US COVID-19 Testing Data, April-19

Recent data on the US’ fight against COVID-19 is sobering, albeit incomplete. Testing overall is dramatically insufficient. Labs are just now beginning to clear through a significant backlog of tests. Without a more aggressive testing regime, US state, local and federal authorities have struggled (and will continue to struggle) to deliver a clear picture or accurate predictive modeling about the extent of infections and mortality rates. That is doubly true for areas about to enter their peak caseloads and associated surges in hospital demand.
 
This will be particularly challenging for American’s rural southern and Appalachian states, who have lagged behind national US testing rates and whose healthcare provider and hospital networks lack the redundancy and surge capabilities of large urban and contiguous coastal population centers, such as in the NY-NJ-CT area. While population centers in these states are less concentrated and overall smaller, so too are their healthcare networks smaller and more diffuse throughout communities.

But it’s not all bad news! One area where the US supply chain is particularly resilient is regarding its agriculture. US farmers, food processors and grocer/retailers are in the strongest position in the world to continue delivering food supplies to American consumers. While consumption patterns and panic-induced hoarding will continue to empty shelves at local stores, all elements of the US supply chain have been able to continuously restock — and will continue to do so. 
 
If you have more questions about the resiliency of the US Agricultural supply system in the face of pressures due to COVID-19, join Zeihan on Geopolitics’ Peter Zeihan for an in-depth seminar on April 20, 2020. 

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Future planned invents include:

  • Transport and Supply Chains
  • Manufacturing
  • Industrial Commodities

The Long, Uphill Climb

Folks, coronavirus is going to be with us for awhile, and it isn’t going to hit every country the same.
 
While all eyes are on New York City right now, it is only at the leading edge of the epidemic in the United States. Each metro region is going to experience its own peak and plateau in COVID-19 cases. NYC’s “peak” will hopefully be this week (but it may be a month from now) along with New Orleans and Detroit. Then other cities. The slapdash and erratic nature of the American lockdown, combined with a woefully insufficient testing system and America’s huge geographic spread, ensures that America’s coronavirus peaks and plateaus will not line up, and as such, occur over a much longer period of time.
 
The damage in the developing world is certain to be far worse. More densely populated cities defined by more cramped living conditions make social distancing difficult to impossible. Even worse, most of the developing world’s workers do not have jobs that enable telecommuting nor do the developing world’s governments have the raw fiscal power of the United States to simply send everyone home for a few weeks. People have to work, and they likely have to work in economic sectors where they most directly interact with one another in specific places. All that encourages both coronavirus’ spread and its ability to treat the poorest parts of the developing world as reservoirs.
 
Don’t see cases in the developed world yet? That’s no surprise. The virus started spreading there after most of the developed world so the epidemics are still early. Most of the developed world lacks high levels of air travel or between-city mass transit, slowing the virus’ spread. In addition, the very weakness of health systems in the developing world that will make the epidemic more painful also means there is hardly any testing.

Combine a longer American economic shut-off with pending deeper epidemics in the developing world than what we have seen thus far, and the end result will be a global economic system that both splinters and faces a very long period of subdued activity.
 
This hits every economic sector in some way, but arguably the industry which will suffer the most rapid and catastrophic change will be energy. Before 2020, the greatest global oil demand drop was only 10%, at the height of the 1998 Asian Financial Crisis. As a result, oil prices plunged by three-quarters. So far in the coronavirus crisis, global oil demand is down between 15% and 35%. Unlike in 1998 when low energy prices stimulated energy demand and so prompted its own recovery, this time we have months of large sections of the world simply remaining offline.
 
Not every producer is going to survive this. In fact, the global nature of the energy sector isn’t likely to survive this.
 
Join Peter Zeihan for a videoconference April 10 to explore which countries will fall out of the market, which will make the cut, and how the changed map of production will remake consumption patterns in the post-COVID era.

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Future planned invents include:

China’s Energy Gauntlet and the Future of Oil

Coronavirus has launched the greatest energy upheaval since the dawn of the petroleum age. In the short run, this means rock-bottom – even negative – prices for oil and a much-needed price break for the world’s major energy consumers.

But nothing lasts forever.

Extended periods of low prices will destroy the productive capacity of many oil exporters, removing them from the market for years. Once the coronavirus crisis passes, that changed map of oil production and export will radically remake global energy flows. By far the largest loser will be China.

China today, as the world’s largest oil importer, sources crude from quite literally everywhere it can. This map – from my new book, Disunited Nations – shows the diversity of sources and the risks to its oil supply chains posed by other countries.

Many of these producers will not be in the market a year from now. Their absence will add an energy security layer to China’s already irrecoverable debt, finance, demographic, consumption, security, political, supply chain and trade problems.

To get the full story, join Peter Zeihan for a video-conference April 10 to explore the end of the era of global energy markets and the rise of a more regionalized – and far less stable – system.

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The Shattering of Global Oil

Oil demand is relatively inelastic. That’s a fancy-schmancy economic term that means people and firms’ energy demand doesn’t vary very much from day-to-day or even year-to-year. Driving to work is perhaps the most accessible example. You do it every work day. If you don’t, you don’t work. And so you drive. Your gasoline demand is stable. Inelastic. Doesn’t matter much if gasoline sells for $1 or $4.
 
On the price side, this means the “normal” rules of supply and demand barely apply. Even minor shifts in supply or demand have wildly outsized impacts on price. We’re used to seeing this as a shortage. China booms and oil prices go up. Iran and Iraq go to war and prices go up. Derivatives trading enters the world of oil and prices go up.
 
But such lopsided impacts also work the other way. In 1991 when it became apparent that the first Gulf War would be a cakewalk and threats to oil supplies were not going to manifest, prices collapsed. They did so again at the beginning of the 2007 subprime real estate crisis after being on a multi-year tear.
 
And now coronavirus is introducing the greatest shift in oil pricing in history. Based on who is making the guess (because no one really has good data yet), coronavirus-instigated quarantines have reduced global oil demand by somewhere between 15 million and 35 million barrels per day out of a pre-crisis level of 100 million. Global prices have plunged to as low as $20 a barrel thus far, and they have (a lot) further to go.

In the past, OPEC has often attempted to micromanage oil markets by adding or subtracting bits of crude. But never before have such changes occurred on anything but a multi-month time-frame, and never before have such changes shifted the balance by more than a couple million barrels at a time. Coronavirus’ impact is already an order of magnitude more than OPEC’s greatest action, and it all happened in just three weeks.
 
This evisceration of demand, the sheer scale of imminent producer collapse is only the beginning. Deepening economic dislocation combined with the greater regionalization of a post-COVID world means oil demand – and global energy markets – will never recover. Join Peter Zeihan April 10 for an exploration of the path forward for the global energy sector, with a heavy emphasis on which producers might be able to stay the course, and which we may not hear from for years.

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Elbow Room and the Unmaking of the Global Economy

Best practices for social distancing suggest a minimum separation distance of six feet in all directions. While such practices are inconvenient and annoying, most Americans can carry out social distancing should they choose, because most Americans live in environments with hefty elbow room both within their homes as well as in their cities and towns.
 
However, that is not the case in many parts of the world. Most global population centers are far more dense than American cities, with both the typical living quarters and the cities’ footprints themselves being far smaller per unit of population.
 
Add in the concentrating effects of extreme poverty, and in some parts of the world social distancing isn’t even theoretically possible.

The outcomes of such cramped living are extreme and reach far beyond health. Join Peter Zeihan to explore such differences in demographic concentration and economic structure, and apply those findings to the ongoing coronavirus epidemic. One outcome among many: the end of global economic integration.

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Future planned invents include:

Coronavirus: The Energy Guide

As a rule I try to stay out of discussions about energy prices. Energy trading is a hectic business with a lot of stress, plagued by fleets of hot-headed issues that have nothing to do with supply or demand or technology. But that’s not the problem today.

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Coronavirus: The Developing World Guide

As governments in Washington, DC and London and Paris took their time to push their respective populations to shelter in place, the novel coronavirus did what it does best: spread quickly and efficiently through dense populations, the sort of dense communities that define the US Atlantic coast and most of Northwestern Europe.

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Coronavirus: The Unmaking of the Global Economy

Here is the accumulated data of all known cases of coronavirus in the United States, courtesy of The COVID Tracking Project. As you can see the situation is getting both worse and better.
 
Worse in that deaths are starting to rise significantly, and that is far worse than it looks. At present about 40% of deaths are in New York state, with nearly all of those in the New York City area – the first American metropolitan region to suffer a full epidemic. Nor is NYC done. Today’s figures indicate the city has at least another week, likely two, before deaths peak. New York’s experience will soon be echoed in other areas with New Orleans, Seattle, Detroit and Chicago looking particularly worrisome. Not linear, logarithmic.
 
Better in that the United States is finally testing about 100,000 people a day. Without decent epidemiological data any public health policy with an eye on containment or mitigation is simply a shot in the dark. Unfortunately, materials, equipment and lab bottlenecks have made testing numbers plateau at this level. Multi-day delays in receiving test results are widespread. Until the United States can increase testing volumes to at least 1,000,000 a day and reduce testing times to a few hours, the only method the country will have for containing the epidemic is complete economic lockdown.

The United States will be the country that has suffered the greatest recorded deaths from coronavirus within two weeks, and the death toll certainly will not peak within a week of that dire landmark. But as difficult and tragic as it is to imagine, coronavirus will burn a much harsher swathe through other countries in the months to come.

Join Peter Zeihan for an exploration of the pandemic to come. He will discuss how and where coronavirus will impact the major countries of the developing world, and how and where it will remake regional and the global economies both this year and far into the future.

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Long after the epidemic peaks in the United States and Europe it will rage through the developed world, inflicting far deeper damage to populations and economies. The United States has HVAC systems and indoor plumbing and so has the option of social distancing. Much of the world’s population does not.

And while the American economy is largely sequestered from the rest of humanity, that of the developing world is not. Damage there will reverberate through the global system, region by region, sector by sector, in ways that will break the global Order’s very foundation.

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You’re Invited: A Strategy and Forecasting Seminar with Peter Zeihan

Coronavirus: The Unmaking of the Global Economy

The United States is extending its recommendation for citizens to stay home by another month, while President Trump has started referring to “only” 100,000 deaths as a positive outcome. If this is the state of the wealthiest country on Earth, how fares the rest of the world? American policy makers and the broader public tend to develop tunnel vision in the face of a crisis, but the COVID-19 pandemic has taught us that the coronavirus neither respects national borders nor cares about personal and corporate balance sheets.

The unfortunate fact is that as dark as the near-term future appears in the United States, a far larger build in cases and deaths will occur throughout the developing world in April and into May.

Join Peter Zeihan and the Zeihan on Geopolitics team to discuss the path of the coronavirus crisis, the impact it will have upon Mexico and Brazil and Nigeria and South Africa and India and Indonesia and more, and how those impacts will fundamentally reshape the global economy.

We hope you will join us for this frank, data-driven seminar and Q&A session.

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This videoconference will set the stage for a series of industry-specific seminars to come.

Future events will include:

  • Energy
  • Agriculture
  • Transport and Supply Chains
  • Manufacturing
  • Industrial Commodities

Coronavirus: The Finance and Banking Guide

Before the coronavirus crisis, there were few underlying financial instabilities in the American economic system. There certainly were nothing like the massive bubbles in real estate markets in 2007. Nor was there the sort of broad industrial dislocations that triggered the 1979 and 1983 oil shocks.

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