Modern Markets Episode 5.0: What does the world look like after CoronaVirus, Americans are about to receive free money, Trump launches FEMA
March 19th, 2020, by FomoHunt
NOT FINANCIAL ADVICE
Coronavirus (COVID-19) Updates
Stats via Johns Hopkins
Confirmed Cases - 229,390
Total Deaths - 9,325
Total Recovered - 84,557
The coverage of the COVID-19 outbreak continues. As this is the largest catalyst for nearly every market it has the undivided attention of the world. As the news is coming fast we will be releasing smaller articles to keep up to date. In this edition, we look at the possible legislative fallout following the health crisis and the bailouts currently on the docket in Congress.
Modern Markets is also deeply interested in the stories of readers and how COVID-19 has affected their daily lives. Please reach at modernmarketsinfo@gmail.com if you or someone you know has been directly affected.
This newsletter is incorporated into the Weekly Modern Markets Podcast available on iTunes, Spotify, Anchor, and Stitcher.
“The worst is yet ahead for us”
Tony Fauci, the Director of the National Institute of Allergy and Infectious Diseases
Quick Clips
Fed cuts rates to zero, restarts quantitative easing. Lower interest rates generally mean lower rates on mortgages and other loans. Quantitative easing
Futures slide down Sunday, after the announcement
Bars and restaurants close nationwide, some offering take-out
First human vaccine test. Even if successful we are 18 months away from a publicly available vaccine.
Orange County and San Francisco shut down. All public and private gatherings have been banned, pausing all “non-essential” businesses. Essential businesses include hospitals, grocery stores, police, fire departments, and law offices.
Trump says the virus could go till August, possibly longer. Our estimates at Modern Markets is 6-18 months.
Banks shutting down branches, stopping services. Could lead to a run on banks.
Some states banning the sale of alcohol and guns
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Round the World in Markets - It’s Not Good
North America
Trump invokes the Defense Production Act
The Defence Production Act gives a sitting president the power to use private businesses to supply resources to the government. This can be physical goods, labor, or whatever means necessary to increase production for what the government needs. For the COVID-19 scenario, these resources would be to increase the production of medical supplies.
FEMA has also been activated, as announced by the president on Wednesday "FEMA is fully engaged at the highest levels. Today, FEMA is activated in every region." For those not aware, FEMA is the Federal Emergency Management Agency and is normally mobilized during national disasters. The agency has been used in the past to provide personnel, supplies, and resources to affected areas in the US. Perhaps the most public use of FEMA occurred in 2005 during Hurricane Katrina.
European Union
Travel to the US from England and Ireland has been blocked. EU shutting down external borders for 30 days. The restrictions are for people traveling from outside of the EU. At this point travel within the EU is still allowed which should keep the flow of goods within Europe moving.
The European Central Bank (ECB) has announced an $823 billion emergency purchase plan. The Pandemic Emergency Purchase Programme (PEPP) will run until the end of 2020, even if COVID-19 is handled before then. The objective of the PEPP is to purchase “ . . . private and public sector securities to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, COVID-19.”
It is, succinctly, a government buy-back program.
What Does a World After COVID-19 Look Like?
(Image courtesy of: https://www.thefire.org/goldwater-institute-releases-model-campus-free-speech-legislation-for-states/)
The COVID-19 pandemic is having an impact far greater than the effect on our economy or available hospital beds. The team at Modern Markets is keeping tabs on some potential legislation that could be snuck in during the ensuing public crisis. There will likely be wide-sweeping legislation near the end of the national emergency, similar to the creation of the Patriot Act and Department of Homeland Security following 9/11.
Geolocation
The government has been attempting to crack or gain access to cell phone data for years with mixed success. Thus far the Apple iPhone has proven to be the most secure off-the-shelf phone available to the public. While there are a number of phones specifically designed for the security-conscious, these are outliers and likely reserved for government officials and Fortune 100 CEOs. For the everyday consumer, the choices are an iPhone or an Android phone.
The Patriot Act already allows for the wiretapping and collection of information of US citizens. Big Tech is in talks to acquire and use your location data to track COVID-19 cases. All it would take to expand this into geolocation, tracking where someone is in real-time, is an infected person with COVID-19 leaving a quarantined area to be with their family. A public manhunt could be enough leverage to allow for a “Citizen Health Safety” act to be pushed through the House and Senate.
A New Jersey patient has already been flagged for giving a false name and address. Mayor Ras Baraka made an impassioned plea during a televised address asking the woman to step forward. Footage from hospital surveillance allowed the woman to be identified and contacted.
Suspension of HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) is one of the standards of the healthcare system. In short, it allows patients to retain control over their health information with a strong emphasis on privacy. Patients must give permission to doctors and nurses to check their health history. This authorization can take time and maybe a bottleneck in a crisis situation. Compliancy groups have issued guidance in regards to “curious” healthcare professionals checking patients for past medical histories when being admitted for possible COVID-19 infections:
“Under HIPAA, however, employees may only access or disclose patient records when specifically authorized to do so as part of their job, or when required to do so under law. Employees should especially resist this temptation with respect to patients who have sought treatment for mild to severe respiratory illness.”
Emphasis added.
As COVID-19 constitutes a National Emergency the President now has the authority to supersede certain aspects of HIPAA for as long as the emergency persists. If the COVID-19 continues for longer than a couple of months, this suspension could be carried forward indefinitely as we prepare for another similar outbreak.
If one needs an example of this happening they only need to look to Italy which is currently at a Warning - Level 3, Avoid Non-Essential Travel. The stories of hospitals overrun, and sick patients getting no treatment are heartbreaking. Over 11,000 have already been hospitalized and 2,000 in intensive care. Bypassing parts of HIPAA may be justified by delivering faster care to those affected or to screen out those without preexisting conditions.
Big Brother is Always Watching
One bill that is currently being proposed is the “Eliminating Abusive and Rampant Neglect of Interactive Technologies Act of 2020” or so-called “Earn It” bill. In short, this bill would give the government authority to scan, read, and categorize EVERY message sent on the internet. While not explicitly using the word “Encryption”, this would include encrypted communications from all websites and Instant Messaging systems. Encrypted messaging secures messages and “locks” them from being read by third parties. Current messaging systems using end-to-end encryption are Facebook Messenger, Signal, and WhatsApp.
We have already seen one privacy bill struck down. Senate Bill 6281 would have allowed consumers access to their online personal data used by large data collection/processing companies like Facebook. Europe has consumer laws in place that allow users to view and delete their online profiles from the databases of large companies.
But I Have Nothing to Hide!
Stop it.
Yes, you do.
Credit card information, Social Security Number, Health Records, Relationship Status, Google Searches, Porn preference, Mother’s maiden name, Amazon Wish List, Job Title, Place of employment, Dog-walking schedule, Dinner Reservations, etc. Furthermore, even if an ideal utopian government was collecting this data, leaks happen ALL the time.
In December of 2018, the Oklahoma government was notified that it had millions of records of FBI files on a server with no password protection; anyone with an internet connection had access to the files. The leak contained data going as far back as 1986.
The largest breach in US history occurred in 2015, affecting 21 million people. The Office of Personnel Management (OPM) was specifically targeted. Social Security numbers and health histories were among the stolen datasets.
So it’s inevitable. I should just be complacent?
That’s no better. In times of crisis, legislation is pushed forward that would normally get flagged in the media as harmful. This time is no different as citizens focus their attention on trying to pay bills and keep their families safe. It’s our responsibility as concerned citizens to be aware of what legislators are trying to pass right in front of us, and contact our representatives to let them know we see what they are doing.
We Are Not Prepared
(Image courtesy of: https://www.shutterstock.com/video/clip-1007831551-young-shocked-surprised-woman-standing-isolated-over)
The coronavirus represents a clear and present danger to our nation. It has spread to all continents except Antarctica. The nations of the world have responded by introducing the largest collective stimulus packages in the world. Qz.com has a comprehensive list of these bailouts: Airlines are seeking $50 billion in bailouts. China is freeing up $79 billion in lending. Japan is buying more than $100 billion worth of ETFs, Germany offering $608 billion of credit to businesses, and the International Monetary Fund is ready to release $1 trillion in lending.
A mobilization on this level is nearly unheard of, perhaps the last time this kind of capital was funneled was in WWII. These numbers are staggering and push the boundaries of human comprehension. Unfortunately, the average American is not ready for the fallout of these policies.
The everyday American is screwed if the coronavirus problem isn’t solved within 2 months. As of 2019, most could not afford a $1,000 emergency expense. The average debt by age group is a staggering statistic on its own:
Under 35: $67,400
35–44: $133,100
45–54: $134,600
55–64: $108,300
65–74: $66,000
75 and up: $34,500
The average millennial or zoomer has over $100,000 in debt. This includes mortgages, student loan debt, credit cards, auto loans, etc. While debt and credit are necessary instruments in the financial world the ability for people to pay off these balances, especially during a pandemic-induced financial crisis, is getting lower by the day.
Those with the means should curb irresponsible spending immediately. Foregoing Starbucks, Cable packages, luxury goods, that new pair of shoes, etc. should all be done until a 3-month emergency fund is secured. Personal finance may not be a fun topic to discuss over beers but it can be the difference between weathering a financial storm or drowning in one. Because, and let's be honest here, most people will NOT be the recipient of any of the massive bailouts that will be mentioned shortly. Here are a few different ways to cut discretionary spending. Create a plan, follow the plan, trust the plan.
More Bailouts
$1 trillion bailout has been proposed to alleviate the turmoil of the financial markets. This would help prevent massive unemployment in the US as factories, schools, and businesses close down. This shutdown could increase unemployment to 20%, as explained by Treasury Secretary Steven Mnuchin.
This would be one of the largest emergency economic packages ever, larger than the 2008 bank bailouts. It would include cash payments to American citizens, an estimated $1,000 to anyone over the age of 18. This kind of payment was originally pioneered by former presidential candidate Andrew Yang. Andrew said that he had “been in touch” with the White House in regards to how a cash payment could be made in a timely fashion. In a press conference on Tuesday, Treasury Secretary Steven Mnuchin told reporters that they would be “looking at sending checks to Americans immediately” within 2 weeks. This would greatly help employees not allowed to report to work, all industries have so far been affected.
This is in addition to the $100 billion dollar bill passed by Congress last week. That bill allowed for sick leave, unemployment benefits, and free testing for COVID-19.
*Breaking*
Congress has approved what is being called a “phase-2” relief bill, following approval in a 90-8 vote in the Senate. This bill guaranteed free COVID-19 testing, increased unemployment insurance, health insurance, and $1 billion in food aid. A third relief package is being negotiated in Congress. This additional relief package would include cash payments of at least $1,000 to US citizens. It is expected to be passed within the week.
Having trouble keeping up with all the stimulus packages? You’re not alone, here’s a list. It adds up to $6.45 TRILLION dollars of government assistance.
This newsletter, analysis, research, and commentary provided by Modern Markets, lead analyst Kaltoro, with contributions from TytanInc and Digital Lawrence. The publication incorporates data from numerous sources including, but not limited to, CoinMarketCap, Bloomberg, CNBC, Lunar Crush, and the team at FomoHunt.