downplayed the disease to let it infect the world.

This will accelerate the decoupling of their economies and set them on a path indistinguishable from open warfare.

Putin then becomes a very interesting middle man standing between these two behemoths struggling with maintaining their standing in the world while their economic and political fortunes metastacize in the new world built on a whole lot less credit and public trust.

Regardless of where things go from here, it should be obvious by now that Trump is ready to pursue a different path if he’s given the chance. It’s clear he’s still battling the remnants of the Clintonista and Obamaite globalists within the U.S. bureaucracy of dubious loyalty.

But after guiding the U.S. through this pandemic and the financial crisis it has catalyzed, he may be in a position in his second term to beat The Davos Crowd one more time.

*  *  *

Join my Patreon if you want help guiding your way through a Post Chi-merica world . Install the Brave Browser if you want to help yourself keep the lines of communication open.

You’d think the last place you’d want to be during the coronavirus pandemic is aboard a cruise ship – especially given one horror story after the next about ships being placed under quarantine, not being able to find a place to dock and passengers getting sick and coming down with the coronavirus. 

Which is why it’s stunning to learn that there is still at least a half-dozen ships out at sea, with passengers and crew, navigating lengthy trips back to port, according to Bloomberg. 

About a month ago, there were hundreds of ships still in service and dozens out to sea.

Recall, we covered the Diamond Princess cruise ship at length, a ship where 700 of its 3,000 passengers eventually tested positive for the coronavirus. Eight of those passengers wound up dying.

Around a month later, the Grand Princess cruise ship was struck with coronavirus – with 21 of its 3,533 passengers (2,422 gues and 1,111 crew) testing positive for the virus. The ship was held off the coast of San Francisco while testing was conducted.

Finally, just this past week, Carnival Corp’s MS Zaandam was forced to dock in Ft. Lauderdale after 193 people were sickened – more than 10% of the ship – and four passengers died out of a total of 1,829 people on board.

Cruise companies have been forced to suspend operations, with companies like Carnival and Royal Caribbean seeing their stocks get decimated over the last month. The President even requested that Carnival Cruises, Royal Caribbean, Norwegian Cruise Line and MSC cruises halt outbound travel for 30 days.

And while the number of ships at sea has dropped off dramatically, it still hasn’t gone to zero.

While more ships have returned to their respective ports, and many have been moved with just crew onboard, Carnival still has five ships with passengers aboard. MSC Cruises also has a ship with passengers that is out to sea. These ships were thousands of miles from their respective ports when operations were suspended and are in the midst of returning.

No cases have been reported on these ships. Yet. 

 

Authored by Blair Nelson via CampusReform.org,

A new disturbing trend has emerged among Zoom conference calls called “zoombombing.” 

Due to the coronavirus, colleges and businesses have had to relocate their classes and meetings onto online video conferencing platforms, such as Zoom. According to the FBI, many Zoom video conference calls have been subjected to some form of hijack.

“The FBI has received multiple reports of conferences being disrupted by pornographic and/or hate images and threatening language.”

There have been several incidents of this happening in various college courses and meetings. At the University of Illinois at Urbana-Champaign, for example, a mandatory diversity workshop called I-connect was hijacked recently. An individual appeared in the Zoom call showing a swastika on their forehead. This led to a series of mass emails that were sent to students who attended these sessions.

“During these workshops, online participants engaged in patterns of disruptive behavior, which culminated in hateful interruptions by a number of individuals using racist and derogatory slurs, showing images of swastikas, and making threats of violence,” said one of the mass emails.

The school said that it would report the incident to the Office of Student Conflict, as well as the Bias Assessment Response Team. 

“Any behavior deemed to be a legal violation will also be reported to the University of Illinois Police Department” UIUC added.

Incidents like this have occurred at other schools across the country. One notable instance happened during a Student Government meeting at the University of Florida. “BREAKING: the Senate livestream was just ‘zoom bombed,’ or crashed,” said University of Florida Student Government Reporter Chasity Maynard. “Multiple unknown people joined the meeting and wrote offensive comments, drew swastikas. The meeting ended abruptly after one person ‘mooned’ the camera.”

Maynard later issued a “correction,” saying that “the Zoom meeting ended after images of genitalia and sex acts were displayed on the screen, but the meeting was not officially called to a close.” 

“Genitalia, naked butts and swastikas flashed across the screens of Student Government senators and guests tonight as they attempted to attend their weekly meeting over Zoom,” Maynard added.

Some UCLA lectures hosted via Zoom were subject to similar hijacks. According to the Daily Bruin, many classes at UCLA were interrupted by individuals yelling vulgar words or typing vulgar messages.

One student, Jessica Jackson, recorded the incident and posted it on her Twitter. Speaking to the Daily Bruin, Jackson said, “About five minutes into the lecture, someone was presenting as if they had a question, … and then finally, when the professor acknowledged the person, he just immediately jumped out with the N-word and was calling him that repeatedly.”

“Over time, I got my phone and started recording what was happening,” Jackson said.

“It just then spiraled out of control – chaos,” said Jackson.

The FBI has issued some tips to avoid these kinds of incidents:

• Do not make meetings or classrooms public. In Zoom, there are two options to make a meeting private: require a meeting password or use the waiting room feature and control the admittance of guests.

• Do not share a link to a teleconference or classroom on an unrestricted publicly available social media post. Provide the link directly to specific people.

• Manage screensharing options. In Zoom, change screensharing to “Host Only.”

• Ensure users are using the updated version of remote access/meeting applications. In January 2020, Zoom updated their software. In their security update, the teleconference software provider added passwords by default for meetings and disabled the ability to randomly scan for meetings to join.

• Lastly, ensure that your organization’s telework policy or guide addresses requirements for physical and information security.

The FBI also encourages those who were victims of these incidents to report them to the FBI. 

”If you were a victim of a teleconference hijacking, or any cyber-crime for that matter, report it to the FBI’s Internet Crime Complaint Center at ic3.gov,” the FBI encourages online users. 

In the weeks since California became the first state to order residents to shelter in place, millions of Americans have grappled with an alarming fact: That shortages of products from Tylenol to toilet paper have continued. If anything, they’ve gotten worse, even as governors like Andrew Cuomo have pleaded with the public not to hoard and buy up supplies like gloves and masks that are needed by health-care professionals.

While health officials have tried to dismiss this simply as a consequence of panicked hoarding, there are more complex dynamics at play, as CNBC explains in a recent piece exploring the shortages of basic products and common medications at pharmacies across NYC – the epicenter of the national outbreak.

In Broadway Chemists, an independent pharmacy on the Upper West Side, Tylenol, the classic over-the-counter painkiller made by JNJ, has been unavailable for weeks. Sophia Liristis, the pharmacist in charge, told CNBC that it’s  on back-order until April 30.

So unless something changes, the people of the Upper West Side won’t be able to buy Tylenol until the end of April at the earliest. That’s four weeks away.

But Tylenol isn’t the only common medical item that’s in short supply. When Liristis checked her system on Tuesday while speaking to CNBC,  she found that thermometers, gloves and masks were not available until May. Pulse oximeters, used to monitor blood-oxygen levels, were unavailable until May 31. Ventolin inhalers, which can ease shortness of breath, were only available two units at a time.  Hydroxychloroquine, the drug used to treat malaria and lupus, and the Zithromax Z-Pak, were so limited as to be practically unavailable.

S Bros Pharmacy in Brooklyn’s Williamsburg neighborhood filled its inventory with hydroxychloroquine and Z-paks when word started to spread that the drugs could be used to treat COVID-19. But the pharmacy is now dispensing hydroxychloroquine only to patients who suffer from chronic autoimmune diseases and those enrolled in a New York study of the drugs’ efficacy, in accordance with state laws and guidelines.

However, S Bros’ shelves are also scarce, with no Tylenol, no hand sanitizer,  and no cleaning supplies like alcohol and peroxide. By now, these products have been long gone. The store struggles to get a few cans of sanitizing spray to decontaminate the pharmacy.

“There’s a shortage of everything – it’s never enough,” said Evangeline Frezoulis, 37, the pharmacy manager at S Bros. “The wholesalers are not able to supply as many pharmacies as needed.”

When these small independent shops run out of items, some independent pharmacists tell customers to check with the chain pharmacies, even though it hurts their business.

“You’re just trying to help the patient get what they need,” Liristis said. “It doesn’t matter if it’s here or somewhere else – we’re just trying to work together.”

While pharmacies in NYC are probably feeling these problems most acutely, it’s occurring across the country to varying degrees. Furthermore, what’s causing these widespread shortages isn’t all that complicated: Over the past few decades, production for medical equipment from masks to plastic gloves has mostly been moved abroad, to places like China and India. With China now battling the second wave of the pandemic, and Indian factories struggling under the weight of an unprecedented lockdown, production is being constrained at a time when demand is soaring all over the world at the same time.

In other words, a “supply shock”, is meeting a different kind of “demand shock.”

If that isn’t clear enough, supply chain managers from Amerisource Bergen and CardinalHealth, two of the biggest suppliers of drugs and medical equipment in the US, explained the problems they are facing.

AmerisourceBergen, a pharmaceutical wholesaler, said the pandemic is pinching supply chains worldwide. As the company places large orders to meet surging U.S. demand, manufacturers in countries like India, which is under nationwide lockdown, are balancing those orders with obligations in regions like the European Union, which is also severely impacted.

“What we’re seeing in the supply chain today particularly from the pharmacy side is an insatiable demand for a limited amount of product,” said Heather Zenk, senior vice president of secure supply chain at AmerisourceBergen. “We are seeing manufacturers talk about things like historical inventory demands and historical product movement,” she said.

In response, AmerisourceBergen is limiting how much pharmacies receive of certain drugs to ensure they get at least some product, a policy the company calls “fair allocation.”

Cardinal Health, another major wholesaler, said it’s managing the distribution of more than 100,000 products considered critical inventory which are in unprecedented demand since the pandemic started to spread. “We are experiencing backorders and declining inventory levels at rates never experienced before,” the company said, in a website statement, warning that customers may only receive partial deliveries while other products are out of stock altogether.

It’s impossible to say when inventories for thousands of products like Tylenol and hand sanitizer will stabilize. And as Americans in certain hot spots around the country continue to struggle to find toilet paper, we suspect widespread hoarding will continue.

Some pharmacies are even home-brewing their own hand sanitizer, just like the inmates in New York’s state prisons. City Drug & Surgical in Manhattan’s Washington Heights neighborhood has been making hand sanitizer since the brand names sold out about three weeks ago. The pharmacy’s owner told CNBC that a batch of the stuff typically takes about 40 minutes to make a batch of 24 bottles. They sell out almost immediately.

How long before pharmacies start making their own reusable face masks – like the kind that the CDC are recommending – out of old T-shirts and rags?

Eradicate the virus – without a vaccine? Manage infection rates to let the population “build immunity through suffering” until a vaccine is available? How can we revive the economy without risking thousands of deaths in fresh outbreaks?

Authored by Wisdom Seeker, a WOLF STREET Commenter with a physical sciences Ph.D., San Francisco Bay Area:

I think we’re now at the turning point in the fight against COVID-19. Everyone’s now acting to stop the spread, and the early hot spots in Europe, North America, and Australia are seeing signs of progress, just as the Asian nations did earlier. There is a long road ahead, and we have to decide which route to take, but Western societies are showing they can handle this too. In this post I’m going to show updated versions of my three favorite graphs, which tell the story and lead to the single biggest public policy-making challenge many nations may face this decade.

Bending the Curve in California: Just-in-Time Deliverance?

The graph below shows confirmed cases in Los Angeles, the San Francisco Bay Area, and California as a whole, with South Korea and Italy as contrasting examples. The vertical axis is a log scale, so exponential growth shows up as a straight line. Data sourced from the Johns Hopkins database and the California state and individual county reports.

Los Angeles lost to the Bay Area on April 2 and became California’s new COVID-19 hot spot. Shelter in place has begun working for the Bay Area, but confirmed cases have still doubled in the past week. So on March 31, our local public health officials released what I call “Shelter-in-Place 2.0,” a tighter set of rules, to try to avoid the hospital-overload scenario which hit Wuhan, Milan, Madrid, and now New York. Face masks are also becoming trendy outside the home! Will the Bay Area get a “just-in-time deliverance”, or is the worst still yet to come?

Locally, Santa Clara County – the heart of Silicon Valley – reports 30% of ICU space in use by COVID patients, 38% used by other patients, and 32% available. So they can take a doubling in COVID ICU cases without overloading, and other Bay Area hospitals have headroom too.

I used this info to estimate a Bay Area ICU limit on the graph, but I must caution that there’s not a direct relationship between “confirmed cases” and “ICU cases,” so it’s only an estimate. An outbreak in a major nursing home, or a worsening of cases-in-progress without improvement in current ICU cases, could lead to a surge in ICU demand.

Best in the US – Minnesota Holds the Line: 

The next graph takes a fresh look at the US data (again from Johns Hopkins), using the 91-DIVOC.com graphing tool. Instead of confirmed cases, this graph shows daily new cases per million population, but still with a log scale.

Last week I noted “Minnesota Bends it Best,” and here we see the result — when an outbreak stalls out, it looks like the flat curve for Minnesota. And not only is it flat, but it’s the lowest sustained level in the US. There’s other good news — Washington has stabilized (albeit at a higher case rate), and even New York (top right) might be flattening out. But Connecticut, New Jersey, Louisiana, Massachusetts, and Michigan have more work to do (click on the chart to enlarge).

Worldwide: What Kind of Ending Can We Write?

The third graph this week shows the global situation for the 50 most populous nations, with focus on the US. Using the same tool and data as the state-by-state graph above, this one also shows daily new cases per million people on a log scale. The US is third behind Spain and now Belgium, and in the same cluster with Italy, France, Germany, the UK and the Netherlands. Growth in the US has started to slow, but it looks like we might still catch the same pain as Spain.

This graph makes it clear that most nations are at “the end of the beginning” — the daily new cases have stopped growing and are stabilizing. But other than China, no one is claiming to have driven case growth back to zero. And dissident reports from China suggest it’s in a bureaucratically-induced state of denial, not entirely in control.

So what’s the endgame here?

Do we try to eradicate the virus — without a vaccine? Do we try to manage infection rates, to let the population “build immunity through suffering” until a vaccine is available? How can we revive the economy without risking thousands of deaths in fresh outbreaks?

Some things are clear: The recovered cases can get back to normal. The infirm elderly need to be protected as much as possible. Everyone else is in between, and without a treatment or vaccine, every economic or social activity comes with some level of infection and mortality risk.

I can see two limiting-case scenarios. Both require that right now, everyone work together to suppress the virus, in every way we can. But we need to start the discussion of “what’s next” since it’s a tough policy choice, perhaps the biggest of the decade.

The first scenario, “put out the fire,” is modeled on Korea. Use shelter-in-place and face masks to suppress the growth of the virus, then use rapidly-growing testing capacity to trace and isolate the infected. With a return to “containment,” everyone else can get back to work. South Korea is doing well, and only has 100 new cases per day nationwide. But even South Korea hasn’t been able to put out the fire completely. And “get back to work” involves major changes in how work is done, to reduce infection risks every minute, every day.

The second scenario, “controlled burn,” envisions an “infection risk budget,” with a goal to keep caseloads at a level that hospitals can sustainably support, while allowing as much economic output as possible. If we risk too many infections, hospitals overflow and thousands die – reruns of New York, Milan and Wuhan. But if we can minimize the risk throughout daily life, and keep our homes safe, then that frees up room in the budget.

With that extra room, more people could get back to work and get the economy going. Even if those activities might cause a bit of spreading, it might be worth the risk (for arena sports, cruise ships and other mass social gatherings, it might not). A “controlled burn” would take a long time, but eventually everyone who needs to work will have immunity or received a vaccine, and we’ll have normal life again (provided the virus doesn’t mutate too fast). But in the absence of an effective treatment or vaccine, it will cost thousands of lives to build herd immunity this way. Is there a better way?

No matter which path is taken, policymakers will have to decide how to balance lives vs. livelihoods. And the rest of us need to learn how to prevent spread at every level, both to preserve lives and to revive jobs.

*  *  *

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely.

Joe Biden says that the Democratic National Convention may need to be held virtually.

In a Friday interview with ABC’s “This Week,” the 2020 Democratic frontrunner said that the convention is “necessary,” but may not be feasible as it would require bringing thousands of people together in one location during a pandemic, according to The Hill.

“Well, we’re gonna have to do a convention,” said Biden. “We may have to do a virtual convention. I know I think we should be thinking about that right now.”

“What we do between now and then is gonna dictate a lot of that as well,” he added.

BREAKING: Joe Biden tells @GStephanopoulos that Democrats “may have to do a virtual convention. I think we should be thinking about that right now. The idea of holding the convention is going to be necessary.”

The convention was rescheduled for August. https://t.co/OBWRrasROt pic.twitter.com/4WNgvp824n

— This Week (@ThisWeekABC) April 5, 2020

Biden, dispensing well-worn advice, has encouraged DNC decision makers to “follow the science” and “listen to the experts.”

The Democratic National Committee announced Thursday that its national convention would be delayed by a month until August because of the coronavirus crisis.

The convention was originally scheduled to start July 13 but will now commence on Aug. 17.

A source close to the Biden campaign told The Hill last week that the former vice president had advocated for the convention to be delayed with the same format. The convention committee said on Thursday that it was trying to figure out the “most appropriate structure for this historic event.”

Meanwhile, the Republican National Convention is scheduled to occur Aug. 24 to 27 in Charlotte, N.C. –The Hill

Biden also repeated advice from Dr. Anthony Fauci, the nation’s top expert in infectious diseases, when he said that what the country needs “most of all” is a vaccine – but that in the meantime “we have to take all the efforts we can to make sure we prevent the spread.”

He also suggested that we would need “at least two more iterations” of coronavirus stimulus.