Covid Cases and Deaths

Victory laps by a few select states and their grandstanding governors offset by the dramatic fall of other governors deserve a current look at the state of Covid by state. Data collected by FactSet on the Covid death and case totals, as of this writing (3/20/2021), are presented below. 

Cases per 100,000

Factset total number of cases per 100,000 population by state.

Higher bars are worse.

The total number of cases, per 100,000 population, range from a remarkable low of 2,026 cases in isolated Hawaii to a disastrous maximum of 13,265 cases in wide open North Dakota! The U.S. statewide average is 8,774 cases per 100,000. Oddly enough, the two states declaring victory, Florida and Texas, in red, have HIGHER per capita cases than the major targets of California and New York, in blue.  The complete list of per capita cases can be seen here. 

Truth be told, the case numbers for the four highlighted states rank near the average. Texas is ranked 27th in the country for per capita number of cases, Florida is 25th, New York 24th and California, where the Governor is facing impeachment due to Covid, is the best of the four at 22nd in the United States.

Deaths per 100,000

Factset total number of Covid deaths per 100,000 population by state.

Higher bars are worse.

The number of per capita Covid deaths by states (51, including the District of Columbia) are not so sanguine. There is a wide disparity among states ranging from a remarkable low of 32 deaths per capita in West Virginia (followed closely by Arizona, Vermont and Ohio) to a high of 271 deaths per capita in New Jersey followed by Wyoming at 254.  Of the four highlighted states California ranks with the worst at 49, behind Wyoming, at 244 deaths per capita. Florida ranks closely behind at 44th in the nation with 234 deaths per capita. Florida's Governor is campaigning on his Covid results. To fill out this story, both New York at 16th in the nation and Texas at 19th, are among the lower ranks of Covid deaths per capita.

One caveat for all these results is there are many factors other than population, such as density, social factors, economics, urbanization and more which affect Covid results. Here we see just one indicative measure.  

Conclusion

Covid is a national medical emergency (hopefully today in retreat). Despite being a medical issue, politics has distorted not just the responses of individuals to medical directives but also the public perception of state by state Covid results. New York's low death rates and Florida's high death rates make little mark in the public eye.

Disclaimer: Posts are for education only, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Please follow this blog by email.

© 2021 George Rahal.

YPI vs CPI, Real Price Increases vs Inflation

CPI versus YPI

T.D. Ameritrade's Ticker Tape publication posted an interesting story about "Assessing Your Personal Inflation Rate"  which discusses prices of the CPI (Consumer Price Index) versus YPI (Your Personal Inflation). The difference between the two is one's individual spending basket versus the CPI basket. Below is an imperfect yet indicative comparison of the CPI basket and my own YPI:

In our household, we spend a little less on energy, food, meds, and shelter but more on purchases and transport-we live close to stores and we have grands. All in all, we match up pretty close to the government breakdown of personal expenses. Your mileage may vary. 

CPI Up 0.4% In February 2021

Below is the reported annual price change by general category. A more detailed breakdown can be found clicking here. 

Inflation versus Real Price Change

When prices rise or fall we need to consider the source or cause of the price change. While some call every price change inflationary only a certain class of changes are due to inflation.  Inflation is a general price increase. In essence, its a rising tide that lifts all ships and reduces the buying power of a given currency, in our case, the dollar. The price rises but the price of everything else rises too

A real price increase is when a certain good or service becomes scarce and that price rises as compared to other prices. The classic examples include an ounce of gold equals the cost of a man's suit or, classically, Ricardo's "barrel of wine" buys a "bolt of cloth" and vice versa!  When buying power rises, when you need two barrels to buy the same bolt, that's a real price increase. For example, a Midwest drought may cause the price of grain to double but nearly everything else, like oil or rent, stays the same. 

Not all price changes are inflation, not all price changes are "real". Today's 4% CPI feels like inflation since all of the economy is recovering from Covid but as in everything economic, only time will tell.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Please follow this blog by email.

© 2021 Vista Market Research.

Bonds versus Bonds

My earlier bond comparison "Bonds vs. The Stock Market" has led me to make a deeper look at major bond funds with varying maturities and varying credit quality ratings. Below are the results for the 10 largest bond funds in the world: 

Results first, analysis follows: 

Methodology

The method here is fairness to the small individual investor and NOT to the fund managers. Yes, there are hundreds of bond funds offered by dozens of companies but few will know these companies unless they are sold to you-a costly proposition. In the end bond funds differ only in expenses, credit quality and duration (a fancy name for time to maturity).  So I picked the TEN LARGEST funds I could find on Yahoo Finance and from searching.

All the numbers here can be found by typing the fund symbol in Yahoo finance, including daily prices since inception. If you do this, be sure to use the "Adjusted Close". This includes the interest payouts of the funds over time. 

Five of the ten are Vanguard funds. Vanguard manages over $800 Billion of the $1.2 Trillion held by the ten largest funds. PIMCO had the reputation as the largest bond fund manager in the world and today is far from it. 

Results

The ten largest bond funds had an average yield of 2.2% but with rates rising in 2021 are down 2% year-to-date (as of 3/3/2021). That is, they already lost all their income for the year plus another 2 points. Duration averages 5 years and is a measure of the gain or loss a fund is likely to have for every 1% change in interest rates (in this case 5% down in price for every 1% rise in interest rates). The average credit rating for these funds are a very good AA. 

Note, as expected, the short term funds with the shortest durations have the best year-to-date returns. PIMCO has excelled here but note the low BBB average credit quality combined with the shortest 1.9 year duration. 

Conclusion

Bond funds are NOT bonds. Bond prices fluctuate prior to their maturity and, if they don't go bankrupt, will eventually mature and return your capital regardless of interest rates. As a former bond trader I could never see the value of bond funds. 

Funds never mature. A bond fund always is buying new bonds to replace those it matures and a large portion of the bond portfolio will always be subject to interest rates.

 

For those who really want to preserve capital, the shortest term bond funds, will do best. Money market funds and CDs will do better. Bank CDs, which pay more than money markets, are usually non-negotiable, you cannot get your money early barring a penalty. Money markets have the lowest rates.

The trade offs are always the same, the safer and shorter the bond, the lower the yield. 

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Please follow this blog by email.

© 2021 Vista Market Research.