iftttwall

Authored by Daniel Klein via The American Institute for Economic Research,

I have been puzzling over attitudes about masks and other facial coverings, particularly in Sweden. Here I use “mask” to mean also a scarf or any other kind of covering over one’s mouth and nose.

In early March 2020, at the start of Spring Break from university employment, I departed the United States for Sweden, but the world changed and I’ve remained in Sweden, where I am now. I don’t read or speak Swedish but many of my friends and associates here are Swedes, including my wife and daughter. I shared earlier drafts of the present rumination with several Swedes in intellectual careers, to check my impressions and suppositions.

The highly trusted Swedish authorities have not encouraged wearing a mask to protect yourself from becoming infected. In fact, they have put out communications that discourage doing so. The experts do encourage social distancing, and, famously now, leave it mainly to voluntary choice. 

Swedes practice social distancing, but they don’t much wear masks. In the stores, on the urban streets, and on public transportation, perhaps 10 percent wear masks. Not many. In many other countries mask-wearing is strongly encouraged or even required.

I strongly suspect that mask-wearing helps significantly to prevent the spread of the disease. I won’t bother here to defend that suspicion.

My wife and daughter live in Sweden. As an 18 year old, my daughter has an active work and social life. She is both a member of a cheerleading team, and a coach of a cheerleading team. Both activities have continued on throughout the pandemic, although the team members have stopped “stunting” with one another, instead doing more individual gymnastics and training.

In early March I was strongly opposed to her keeping up the cheerleading activities and her other regular social activities. In my household my opinion counts for little, and she has continued to live her life pretty normally (her high-school classes went online, however).

Now in early May, however, my attitude has rather changed. I need to take precautions against catching the virus from her, I need to stay fit, but I want her to live her life without great precaution against her catching the virus (this of course is on the assumption that subsequent immunity is not only short-lived). 

I have a vague sense of “herd immunity” as a certain threshold, estimated to something like 60+% of immunity for Covid19. But even if things long remain well shy of that threshold, one more percentage point has an upside, as well as a downside. Think about the percentage with immunity going from 27 percent to 28 percent. The people in that additional percentage point can suffer and die as they become infected, and they can, for a few weeks (?), infect others, such as their elderly parents who are more vulnerable. But once someone like my daughter gets past it, she can get on with life, and cannot thereafter be a spreader (though for how long is unknown). 

Many factors would affect the unfolding scene of humankind’s future. But it is not implausible that that scene is better when Swedes mostly do not wear masks on public transportation than when they do. Ditto the Czech Republic, where people are required to wear masks. If you listen here to the former Swedish State Epidemiologist Johan Giesecke, the man who hired the current one, Anders Tegnell, you’ll find what he says consistent with what I’m suggesting here, but no mention of masks. But elsewhere he has downplayed the value of wearing a mask.

As the pandemic began there was the problem of stock-outs of masks and other protective equipment, and that surely helped to prompt officials to discourage pervasive mask-wearing. But that problem was temporary and, at any rate, officials could have encouraged the public to devise simple makeshifts, such as scarves. I think there is a deeper dilemma surrounding mask messaging.

I cannot help suspect that behind the posture of Swedish officialdom is a tacit sensibility that it’s good to inch the exposure upward. I do not mean to suggest a secret deliberate strategy. Rather, it would be a complex sociological process of taboo, half-conscious esotericism, and circumspection among some who are not yet in a position to speak with candor and openness. 

If it were to the good that they mask their sensibilities, would it be wrong of me to unmask them? 

It is possible that neither their masking nor my unmasking would be blameworthy; their discourse situation differs from my discourse situation.

If there’s one topic we have covered widely since the coronavirus pandemic started, it has been the collapse of the auto industry.

Over the last week we have detailed how used car prices will likely cripple what little interest in new cars remains, how dealers are scrambling to desperately offer incentives and how ships full of vehicles are being turned away at port cities due to a lack of space and inventory glut.

But, if there’s one silver lining to global central banks widening the wealth gap, its that the super-rich still have plenty of cash to buy exotic vehicles. While demand may be tepid from average run-of-the-mill car buyers, the wealthy have kept a bid under the price of luxury automobiles, Ferrari reported this week. 

The maker of the $1.74 million Monza supercar said this week that its order book is “strong” regardless of a 7 week shutdown at its Italian plants, according to Bloomberg. The company’s CFO said on Monday that deliveries in Q1 were actually up 5% from the year prior. 

Despite lowing its 2020 guide, the company is predicting a recovery in the second half of the year. The company says it could see faster revenue and profit growth than expected with the recovery as a tailwind. 

Bloomberg Intelligence analyst Michael Dean said: “Evidence from the prior financial crisis suggests demand should remain robust. However, the main risk is that production will again be shuttered if there’s a second wave of Covid-19 infections in Italy.”

As Ferrari returns to work, the company may wind up asking employees to work Saturdays and shorten summer holidays in order to catch up with its order book.

Plants in Maranello and Modena will be back to full production on May 8 and Premier Giuseppe Conte is working toward a gradual re-opening of the country’s economy after an almost two month halt once it was discovered that Italy was a epicenter of the coronavirus outbreak.

Despite some cancellations, Ferrari says the numbers are “nothing that we would deem to be alarming”. The company introduced five new models in 2019 and boosted sales to more than 10,000 units per year for the first time in the company’s history. Ferrari delivered 2,728 cars in Q1. 

Massimo Vecchio, an analyst for UBI Banca said the company’s results show “strong resiliency”. At the same time, automakers like Daimler and Renault have withdrawn guidance completely. 

Authored by Steve Watson via Summit News,

France will use its existing network of surveillance cameras to monitor how many people are wearing masks and track how citizens are complying with social distancing after its coronavirus lockdown is eased next week, according to reports.

The BBC notes that “The resort city of Cannes on the Côte d’Azur has trialled the monitoring software, installed at outdoor markets and on buses.”

Datakalab, the French firm behind the software says its algorithms “can be incorporated into existing surveillance systems in other public spaces, such as hospitals, stations, airports and shopping centres.”

The company claims that the software being installed to work with existing cameras does not violate EU data privacy laws because “No image is stored or transmitted.”

Cannes Mayor David Lisnard said, “This technology doesn’t identify people but just gives us mathematical analysis to meet people’s needs.”

So, essentially, it’s ok to track you everywhere you go to ensure you comply, so long as they don’t keep your picture on a hard drive.

France already announced that face masks will be compulsory on public transport and in schools from next week. The country’s lockdown has been more severe than most, with anyone traveling outside their home needing papers approved by the authorities. Anyone found outside without the relevant documents is subject to a fine of €135 upwards.

The case in France highlights how the framework of surveillance that has already been in place and rapidly expanding for two decades is now being used to enforce the removal of freedoms.

We also recently highlighted how tech companies all over the world are developing more sophisticated tools that will allow law enforcement to more effectively police social distancing rules.

We are so used to surveillance now that for many it doesn’t seem that much more of a change to simply give over total compliance and acceptance of a panopticon world.

Coronavirus was just the crisis need to institute permanent societal lockdown using already existing tools, as well as new technologies that can be slotted into those systems already in place.

Mainland Chinese are no fools. They’re shunning commercial real estate deals in Hong Kong as a deep recession unfolds. 

According to Bloomberg, citing a new CBRE Group Inc. report, there were no mainland Chinese buyers for property transactions greater than HK$77 million ($10 million) in 1Q20. This was a sharp difference from several years ago when bidding wars drove property prices higher.  

“A lot of mainland buyers are taking a step back because of the economic outlook and the conflicts that made them feel unwelcome,” said Reeves Yan, head of capital markets at CBRE. 

Preliminary data on Monday showed Hong Kong’s economy crashed in 1Q20, with the worst economic contraction ever, printing -8.9% YoY. The data suggest a further plunge in economic activity will be seen in 2Q as more of the lockdown was captured in the quarter.

Yan said capital controls imposed by Beijing on money flowing in and out of China had also damaged the commercial real estate market. 

As shown in the chart below, there was a confluence of events that resulted in the decline of buyers:

The decline of mainland participation also resulted in a price slump, data from the Rating and Valuation Department showed. A decades-long trendline was recently broken. A peak in prices was seen about a year after the global slowdown started, and about half a year after the trade war gained momentum. In February, prices fell 8.5% from a year earlier.

Hong Kong Financial Secretary Paul Chan Mo-Po warned on Monday that a “deep recession” has made the “economic situation very challenging.”

Iris Pang, Greater China economist at ING, said there are some signs the virus spread across Asia has slowed but warned: “social distancing will continue to hurt catering and shopping.” She said the risk of more protests is increasing for “the summer holidays.” 

A recovery of Hong Kong’s collapsed tourism industry could take years. Chinese tourists began to shun the city when protests erupted last summer. Then when the pandemic unfolded earlier this year, mainlanders completely abandoned the area. The decline of mainlanders means a reduction in foot traffic at the world’s most expensive shopping mall, located at Hong Kong’s Times Square in the center of Causeway Bay, reported Bloomberg. This is the area where mainlanders would come to pick up expensive watches and discounted cosmetics. 

Mainlander visitors plummeted 53% in December over the prior year, mainly because of the protest. However, the virus, which resulted in strict stay-at-home orders, is likely to show visitor data near zero for early 2020. 

“Many retailers are saying it’s a disaster,” said Nicholas Bradstreet, managing director of at Savills Plc. “In the last 10 days, their sales have been down 70% to 80% week-on-week. There’s very little traffic into the shops” at retail districts like Central, Causeway Bay and Tsim Sha Tsui, he added. 

Times Square fronts Russell Street, where commercial real estate prices are equivalent to New York City’s and is some of the most expensive in the world. Prada, operating a store in the retail district, recently got out of its HK$9 million ($1.2 million) per month lease as the area now resembles a ghost town. 

“Causeway Bay is very quiet now. It used to have a lot of traffic,” said Wong, a salesperson at a retail store in the area. “With the scarcity of face masks, people would rather not go out at all.”

The retail downturn in Hong Kong is due to the lack of tourists from China, has stressed out landlords, and dented commercial real estate prices as we noted above. 

Mall owners, including Times Square’s Wharf Real Estate Investment Co., is facing rent pressures and rising vacancies. The shares of the company have corrected about 15% since late January. 

The deepening economic contraction will undoubtedly be shown in 2Q20. This will continue to pressure real estate prices as it now appears the prospects of a V-shaped recovery are fading.