Financial Markets

Are we witnessing sporting suicide?

People used to be able to watch sports in order to be able escape financial stress, relationship pressure, horrible bosses or politics for a couple of hours. Now politics comes as standard and is being actively shoved straight in paying customers’ faces.

The NBA has just announced it will paint “Black Lives Matter” on the courtside.

Retired NFL defensive end Marcellus Wiley explained why he thought it is a bad idea for the NBA to do it based on the divisive manifesto of BLM.

This follows on from the NFL’s pandering to identity politics and promotion of segregation by introducing a “black national anthem” before Week 1 games.

As one astute reader posted this with respect to the NFL post we wrote today,

If this causes a loss of attendance will the excuse be that those missing were therefore racist? And how does that help pay the bills? What will be the steps taken to address shortfalls in revenue ? Presumably reductions in salaries and jobs to those whose livelihood depends on the attendance?

This is a very emotive issue and no one is denying that it is not an important one but enforcing dictats onto paying customers is never a good idea – asking for help to change is better than demanding change and alienating a section of society who for the most part were already onside -you cannot force their cooperation – you will just make reasonable people unreasonable.

We think the NBA and NFL are making extremely poor decisions. As corporations they have that right but since when has treating customers with contempt been a good strategy?? Gillette anyone?

We wrote a piece on the divisive nature of sports being ruined by political activism a few weeks back.

#BlackSkinMatters. J&J caves to the cancel culture mob

Now J&J is dumping hand whitening cream after social pressure surrounding racial inequality.

Perhaps sunscreen and tanning lotions should be banned by the company too? After all, those who want a darker complexion must be just as guilty of dermatological appropriation.

Or is J&J’s move really just a cynical attempt by the legal and PR departments to appear as a good corporate citizen amidst a criminal probe into whether the pharma giant lied to the public about the possible cancer risks of its talcum powder?

Also, did J&J ever think of the demand from similar products for coloured women?

Urban Rx deliberately targeted this space because of an absence of products tailored to their needs. Perhaps J&J should self-flagellate for not catering this area and apologize for racially insensitive product developers. Publicly sack them to appease the mob. Black Skin Matters.

Forbes says sales for UrbanRx are booming.

Urban Rx Founder Rachel Roff opened a spa in Charlotte, North Carolina 12 years ago and found that although 50% of the women in the south are African-American, Roff could not find products that provided adequate skin care for women with darker skin. Over time she developed a skincare technology she calls Cleartone Advanced Technology…Although she still operates the spa, that business is dwarfed by the skincare business, which continues to grow very rapidly.

See a need. Fill a need. We hope Roff continues to do well. After all, if coloured women care about removing blemishes surely they have exactly the same requirements as women of other skin tones. It isn’t racist. It is a choice.

Skin whitening products are extremely popular in Asian and Middle Eastern markets. Perhaps J&J should launch a targeted ad campaign shaming c.70% of the world’s female population for their dermatological privilege.

According to Grandview Research , the global skin lightening products market size was valued at US$ 8.3 billion in 2018 and a CAGR of 7.8%pa.

Didn’t J&J’s PR department study what happened to P&G when it targeted ‘toxic masculinity’ via the Gillette brand which wiped $8 billion in value?

From our perspective, J&J products are off our list. We never ask anyone to boycott companies but we are sick of being lectured to by sanctimonious businesses who want to morally preen.

These brands are totally within their rights to make commercial decisions about product lines.

However they don’t have an obligation to tell customers that their personal preferences with respect to hygiene, skincare or anything else are not in step with the times, especially in cultures that hold different views about beauty which are often centuries old.

Japanese skin whitening giants Shiseido and KOSÉ will be loving such corporate harakiri by J&J. J&J shareholders won’t.

Get woke, go broke.

Aunt Jemima name to be removed. The history is more interesting than the syrup

Quaker Oats announced on Wednesday that it recognizes that “Aunt Jemima’s (syrup) origins are based on a racial stereotype.” For context, the term “Aunt Jemima” is sometimes used colloquially used as a female version of the derogatory label “Uncle Tom”. The question is did the term predate the syrup or not? Or was it related at all?

Presumably, those that like Aunt Jemima syrup must be racists too. Or could it be they just like the taste?

If it was a purely commercial decision to change the name because sales of the brand were plummeting that would be one thing. What will Quaker Oats do if there is a sudden rush on the remaining stocks of the brand? It is rank hypocrisy based on appeasing the mob. Pathetically weak. Quaker Oats had no issues promoting the brand for decades while all this “systemic racism” was at play.

Well well, what do you know?

Anna Short Harrington began her career as Aunt Jemima in 1935. So she could support her five children, she relocated from South Carolina with her family to Syracuse, New York and began to cook for a living. Quaker Oats discovered her when she was cooking at a fair and signed her on.

On August 5, 2014, her descendants filed a lawsuit against plaintiffs Quaker Oats and PepsiCo for $2 billion. They accused the companies of failing to pay Harrington and her heirs an “equitable fair share of royalties” from the recipes Quaker benefitted from. They lost.

Before the woke mob seize on the racism card, isn’t it interesting that her descendants had no issue with the brand name whatsoever. They had an issue with the economics of it. Imagine if the cancel culture were ahead of the curve. We imagine the descendants might have pushed back.

Who knew? Gone with the Wind now #1 selling DVD on Amazon

No sooner had HBO removed ‘Gone with the Wind‘ from its streaming service, it became Amazon’s #1 selling movie title.

Who knew people hated having others decide what they are allowed to consume?

We pray the Gov’t makes more $60bn mistakes!

Can the media and shadow politicians get a grip? Since when should taxpayers complain when the government makes a huge error in our favour? We can pretty much stake our lives on the fact that 99% of government programs end up way more expensive than initially budgeted for. French Submarines anyone? NBN? We should be looking at the JobKeeper revision as a massive positive.

The federal government estimated that the JobKeeper program would initially cost $130 billion. Now it appears they overestimated it by $60 billion. That was driven by the idiosyncrasies of who would be eligible at the employer end – from the self-employed to big business and everything in between.

Given the limited time window, forgive the Treasury and Tax Office for not landing estimates on target. It is ridiculous to expect they could estimate such a fluid piece of legislation.

The unwelcome arrival of COVID19 and the sudden stay-at-home orders that ensued hardly gave a generous window of opportunity to apply Japanese level precision engineering to the process.

Our only criticism lies with the drip feed approach to restarting the hibernating economy. As we mentioned yesterday with respect to the 50 US states, so many appear to be copying each other rather than making bold data driven decisions based on facts not consensus.

The reality is that the Treasury will need to make many more multi billion dollar mistakes in the spirit of JobKeeper to help mitigate the damage caused by the looking trillion dollar deficits.

Perhaps the $60 billion saving can be redeployed to building a bullet train from Sydney to Melbourne. A 20-yr project that is just the type of infrastructure spending which ticks so many boxes – relieving pressure on the state capitol cities, housing, assist a growing population and provide lots of jobs.

Am I a Despot or Not??

We have compiled a spreadsheet titled US State Governor Coronavirus Responsesto see who would appear to have the most despotic tendencies. We have broken down the categories by party affiliation, COVID19 infections, deaths and some choice quotes to express how some treat their minions. However there is one true standout governor that must be channeling former Albanian dictator Enver Hoxha for despotic tendencies.

Before we get accused of being partisan hacks, we note that in some states, governors have seemingly crossed their political ideologies in the opposite direction.

On balance, Republicans governors have been far more eager to open up their economies and remove restrictions. Arkansas, Iowa, Nebraska, North Dakota and South Dakota all resisted issuing stay-at-home orders, while Wyoming, Utah, Oklahoma and South Carolina have only issued such orders in specific parts of their states. All nine are Republican states. Most of these states encouraged “personal responsibility.

Infection rates in the aforementioned 9 rogue states stand at only 0.2886% and death rates are at 0.0096%. The relatively spread out nature of these states no doubt helped. Instead of the predictions that death rates would spiral out of control, 99.99% of the population in these states continue to function.

On the other hand, Democrat governors have had far harsher restrictions with respect to stay at home laws. Some may argue that the population densities of New York skew the figures.

Analysing the data, 178.7 million Americans live in the 24 (+1) Democrat-run states (districts). 149.5 million in 26 Republican-controlled states. COVID-19 infections in Democrat states is at 1.07 million with deaths at 70,652. Republican-controlled states have 456,000 infections and only 21,700 deaths. That means that Democrat states have a 0.5995% infection rate and 0.0395% death rate vs Republicans at 0.3049% and 0.0145% respectively, or effectively half. Stripping out NY for the Democrats would kick those figures to 0.4452% and 0.0262%. This would mean that infection rates were still 46% and death rates 80% higher relatively speaking.

The mainstream media wasted no time pointing out the negligence of GOP states and the shocking reckoning that would follow.

Partisan paper, The Kansas City Star, lambasted Missouri Gov. Mike Parsons (R) on April 1. They contrasted his failures to the successes of NY Gov Cuomo (D), Kansas Gov Kelly (D) & Illinois Gov Pritzker (D) by saying, “Only three other governors in the country have been as laissez-faire as Parson has in dealing with a crisis the likes of which no one alive today has ever seen — and one that will define the legacy of most every elected official now serving.” 6 weeks after this prophecy, 99.99% of Missourians haven’t succumbed to COVID-19 vs 99.994% in Kansas, 99.96% in Illinois and NY at 99.85%. Hardly a train wreck for Parsons!

Perhaps what is scarier is the “staged approach” methodology to removing restrictions which do not seem to be based on robust scientific evidence but copying thy neighbour’s homework. Take a look at some of the gradual loosening of Australia’s restrictions and it smacks of the same “one size fits all” approach in many states in the US. e.g. 10 people only in restaurants. Social distancing etc. Hardly inspiring to have such a lack of independent thinking. Especially when the coronavirus statistics to date are anything remotely as reported in the hysteric media.

Enough from us. Let’s get down to the approaches of these American states.

The most in your face comment during the coronavirus came from Indiana Republican Rep. Trey Hollingsworth.

It is policymakers’ decision to put on our big boy and big girl pants and say it is the lesser of these two evils…It is not zero evil, but it is the lesser of these two evils, and we intend to move forward that direction…We are going to have to look Americans in the eye and say, ‘We are making the best decisions for the most Americans possible,’ and the answer to that is to get Americans back to work, to get Americans back to their businesses

We wonder why data means nothing to Hawaiian Gov David Ige (D)?

Hawaii has a 0.0012% COVID death rate, one of the lowest in the country but Democrat Gov. David Ige pushed the stay at home order to the end of June. Furthermore, in the first month, the Honolulu Police Department handed out 4,600 warnings and 353 citations for breaches of the executive order.

What on earth was Tampa Bay, Florida Mayor Castor (D) thinking?

Tampa Bay, Florida Mayor Jane Castor (Democrat) released 160 prisoners from Hillsborough County Jail over concerns of COVID-19. One prisoner ended up killing a civilian the day after being released.

New Jersey Gov. Murphy (D) & Kentucky Gov. Beshear (D) showed little or no care about the constitution. 

In an interview with Fox NewsTucker Carlson, Democrat Gov. Philip Murphy (D) uttered the words “the Bill of Rights is above my pay grade.” He then went on to confess that he had not considered the effect of his restrictive executive orders on the Bill of Rights.U.S.

District Judge William Bertelsman ruled in May that Kentucky Gov. Andy Beshear’s (D) restrictions on out-of-state travel were unconstitutional.

We were surprised to see Colorado Gov. Polis (D) adopt seemingly Republican style freedoms to his constituents.

Democrat Gov. Jared Polis spoke of Coloradans taking “personal responsibility“. Instead of imposing draconian police state penalties like most of his Democrat colleagues he left it to local authorities to sort out.

Mayor Hicks (D) of Grants, New Mexico decided to take a potshot at his Democratic Governor accusing her of adopting Nazi Germany style tactics. 

Hicks criticised Governor Michelle Lujan Grisham’s Public Health Orders saying, “What the governor is doing is wrong” He allowed small business and golf courses to open before state police intervened and shut him down. He likened the New Mexico State Police behaving like the Gestapo.

It wasn’t just Democrats either. Republican primary candidate Daniel McCarthy took a swipe at Arizona Gov. Doug Ducey (R) saying, “No empathy! Dictator Ducey tacked on another 15 days of shutdowns, leaving Arizonans wondering why our own governor is so comfortable letting lives and businesses be crushed under the weight of our new regime.

Rhode Island Gov. Gina Raimondo (D) took the technology initiative much like Australia’s COVIDSafe app.

An app, called “Crush COVID RI” will be used by state health experts to conduct contact tracing and better understand the spread of the virus across the state.

South Dakota Gov. Kristi Noem (R) is the standout in terms of constituents openly pouring out love to her. 

Gov. Noem was presented with a surprise parade by her constituents thanking her for her considered actions in response to putting the responsibility back on them.

Texas Gov. Greg Abbott (R) slammed the judiciary for its pettiness. 

After a Texas hairdresser was jailed for not apologizing to the judge because she reopened her salon during lockdown, Gov Abbott said, “Throwing Texans in jail who have had their businesses shut down through no fault of their own is nonsensical, and I will not allow it to happen.” She was released.

Gov Cooper (D) of North Carolina copped a slap on the wrist from the judiciary

A federal judge blocked enforcement of a portion of Cooper’s order preventing churches from holding indoor services attended by more than 10 people.

Virginia’s Liberty University used the Bible to criticise Gov Ralph Northam’s (D) criticisms.

We invite Governor Northam (D) to come and see our compliance for himself, rather than making false accusations in press conferences from Richmond. As the Ninth Commandment says, “Thou shalt not bear false witness against thy neighbor.””

Democrat-controlled Wisconsin Chief Justice Patience Roggensack probably could have chosen her words more carefully. 

Roggensack was blasted for her remarks saying the uptick in coronavirus cases in Brown County was due to meatpacking employees testing positive and not “regular folks.” Take that you lowly educated Trump-voting deplorables.

There were many governors channelling Enver Hoxha for despotic tendencies. The reality is that more mayors were enjoying their newfound powers. 

We had LA Mayor Eric Garcetti (D) proudly champion he would have the water and electricity cut off for any businesses that didn’t comply with the lockdown. He also proudly banned sunbathing on dry sand, citing Australia as his benchmark.

We had Chicago Mayor Lori Lightfoot (D) justify having a haircut (considered non-essential to everyone else) because of her regular TV appearances despite berating Chicagoans like children with the threat of the heavy hand of the CPD to anyone who violated stay-at-home orders.

NY Mayor Bill De Blasio had his failed, “dob in your neighbour hotline“, his use of the gym (considered non-essential to everyone else) and the threat to fence off the beach at Coney Island were the peons to misbehave.

Washington DC Mayor Muriel Bowser (D) threatened to get compliance from her minions by “exercising the full force of our MPD, FEMS, DC Health and ABRA and the emergency authority to achieve it.

NY Governor Andrew Cuomo extended the stay at home directive called PAUSE—which stands for “Policies Assure Uniform Safety for Everyone” til June 13th. As most know, NY has had the highest incidences of infections and deaths throughout the country. The high density of NYC compounded the problem.

He ordered that infected patients be sent back to the nursing homes they came from which caused a huge spike in deaths. There are now reports that the data was fiddled to cover up the scandal. He has since stopped sending people back to nursing homes. He said, “Older people, vulnerable people, are going to die from this virus…That is going to happen. Despite whatever you do.

Michigan Gov. Gretchen Whitmer (D) pandered to racism and many other issues from the identity politics playbook to disguise the fact she is being sued by other state legislators for extending the executive orders without their approval. Protestors that descended on Lansing complained they were sick of being treated like small children. 99.5% of Michigan residents haven’t been infected with coronavirus. 99.95% haven’t died.

Alas, Gov. Katie Brown (D) of Oregon has shown herself to be the most despotic leader. Despite 99.92% of Oregonians not being infected and 99.997% not having succumbed to the virus she had no compunction ramming her rule of law. Oregon has less than 4% of the infection rate and 2% of the death rate of NY State yet Brown has kept an “indefinite” stay at home order in place.

An Oregon judge declared that the coronavirus restrictions enacted by Gov. Brown were “null and void” because her emergency orders were not approved by the state legislature after 28 days. The judge agreed with the lawsuit launched by 10 churches against the State of Oregon which argued that the emergency powers only lasted for a month and that to lengthen them required legislative approval which she did not seek!

Not to be outdone, Gov. Brown went to the State Supreme Court where she has a pending review. The Governor praised the Supreme Court action by saying, “There are no shortcuts for us to return to life as it was before this pandemic. Moving too quickly could return Oregon to the early days of this crisis when we braced ourselves for hospitals to be overfilled.

A bit of an odd statement when the number of people hospitalised in Oregon with COVID19 has fallen 63% in the last month to May 12th to 57 people.

Worst of all was her treatment of hair salon owner Lindsey Graham who was fined $14,000 for opening her store because it was a non-essential business. She was further threatened with the prospect of having her lease terminated as she operated out of a building owned by the State of Oregon. The final straw was the dispatch of child protection services to Graham’s home to interrogate her 6-yo stepson and check if bathroom sanitation (aka the cleanliness under the toilet seat) was up to standard.

No one questions the tragic loss of life from this pandemic. We just question the heavy-handed tactics of governors and mayors who have a twisted version of data which is completely at odds with reality. This is all about politics.

Credit is normalising, but… excellent commentary from Narrow Road Capital

If you haven’t done so already, we strongly encourage people to sign up to Narrow Road Capital’s insights on high yield and distressed credit markets. Even better it is free. Jonathan really puts together his thoughts in a very digestible format.

Jonathan has penned this excellent summary of the state of debt markets and cautions us not to get too excited. We have highlighted the things that stood out for us.

Credit is Normalising, But…

Credit securities, both in Australia and globally are getting back on their feet. The bookbuilds this week of $1 billion of corporate debt by Woolworths, $1.25 billion of RMBS by La Trobe and the $500 million of hybrids by Macquarie are all positive signs. However, secondary trading in many debt sectors is light and a few sectors remain moribund. Whilst the signs are generally encouraging, three dark clouds on the horizon point to the possibility of worsening conditions.

The leverage fuelled, panic driven sell-off started on February 24 and ran until March 23 . The circuit breaker was the Federal Reserve’s announcement of “unlimited quantitative easing”. At that time, there were widespread reports of global investors struggling to sell even the highest quality government bonds. Given how dire it was, it has been a relatively quick journey back from the abyss.

In Australia, major bank senior bonds recovered first and are now trading at similar spreads to three months ago. Corporate and securitisation debt has had a far slower recovery with trading remaining patchy. The large issuance this week by Woolworths and La Trobe, as well as a smaller issue by Liberty showed that buyers were willing to return. But unlike major bank bonds, spreads on corporate and securitisation debt have been reset at much higher levels.

At the same time as credit markets are improving, the economic outlook is also brightening in some ways with the gradual easing of restrictions on business. There is a growing view that the worst of Covid-19 has past and that a vaccine or drug treatment might not be far away. The optimism of the human spirit seems boundless with some investors seeing the pandemic as just another opportunity to buy the dip.

Where many investors are seeing mostly positives, I’m seeing mostly negatives. Australia has gone nearly 30 years without a recession leaving our economy fat and lazy. Asset prices (notably housing) have been propped up by population growth, credit growth and interest rates cuts, all factors unlikely to repeat. We’ve had over a decade of Federal Government deficits, destroying the legacy of Peter Costello’s decade of fiscal discipline. The economic buffers we had before the last crisis have been frittered away, leaving Australia poorly placed to withstand and rebound from the current economic and financial crisis. Given this backdrop, there are three standout risks for investors to factor in.

Remember 2007 – Fundamentals Matter

The bounce back in the last two months reminds me a great deal of 2007. In July 2007 credit markets slammed into a brick wall with credit default swaps and CDOs taking substantial damage. Bank bonds sold off as the riskier European banks started to have their solvency questioned. Yet after an initial shock, some of the markdowns turned around offering a window to get out with limited losses.

At first, equities and property continued on their merry way oblivious to the damage in credit markets. Australian equities peaked in October 2007 but held near record levels until January 2008. In December 2007, the property sector was slammed as Centro disclosed it couldn’t roll over its debt. Both at the time and in hindsight, the second half of 2007 was a bizarre period where fundamentals and market prices were so divergent. Given the medium term outlook for Australia includes significant unemployment and business failures, it is hard not to conclude that most investors are ignoring the fundamentals, just like they did in 2007.

Quantitative Easing

If the global debt markets are likened to plumbing, then quantitative easing is the duct tape used to cover the cracks. Central bank buying of government debt has delivered liquidity to debt markets at a time when governments and corporates are going on record borrowing sprees. If investors weren’t able to sell assets to governments via quantitative easing programs, they wouldn’t have capacity to buy the new issuance and bond yields would soar. Quantitative easing is beating back the bond vigilantes temporarily.

Australia has been a late entrant to this charade but is making up for lost time with the RBA hoovering up 7% of Australian government bonds in two months. At this rate, they will own the entire government bond market by the end of 2022. Whilst the RBA buying government bonds is the main game, there’s also been cheap funding for banks and the securitisation market. It’s no longer a case of merely providing liquidity against super safe assets, the recent purchases of sub-investment grade securitisation tranches come with the meaningful possibility of capital losses.

Whilst quantitative easing has yet to hit its unknown limits in developed economies, emerging markets have shown what happens when citizens and investors lose confidence in a fiat currency. The widespread use of US dollars in Argentina, Ecuador, Lebanon, Venezuela and Zimbabwe is the practical outworking of a country adopting funny money practices. At some point, the duct tape stops working and the value of the currency goes down the drain.

Global High Yield and Emerging Market Debt

Whilst most credit sectors are recovering well, corporate high yield debt and emerging market debt are on life support. The US high debt market has recovered around half of the losses that occurred since mid-February. However, this has been a quality driven rally with BB rated companies able to issue whilst B- and CCC rated companies are stuck in the doghouse. Several failed transactions have been a clear warning that lenders have little appetite for companies that can’t demonstrate their solvency in the medium term. The weaker airlines, energy companies and tourism associated businesses are looking at their cash positions and making calls about when to enter bankruptcy.

It’s a similar outlook for the weaker sovereign borrowers, particularly in emerging markets. The years leading up to this crisis saw an explosion in lending to the lowest rated sovereigns. Many of these countries are now turning to the IMF for bailouts; at last count roughly half of the world’s countries had put their hands up for help. There’s a global wave of jobs that will be lost as the weakest companies and countries are forced to reign in their spending. Whilst investors are pricing in a solid probability of defaults, they are ignoring the wider economic impacts of defaulting borrowers on the global economy.

Written by Jonathan Rochford for Narrow Road Capital on 16 May 2020. Comments and criticisms are welcomed and can be sent to info@narrowroadcapital.com

Disclosure

This article has been prepared for educational purposes and is in no way meant to be a substitute for professional and tailored financial advice. It contains information derived and sourced from a broad list of third parties and has been prepared on the basis that this third party information is accurate. This article expresses the views of the author at a point in time, and such views may change in the future with no obligation on Narrow Road Capital or the author to publicly update these views. Narrow Road Capital advises on and invests in a wide range of securities, including securities linked to the performance of various companies and financial institutions.

APRA priorities are frightening

We wrote a while back that the Australian Prudential Regulatory Authority (APRA) had taken its finger OFF the pulse when assessing the risks facing our financial institutions. That was before COVID19. We think our banks are heavily leveraged and have little equity to offset a collapse in the property bubble.

Despite being faced with the prospect of a property meltdown thanks to an employment destroying pandemic, APRA thinks hiring a “Head of Climate Risk” is the way forward.

Why does APRA bother pursuing a field it has no expertise in much less look to create new green tape to extend its oversight?

It is not alone. The Australian Securities & Investments Commission (ASIC) is now seeking more oversight on corporates reporting on climate change.

ASIC’s own study found that fewer and fewer companies were reporting on climate change over the past decade. Shouldn’t we take that as corporates having a better pulse on the impact that climate change will have on their industries than a bunch of bureaucrats wanting to legislate an ideology?

With the COVID19 driven seismic economic shifts to come, it is frightening to see our government departments pursuing irrelevant regulation that companies are even less concerned about.

APRA should be focused on ensuring the coming property market implosion doesn’t cripple our banks. Instead of using the time to fine tune a wide variety of scenarios and stress tests to combat the troubling future, it is only proving it should have power taken away not granted.

A tale: Today vs 600BC

dollar bomb

As a lover of ancient history, this story in ZeroHedge is an interesting parallel on the dangers of debt forgiveness today using the tale of releasing the commoners from debt slavery by Solon in 600BC. In short, everyone ends up paying the price.

We think the sensible solution is to let individual landlords negotiate their own deals. Let them live and die with the consequences of their actions. Undoubtedly every landlord has a unique position where a one-size-fits-all strategy won’t work.

Experts inside YouTube ride roughshod over medical opinion

Erickson

The video of Bakersfield-based microbiology experts, Drs Dan Erickson and Artin Massihi, discussing a contrarian view on COVID19 that YouTube took down is still available on this link.

In what world are we living where a video channel prioritises a groupthink generated political opinion that overrides medical experts who have based their findings on available hard data, not wildly inaccurate models? The video was taken down for a ‘violation of community standards.’ You can read the YouTube statement here.

We would understand this if the doctors had no medical training and were pushing wild conspiracy theories. They simply weren’t. All that happened was a sensible presentation of data coupled with opinions based on their background as microbiologists. They think the fears have been overblown.

If you listen to the dialogue, the hard data confirms what we had been saying about the statistics of the pandemic. The doctors compared the data of an open Sweden vs a closed Norway and concluded the data discrepancies of COVID19 were statistically insignificant.

Many of our readers know we are contrarians by nature. We are more curious about what we might be missing rather than just accepting what is commonly reported. When opinions support the data, it isn’t an exercise in confirmation bias. We are genuinely interested as to whether the arguments sound convincing enough to validate them. We are even more concerned when the other side of the debate seek to shut it down rather than expose the flaws in Erickson and Massihi’s thinking.

Is the dissenting view more widespread than the media given credit for? After all the data is a moving feast. We are learning about COVID19 on a daily basis so sticking to the thinking of 2 months ago may not be relevant if the course shifts. Why are governments setting fixed future dates? Why not open up when the data supports it? Hardly any science in politically driven decision making.

An ER doctor in Wisconsin confirmed Drs Erickson and Massihi’s view that it isn’t about science. He wondered why someone in a hazmat suit was taking his temperature when there were next to no patients inside, something that is borne out by the data with so many beds available. Should we fear politics more than the pandemic?

Are governments following a herd mentality which uses poorly interpreted data as opposed to considering herd immunity based on medical science? The economic fallout will likely be way worse than any impacts of the virus itself. As we wrote earlier this week, governments carry zero responsibility for their actions because they can hide behind telling us it was for our own good. We bear the lot in terms of consequences. A terrible equation.

We believe that groupthink is the more dangerous pathogen in society. Whether financial crises or topics such as climate change, dissenting voices have repeatedly been terminated, especially by media outlets. Surely if the data sits with the prevailing sentiment, why not pick the bones out of Erickson and Massihi’s statement and debunk it with more prescient facts? In what world does it help to suppress information? Defeat data with data. This is why we remain contrarians.

The medical discussion surrounding the live clinical data of Erickson and Massihi makes plausible sense. We have all grown up learning that a baby gnawing a dog lead helps its body work out how to fight future infections. The doctors argue that keeping people locked down decreases one’s immunity to fight against COVID19.

The Bakersfield doctors believe that preventing the body from being able to combat coronavirus by not being exposed to it could have the opposite of the intended effect when people start to mingle again. Many people may not even know they have it. So when those people who caught it in a supermarket could restart the process. Does the government return to lockdown again and restart the negative loop?

These doctors claimed to have done the majority of testing for Kern County, California. The data backs up what is being experienced around the world positive test rates for infection are far higher than what is being reported but the death rates are way lower. Having said that, these two owners of seven clinics noted (some might argue somewhat selfishly) that the amount of people getting tested is way lower than their installed capacity. Irrational fear has been keeping people away. Then we are surprised when the natives get restless?

The two doctors recommend putting kids back into school. Slowly reopen other businesses and eventually sporting venues. The doctors questioned how it is OK to go to Costco but not a small cafe. It is reverse logic. There is a far higher exposure in a large business than a local cafe.

The adverse economic impacts don’t match the behaviour of the coronavirus in their opinion. Until a vaccine is found, the human body has the best chance of defeating it. Erickson and Massihi argued that 94% of the people recorded as dying from coronavirus had comorbidities – heart failure, immunodeficiencies, HIV etc. The death toll related to COVID19 alone is a speck.

The doctors added that there has been a sharp rise in domestic violence, child abuse, suicide, depression or mental health issues during the stay home orders. The campaign of fear exacerbated by the media is viewed as a far bigger problem than the coronavirus itself. Massihi suggested that people are becoming afraid to see the doctor for completely non-virus related reasons for fear of catching COVID19 by going to seek medical help. He argued that someone with symptoms of appendicitis avoiding the doctor for fear of contracting coronavirus may die of sepsis.

We don’t pretend to be doctors for a second. We offer no medical opinions here. We merely question why a social media channel decides it knows better than medical experts?

We understand a private business has the freedom to act in ways it sees as best for shareholders, but this seems far more sinister –  using its power to shut down free speech. Perhaps the doctors should sue YouTube for violating their first amendment rights. If there was ever a need for control over media censorship, this makes a great test case.