Thursday July 30 2020

Nassim Taleb created the Black Swan Theory of Randomness.

From wikipedia

The theory was developed by Nassim Nicholas Taleb to explain:

1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
2. The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
3. The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event's massive role in historical affairs.

Taleb's "black swan theory" refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences.^[1]:xxi More technically, in the scientific monograph "Silent Risk",^[2] Taleb mathematically defines the black swan problem as "stemming from the use of degenerate metaprobability".^{[2]The v}

The virus sweeping the world is such an event.  Reading today's WSJ it is clear that for many firms this was beyond the realm of normal expectations.

Education is such an example.

Purdue is cancelling its MBA program. Too expensive and lack of foreign students due to virus are a couple of reasons. I would add that obtaining a certificate is much less expensive in terms of time and money, CMA CIA, CISA.

Joe Biden is no friend of charter schools, Trump is, this is likely to be a giant campaign issue. Now that near all K-12 were home schooled this past semester, that will likely be a much larger factor going forward. Parents are hiring tutors and using their own specialties to help their kids.

I believe it  will be more difficult to get students back to college after a couple of semesters at home. I also expect questioning of the value equation of college, why does it cost so much.

Boeing has been double whammied between the 737 Max problems and the slow down in air travel, now stuck with lots of unsold planes.

Bob Crandall ex CEO of American Air suspects business travel is permanently lower by one third to one half. Using webex and zoom is much cheaper.

I suspect we will see airline mergers. Hotels may not be quite as hard hit.

Wed July 29 2020

Wed July  29 2020

The US is now at a  1.7 replacement rate in new births,, so population creation is declining. This is true for most western countries.

This makes for a smaller economy but cheers to the climate change group, less pollution.

https://www.bloombergquint.com/businessweek/coronavirus-pandemic-americans-aren-t-making-babies-in-crisis

Even though the  2009 crisis is ten years behind us, the birth rate keeps dropping

Wed July 29  2020

Yesterday, the Trump administration announced it’s giving Eastman Kodak a $765 million loan to manufacture pharmaceutical ingredients at a pair of plants in New York and Minnesota. 

Yep…that Kodak. Once a cutting-edge tech company with 145,000 employees, Kodak struggled after digital cameras usurped its film business. After filing for bankruptcy in 2012, it’s tried to reinvent itself, including a (failed) foray into cryptocurrency.

Now, it’ll shift operations from mixing chemicals for film to mixing chemicals for drugs. The administration thinks it can get Kodak to manufacture a quarter of active ingredients needed in the U.S., creating 350 jobs along the way.

Zoom out: Remember the Defense Production Act (DPA) President Trump invoked early in the pandemic to compel companies to make test kits? The Kodak investment is funneling DPA funds through an agency affiliated with the Defense Department. The broader goal is to rebuild depleted medical stockpiles and reduce dependence on foreign manufacturers, particularly in China.