A Humiliated Wall Street Scrambles To Convince Clients That Nothing Is F***ed Here As Infections Soar

After China was brazenly lying (because there is no other way to call what misrepresenting the full impact of a deadly viral pandemic can be called) to the world for two weeks, the overnight admission that there are in fact 15,000 "new" cases - and most likely soon to be dead cases as lung lesions appear in CT scans usually when a patient is terminal - slammed the carefully crafted narrative that the number of infections is declining, while the surge in deaths confirms that this was not just a question of "changing a definition" as China advocates claim, but a carefully premeditated gamble to under-represent the full impact of the coronavirus pandemic.

What we find odd is that everyone knows that any data coming out of China is either fabricated, goal seeked or otherwise manipulated when it comes to its economy, yet so many gullible and naive "analysts" rushed to believe every new update from Chinese health authorities, even though Beijing has so far still refused to allow CDC reps in China for the very simple reason that it does not want others to observe the reality on the ground.

In any case, following China's unexpected admission that the pandemic is far from contained, Wall Street - which for days spoon-fed its clients a flawed and erroneous narrative which one could ascertain with a casual glance at the "official" underlying data, that the disease is about to fade into memory - has found itself scrambling to preserve the "fake narrative" that "nothing is fucked here" and, indeed, it's all getting better.


The Dude

To be sure, for Wall Street whose sole purpose these days some claim is to convert GAAP into non-GAAP and EBITDA into Adjusted EBITDA, with the Chinese infection data now effectively broken down into fake or "pre-adjusted" and non-fake, or "post-adjusted" data sets, creating and defending "Adjusted Infections" which once again show that China is winning the war on the pandemic, is precisely where Wall Street's epidemiologists pardon economists excel.

First on the list was none other than Goldman Sachs economist Andrew Tilton, who scrambled to blast an email to clients first thing this morning to ease fears that Goldman's analysis - which underscored just how successful China has been to contain the coronavirus - was wrong for weeks as it relied on incomplete and erroneous data, and instead - you guessed it - said that if only one excludes the newly defined cases, well then all is well.

Which of course is absolutely true... and it's also outright fabrication of the truth the same way that if one only excludes all corporate costs and expenses, one gets WeWork's "Community Adjusted EBITDA ." The only problem is that when one fabricates financial data, the worst thing that can happen is some rich people become a little poorer. But when one is actively complicit in a global pandemic coverup, which anyone who sides with China in its gross coverup is doing right now, people die.

For those wondering, here is what Goldman said this morning to put its clients' minds at ease:

A large increase in Hubei virus cases due to definition change: News media reported a very sharp rise in the number of confirmed coronavirus (Covid-19) cases in Hubei province as of February 12: an increase of 14,840 vs. 1,638 the previous day.  The jump stems from a loosening in the requirements for a confirmed case.  Previously, a positive lab test for Covid-19 was required for a case to be considered confirmed in Hubei.  Now, either a positive lab test or a positive clinical test (e.g. medical imaging-based) is sufficient.  According to data on a Hubei government website, 13,332 of the 14,840 cases reported today for Hubei were added because of this loosening in the definition.  Our understanding is that this definitional change has been made in Hubei province only and is one-off.

Translated: if only China would continue to report coronavirus cases and deaths as pneumonia (as the WSJ reported some time ago it was doing), none of this would have happened, and if only the rest of China keeps its mouth shut and continues to lie about the full extent of the pandemic, then all should be well, and just buy stawks.

Continuing further down we read:

Separately, China’s national health service issued an updated document on February 9th that tightened the definition of a new confirmed case in provinces other than Hubei slightly.  Specifically, they require a person exhibit symptoms in addition to having a positive test for the virus. News media reported that a northeastern province cut the number of total confirmed cases slightly due to this definitional change.  

Once again, if only clients will focus on the Adjusted EBITDA, er Adjusted Infections number, then clearly there is no problem and stuff.

Which brings us to Tilton's conclusion, where the Goldman economists dons his most cheerful "optimistic epidemiologist" to magically conclude that if only one ignores the newly revised cases, then the cases based on the old definition are actually going down (so you must buy stawks). Which incidentally is the same as telling a terminal Coronavirus patient in China that their  infection only is based on a new definition and so they will die (now that the definition of "death" has also been revised) but it's cool because since they were not infected according to the old definition, their death will be ignored by the market and the Goldman-China propaganda axis.

Finally, as for the slowing cases based on the old definition, that is only happening because China is running out of test kits. But don't tell that to Goldman's crack epidemiologist economist team, which wants nothing more than to believe China's propaganda. We bring this up just in case there is still any doubt why Goldman is losing tons of top talent by the day as the bank transitions from Wall Street's most respected prop trading desk into a subprime lending-focused commercial bank for the masses.

Despite the sharp jump in new cases in Hubei, the available data still show the growth rate of new infections—holding the definition constant—to be slowing. By comparing Hubei official data releases on February 12th vs. that on February 11th, we calculate that the number of new cases dropped from 1,638 to 1,508 based on the old definition.

If we include cases that were newly identified on February 12 under the new definition, then new confirmed cases under the broader definition were 6,528 on February 11th and 4,273 on February 12th.  Therefore, today’s jump in the number of Hubei confirmed cases does not imply a renewed acceleration in the spread of Covid-19, based on the available information and our understanding of it.

That's because your "understanding of it" is shit, Andrew.

Yet not even Goldman has the temerity to conclude its "analysis" without suggesting that it may - once again - be dead wrong in minimizing the impact of the coronavirus pandemic, and Tilton concludes by saying that "it's theoretically possible that we could see other changes to the case definition in Hubei or other provinces again in the future."

In other words, dear China, please no more "case definition changes" that will reveal the full extent of the pandemic, which now even the White House is convinced is being underrepresented by over 100,000!

To be fair, it wasn't just Goldman that was cause with its pants down. Another "expert" that tried to minimize last night's shocking surge in cases was Capital Economics which said the surge did not necessarily point to an acceleration in the spread of the virus but rather that official figures had been understating its prevalence.

"For now, the latest figures don’t appear to undermine the recent tentative signs that the spread of the virus may be slowing," it said, even though clearly the latest figures confirm that the prior figures were false and that the spread of the virus is clearly exponential once again.

Finally, Frank Benzimara, SocGen's head of Asia Equity Strategy in Hong Kong, said the new figures had not sparked panic in financial markets: "It can be seen as an exercise of transparency" he said naively desperate to defend the Chinese communist party whose only goal is to prevent a social panic and to minimize the infection numbers as long as possible, adding that "there is no panic on this," which we can only expect was referring to SocGen clients (instead of say Wuhan residents) who have become habituated to the Fed injecting ever more liquidity the closer the world gets to the apocalypse.

As for Frank, one may be almost tempted of accusing him of littlr hypocrisy because while "there is no panic", Reuters reported that "Benzimra himself logged in from home and speaking to clients by phone as meetings are increasingly canceled, even in cities not subject to quarantine."

Sounds a little panicky to us, Frank...