Modlin Global Analysis Newsletter
Modlin Global Analysis Newsletter
Questions I
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Questions I

This week we are going to focus on some questions I have regarding the global, political, and economic environment over these coming months.  Spoiler alert:  While I have some thoughts, I do not claim to have all the answers to these questions. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin

One of my favorite activities in my late teens and early 20s was to practice analyzing issues and then writing down predictions on what I thought would happen next.  This challenges a person to think more thoroughly about issues.  For me, it was the equivalent of a young person shooting free throws in the backyard trying to improve their precision.  It was a challenge to my thinking, which allowed me to be more real with myself and how I analyze situations. Those practices carry on to today, but I have to be honest: sometimes I have more questions than I can fully analyze.  So, while I have a few thoughts, I think it’s important to parse out the knowns from the unknowns.  Below are the unknowns that I think will be critical in the months ahead. I believe that organizing these thoughts can help us to come up with sufficient answers and to better understand important puzzles in our world.

What is the influence of seasonality on outbreaks of Covid-19?

Recently a friend of mine asked me this question and, while I am not an epidemiologist, I am increasingly convinced that there is a seasonal component to Covid-19.  Part of this conclusion comes from reading existing research of like viruses that have seasonal profiles to them.  Also, in regions that have had spikes in cold weather -- whether that be the upper Midwest, United Kingdom, or parts of northern continental Europe-- all have seen distinct increases in Covid-19 outbreaks.  My rudimentary frame of reference has been noticing temperatures in the 50s and spikes of cases 2 to 3 weeks later, but that is an imprecise rule of thumb.  If this pattern persists, we will likely see cases of Covid-19 feed into the further spread.  Simply put, cases come from previous cases. So even in periods of slightly warmer weather, you will see exponential growth of cases.  While treatments have advanced, it will be interesting to see which states pursue various policies to address this issue.  If a vaccine starts rolling out early next year, it will not forestall any of the build-up from the previous months of cases.  The gains from the vaccine will come as more and more people are vaccinated.  How these variables intersect is another puzzle.

How will this seasonality of Covid-19 influence markets and the broader economy?

I expect that the economies will be adversely affected by continuous waves of the virus.  The cost will be most pronounced among those entities affected now.  Those firms will have to deal with compounding periods of losses that will likely stretch for over 12 months.  I also think that shifting consumer attitudes could be one of the greater risks for these firms. Fear and decreased buying activity, outside core necessities, could have a significant impact on many companies. Of course, this will vary somewhat due to individual behaviors. But in the aggregate, this trend will be costly for many types of firms, especially those that directly interact with customers in confined spaces.  This connects to another question.

What can we expect US unemployment to be in the coming months?  Outside of a few sectors that have seen robust growth, I think that these closing months of the year going into early next year will see fewer gains from people being reemployed. I’m thinking here specifically about workers who were let go during the closures.  Interestingly we did see a significant number of workers get rehired, beginning in the middle of the year.  That was largely due to individuals being rehired by firms who had temporarily let them go.  Often in labor markets, it is harder for both employer and employee to match up quickly but in these conditions, depending on the state of the specific business, it was easier to match.

What is the likelihood that society will learn only a few things from the Covid-19 experience?

On this front, I have a mixed response.  Societies sometimes learn the wrong things from crises.  However, that habit of wearing a mask and distancing will be ingrained in many societies for at least a few decades.  That can buy valuable months for effective responses and treatments.  Furthermore, an important lesson has been the application and testing of existing treatments to determine their effectiveness. This has helped us learn about the efficacy of existing, lower-cost steroid type injections for Covid-19 patients.  This may prove to be a more effective research method than starting from scratch.  On the flip side, we will also be affected by lessons that have flawed conclusions. Many of those are the result of depending on confirmation bias instead of testing.

Is the four bedroom home the biggest selling commodity around?

Between an increase in individuals working from home for an existing employer and those working from home for a new business startup, I expect that we will see increased demand for living space. This is incentivized through tax policy where small business expenses can be deducted from home work. There is also the real likelihood of an increase in household size due to more people being confined. All this seems to point to a demand for an additional bedroom in many households.

Next week we will continue the discussion about existing questions, and we will focus on the implications of change as we look at specific international relations.  What questions do you think about? 

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I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin

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Modlin Global Analysis Newsletter
Modlin Global Analysis Newsletter
Welcome to Modlin Global Analysis! Every week I send a podcast and newsletter on politics, economics, or international affairs where I analyze a consequential contemporary matter through multiple lenses to add insight and avoid opinion.
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