Wednesday, May 20, 2020

The LTCM collapse, the GFC and Covid-19 — THIS Connects all Three

“It is the certainty that they possess the truth that makes men cruel.” - Anatole France, novelist, essayist, Nobel laureate (1844-1924)


You may not remember it but for finance geeks we either remember, or have heard of the debacle that was the giant bond trading hedge fund Long Term Capital Management  that grew from  $1.25 billion at launch to over $100 billion in under 3 years!
Admittedly I was still at high school trying to ogle teenage girls cleavage when it all unfolded, and so I was...ahem…”otherwise occupied” but I sure as hell heard about it and subsequently read up on the theatrics upon entering the industry. The thing with LTCM was that it was run by finance veterans, two Nobel prize winners, PHD’s and professors. It was an all stars team.
They proceeded to knock out 40% a year for about 2 years leading everyone to believe that they were indeed Gods. The way they made money was by bond arbitrage and mean reversion based on statistical models they’d built. 
Come 1998 and the Russian government defaulted on their debt. This is when their model finally met with the real world. Mark to model rapidly became mark-to-market as the Russian ruble collapsed (something not in their model).
And that was the end of LTCM, who had to be bailed out by the FED providing them with enough time to survive in order to liquidate their positions without endangering the entire financial system. As it was the Dow lost 19.2% from 7/19/1998 to 8/31/1998 and enjoyed the largest single-day decline of 6.4% on the 31st August 98.
The fascinating story is recounted in Roger Lowenstein’s book, When Genius Failed‘. If you like this sort of stuff I highly recommend it.
One thing even more interesting than cleavage is that when things began to turn awry for LTCM the firm continued to believe in their model...even though the real world was screaming at the top of its lungs “YOU”RE WRONG, GET OUT, GET OUT!”
As we know they didn’t….and completely pha-cd things up.

The Global Financial Crisis example:

Closer to home, at least in terms of time frame was the GFC. Here we had large money-center banks staffed with rocket scientists in thousand dollar suits, who built fancy risk models (VAR), figuring that their models would protect them from themselves. Which if you think about it is kind of like deciding that yes you are going to become a heroin addict but you’ll include in your diet some greens and a few multivitamins so you’ll be just fine. A logical contradiction.
You see the idea was that lending money to folks who hadn’t any money of their own would be just fine provided you packaged what were so obviously ishty loans with tranches of other similarly ishty loans, creating DOI (diversification of isht) and this would magically render the entire isht sausage to be of high quality. Models remember. Built by rocket scientists. I’ve worked with some of them in a past life. Brainy AF. A bit - you know...geeky, zero sense of humour but nice people. 
The problem with all of the above is that any model no matter how sophisticated is a patchwork of guesses on how the real world will work. They’re better than nothing at all but an over reliance on them inevitably ends badly They work until - they don't. Mark to model is the same as mark to market...until it isn’t. 
And you know what happened in the GFC which was EXACTLY the same thing that had happened in the LTCM crisis before? The market began screaming “YOU’RE WRONG, YOU'RE WRONG, GET OUT GET OUT!” and while those who were listening to the market saw what was so obviously coming, you know what the folks with the models did?
They ignored the market and relied on the models.
Models are useful to be used when we’ve no other options. But as soon as we have actual live events and certainly data, history indicates that you really need to plug that data in. That’s real...the models are after all guesswork. Educated guesswork but guesswork nonetheless. 
Howard Marks of Oaktree capital recently referred to this in a memo to clients:
“The field of economics is muddled and imprecise, and there’s good reason it’s called “the dismal science.” Unlike a "real" science like physics, in economics there are no rules that one can count on to consistently produce a given outcome, as in “if a, then b.” There are only patterns that tend to repeat, and while they may be historical, logical and often-observed, they’re still only tendencies.”
Hence models which are built on previous patterns.
Which brings me to something I know I’ll get hate mail for because like so many things in society right now have become polarising and binary. That’s not how science and evidence based rational thinking work. It is a sad affair that neither science or rational thinking are leading the charge today. 
Here we are today and the entire world, or much of it anyway has locked down based largely on two things:
  1. China's response to a spreading virus which freaked everyone out (the response that is) and
  2. Neil Fergusson's guesswork model projecting a gazillion deaths by lunchtime unless we acted NOW.
In the olden days - last year - we couldn’t have imagined that some skinny geek epidemiologist recently bankrolled by pharmaceutical companies from the Imperial college of London would prove pivotal in global governments decisions to place everyone under house arrest.
Aside from the fact that Neil “I like shagging my mistress while you’re all in quarantine” Fergusson is funded by Bill “I want to vaccinate the world” Gates, presenting a conflict of interest so grand and obscene it makes bank robbery look like child's play, there is the inexcusable fact that Fergusson's model and report which has formed the foundation for much of the world's policy responses to the virus, was never peer reviewed. This is the first time in history that something that’s entirely unscientific and has been resolutely adopted and policy actions implemented based on what was entirely non peer-reviewed guesswork. 
An error in judgement? Decisions made in a panic?
I don’t know, but really we don’t need to have it peer reviewed because now we’re months into this and we need only look at the data coming in, from all over the world, and it’s painfully obvious the original estimates are out... and not by a small amount. The gap between projections and reality is wide enough to fit all of the Chinese misinformation into it, with ample space for the fawning MSM to fit as well. In other words - large. And yes even when comparing countries or states that have “sheltered in place” and those such as Sweden that haven’t. 
And now, as happened in the LTCM crisis and the GFC, do you know what policy makers and the media who  love tragedy and fear are doing?
True to history they’re following the model instead of the facts.
The facts are screaming “YOU WERE WRONG, CHANGE POLICY NOW”.
But they likely won’t. Pray tell how as a leader of a country - any democratic country - you can turn around and tell your citizens "Hey sorry about that. We panicked and destroyed the economy and racked up debts that we won’t possibly be able to pay back, and we did it based on a flawed model that was never peer reviewed".
You’d be immediately considered a buffoon... and rightly so.
No...instead you’re going to do everything in your power to ensure that citizens are treated like mushrooms. Kept in the dark and fed isht. 
And now citizens who've been placed under house arrest for weeks on end, fed a never ending diet of fear porn without any sort of context are too terrified to move.
Telling them to simply look at the data is worthless because people have long since given up responsibility for their own outcomes relying instead on experts and government officials to tell them what to do, why, how and when.  Consider that the government can’t figure out how to deliver the mail and yet they’ve now been entrusted with most everything in citizens' lives, soup to nuts. It is tragically stupid. 
A part of me hopes that the facts will matter. That society will look at this and say...why we really are foolish to panic and create hysteria over something that kills an absolutely de minimis number of people. It is a tiny part of me. Ironically not the rational part, rather the hopeful clinging desperate part of me. It is the part I try to bring back in order to fall asleep at night, because within it lies the hope that facts matter. But a much much bigger part of me, that which is forged in reading man's history and watching markets for all of my professional career, worries that we’ve passed the rubicon. 
It is the part which reminds me that herd behaviour is always prevalent but on very rare occasions it is ALL that matters. Witch burning in the 1400’s through the 1700’s, Tulipomania, the South Sea’s all happened before.
The herd has stampeded and continues stampeding. Will it stop and begin to view the landscape rationally, or have we gone too far as I alluded to in this article?
Only time will tell now.
- Chris

What Sweden Can Teach Us About The Economics Of Pandemics

Sweden’s unique policy approach in this pandemic has been described as “freewheeling” in international news media, but it would be more accurate to call it balanced. 
Johan Giesecke, a world-renowned epidemiologist and advisor to the Swedish Government, calls it “evidence-based.”
The Swedish Public Health Agency early decided against lockdowns and quarantining the population. Most people suffer few complications from COVID-19 or are asymptomatic. Without a vaccine or cure available in the foreseeable future, there is no stopping of the infection. Sweden therefore focused on protecting the old and the frail while “flattening the curve” and expanding healthcare capacity. 
The Swedes’ comparatively lax policy has allowed schools and businesses to remain open, but high schools and colleges are closed, nursing homes prohibit visitors, public gatherings are capped at 50 people, and there are social distancing rules in place for restaurants. High-risk groups are recommended to self-isolate while the virus runs its course. 
Sweden’s policy might seem heartless from the perspective of the pandemic only, but its approach seeks a “golden middle” between evils – and it appears to be working.
Dr. Mike Ryan, the WHO’s top emergencies expert, recently lauded the approach, saying “Sweden represents a model if we wish to get back to a society in which we don’t have lockdowns.”
There is good reason to avoid large-scale lockdowns, and Sweden’s approach recognizes the downside of such measures. While widespread disease has an expected cooling effect on the economy, the world’s adoption of China’s extreme measures has forced an end to the economic boom and pushed us into an apparent severe global recession. 
Over 30 million Americans have been laid off, pushing unemployment from 3.5% to 19%. The shelter at home decrees keep many more millions at home climbing the walls. This grounding of many tens of millions of healthy and productive people puts further strain on already weakened production and supply chains. A quarter of businesses expect to be closing by June if restrictions are not lifted and sales don’t pick up. 
This is not simply about economics. The economic impact goes beyond pure financial losses. Business closures cripple supply chains and will affect the availability of goods for the foreseeable future. This includes food shortages. More money can help those without savings or income cover immediate and necessary outlays, such as rent and utilities. But more money cannot buy food from empty shelves.
Newly created money and spending, with the CARES Act’s $2.3 trillion exceeding 10% of the country’s GDP, has long-term effects. The massive infusion distorts prices and thereby the allocation of resources throughout the economy. The result is malinvestments as entrepreneurs and investors make decisions based on corrupted market signals. These eventually necessitate corrections, typically through layoffs and business closures. 
But financial hardship and forced long-term sheltering at home also bring other ills. As expected as it is heart-wrenching, child sexual abuse is reportedly up 22% for March. We should also anticipate rises in other evils as people stay at home: divorces, depression, alcoholism, domestic violence, suicides, ill health, and overall increased mortality. These issues are primarily caused by the lockdowns.
Sweden, a small, trade-dependent country, is not unaffected by the downturn. But their lax policy limits the harm. Unemployment in Sweden is projected to be 8.7% in 2020 due to the coronavirus crisis and GDP is expected to fall year over year by 3.4%. Yet, importantly, Sweden is not seeing massive business closures and the Swedish economy therefore retains the ability to bounce back. While unemployment is expected to remain high at 8.9% in 2021, the country’s projected 2020 GDP is expected to grow by 3.4%. This would not be possible had a large fraction of entrepreneurs and small businesses been wiped out.
Much maligned by those focusing only on the pandemic, Sweden’s policy could end up much closer to balancing the two foreseeable evils. When restrictions are eventually lifted – barring a cure or vaccine – countries that adopted more draconian measures will see some of the deaths Sweden has already suffered. Giesecke notes that “the difference between countries will be quite small in the end.” 
If this is true, then Sweden will have avoided the lion’s share of the enormous economic, personal, and social tragedies that societies under lockdown have imposed on themselves. From this perspective, perhaps Sweden’s strategy should be neither feared nor maligned, but emulated.

Monday, May 18, 2020

BREAKING: Researchers claim 100 percent cure rate vs. covid-19 in 100+ patient trial conducted in Ecuador, using intravenous chlorine dioxide

Image: BREAKING: Researchers claim 100 percent cure rate vs. covid-19 in 100+ patient trial conducted in Ecuador, using intravenous chlorine dioxide
(Natural News) Preliminary data from a clinical trial involving more than 100 covid-19 patients in Ecuador has resulted in a claimed 100 cure rate within four days, according to Andreas Kalcker who is closely following the results of the effort. The tests were carried out by the Asociacion Ecuatoriana de Medicos Expertos en Medicina Integrativa, a group of integrative medicine practitioners.
Ecuador has been hit particularly hard by the coronavirus, and the current “standard of care” promoted by Western medicine — largely based on the use of ventilators — has been killing the vast majority of critical patients while utterly failing to address the real root of the problem.
Covid-19 isn’t an Acute Respiratory Disease (ARD), it turns out. Rather, it often presents as an inflammation and blood clotting condition (see The Lancet research, below) which causes the blood to be unable to carry oxygen, resulting in patient hypoxia and eventual asphyxiation.
This is why intravenous chlorine dioxide — which immediately delivers a high dose of oxygen to blood cells — is believed to work so effectively against covid-19. It reportedly restores the oxygen-carrying capacity of hemoglobin and clears the clotting in the lungs, all while destroying pathogens.
Chlorine dioxide researcher and advocate Andreas Kalcker has posted a video (in Spanish) where he explains the findings. That video, entitled, “Mas de 100 Casos de Covid-19 recuperados con CDS por medicos de Aememi,” is found at this link on
A video embed is offered here:
In the video, Andreas explains that researchers were able to achieve a complete cure in just four days through the use of intravenous chlorine dioxide (ClO2). Here’s a photo of some of the researchers holding syringes of chlorine dioxide, which is then infused into the patients’ blood, where it releases a wave of oxygen that researchers believe saturates the blood with O2 while killing pathogens:
Another clinical trial involving chlorine dioxide is currently under way, documented by the US National Library of Medicine at The study uses oral chlorine dioxide (rather than intravenous) and is entitled, “Determination of the Effectiveness of Oral Chlorine Dioxide in the Treatment of COVID 19.” The trial is being conducted by the Genesis Foundation and involves 20 patients.
The identifier for that trial is NCT04343742.
Andreas Kalcker explains in his video that chlorine dioxide is a powerful disinfectant that destroys viruses and bacteria. The substance has long been used in water purification processes and is approved by various US government agencies for as a water treatment and purification agent.
This video frame shows blood cells being flooded with oxygen from ClO2, instantly reducing clotting / coagulation:

Covid-19 is not an acute respiratory disease

In another bombshell science paper published May 7, 2020, in The Lancet, researchers Dennis McGonagle and others determined that covid-19 is not a respiratory disease but rather “diffuse pulmonary intravascular coagulopathy,” a kind of blood clotting that presents in lung tissue.
This explains why patients with covid-19 are dying from hypoxia (lack of oxygen) and are frequently killed by the use of ventilators. As an ICU doctor from New York warned months agodoctors are treating the wrong disease. (That doctor’s YouTube channel was deleted and all his videos were censored, of course. No one is allowed to question medical orthodoxy in the medical police state known as the United States of America.)
Study authors also found the inflammation triggers a worsening of the condition, which implies that anti-inflammatory interventions might be the key to saving lives and ending the pandemic. From the study:
The immune mechanism underlying diffuse alveolar and pulmonary interstitial inflammation in COVID-19 involves a MAS-like state that triggers extensive immunothrombosis…
MAS stands for Macrophage Activation Syndrome, and it is an inflammatory response stemming from an over-reactive immune response, similar to the “cytokine storm” that’s being widely discussed (which vitamin C helps prevent, according to published research). As the study explains:
The severity of systemic inflammation in response to human coronavirus family members has features reminiscent of a cytokine storm or macrophage activation syndrome (MAS), also known as secondary haemophagocytic lymphohistocytosis (sHLH).
Figure 1 from the study:
To simplify these findings, covid-19 is not acute viral pneumonia impacting the respiratory system but rather an inflammation-based immunological response that leads to thrombosis (clotting in the lungs) which kills the patient. The use of ventilators only makes the problem worse, which is why previous observational studies have found that 88% of patients put on ventilators end up dying. They are dying because the ventilator treatment is the wrong treatment.
Chlorine dioxide is reportedly saving 100 percent of the patients studied so far because chlorine dioxide floods the blood with instantly usable oxygen while killing the pathogens responsible for clotting. There is also anecdotal evidence that some people are beating covid-19 infections with high doses of aspirin, a blood thinner, although this information should not be taken as advice for treatment, and far more research is needed on blood thinners and anti-inflammatory interventions.
This may also help explain why turmeric and vitamin D are associated with strong reductions in inflammation in the body, which may prove useful in balancing the immune response and preventing the kind of imbalance that can lead to immune system overreactions.

The criminal medical cartels are censoring all treatments and cures that work to save lives

Notably, the criminal Big Pharma cartels and corrupt government regulators (like the FDA, FTC, CDC) are going out of their way to try to criminalize or suppress any non-vaccine, non-pharma solutions that might save lives. Over the last month, we’ve all witnessed an astonishing level of aggression and mafia-style tactics used by the FDA and FTC against pioneering researchers offering a variety of possible solutions, from colloidal silver to chlorine dioxide and even intravenous vitamin C.
They’ve even declared war on hydroxychloroquine and the medical establishment has been engineering clinical trials which are designed to fail from the start in order to discredit the off-patent, affordable drug.
There is no doubt that Big Pharma’s obedient government lackeys are at war with truth and are desperately trying to suppress information about natural cures and integrative treatments that might eliminate covid-19 before vaccines can be made available.
The techno-fascist tech giants like Facebook, Google, Vimeo, YouTube and Twitter are all-in with Big Pharma, going out of their way to censor and destroy all information that criticizes vaccines or offers wisdom about natural treatments or integrative medicine interventions. This criminal cabal of Big Tech and Big Pharma is the enemy of humanity, as they are deliberately working to worsen the pandemic, increase suffering and death and extend the punishing lockdowns for as long as possible in order to cause several economic damage while preparing the masses for mandatory vaccines.
We are all witnessing a powerful criminal gang of corporations and regulators who are deliberately seeking to destroy human society as we know it today, and they are the gatekeepers of information on the ‘net (and in the news). This is why we are repeating our call for the CEOs of all the top tech giants to be arrested and charged with crimes against humanity, then prosecuted in a court of law. Over the weekend, a member of Italy’s Parliament gave a rousing speech in which she labeled Bill Gates a “vaccine criminal” and demanded he be arrested and charged with crimes against humanity.
Such efforts should not be limited to Bill Gates, however. They must include the criminals of other tech giants as well as the corrupt, anti-human criminals running the FDA, FTC and CDC, among others. Their crimes against humanity must not go unanswered, and they must be held accountable in a court of law.
The destructive, anti-human agendas of Big Pharma and Big Tech are incompatible with human freedom and a sustainable human civilization. These anti-human institutions must be permanently dismantled, and humanity must rise up against this threat in the same way we once awakened against the Third Reich and the rise of Nazi fascism and the Holocaust.
Right now, Big Pharma, Big Tech, the FDA and the CDC are plotting to kill billions of human beings with an engineered bioweapon, a risky vaccine, and high-fatality prescription drugs that make people more vulnerable to covid-19. These enemies of humanity must be stopped, and the truth about chlorine dioxide must be set free so that human beings can be saved from suffering and death.
To learn more about the establishment’s war on truth (and war on humanity), watch my recent interview with Dr. Judy Mikovits, who has also been subjected to extreme censorship for raising the alarm about how vaccines are spreading infectious disease.

Silicon Valley Invents “The Free Lunch” – The Doordash-Pizza Arbitrage

Authored by Ranjan Roy via The Margins substack,
If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me. Every platform loses money. Restaurants feel like they're getting screwed. Delivery drivers are poster children for gig economy problems. Customers get annoyed about delivery fees.
Isn't business supposed to solve problems?
Last week's Uber-Grubhub news set off some antitrust alarms for me and got me thinking about the business of food delivery as a whole. But let me start this newsletter with a story about Pizza Arbitrage.

Market Inefficiencies

In March 2019 a good friend who owns a few pizza restaurants messaged me (this friend has made appearances in prior Margins' pieces). For over a decade, he resisted adding delivery as an option for his restaurants. He felt it would detract from focusing on the dine-in experience and result in trying to compete with Domino's.
But he had suddenly started getting customers calling in with complaints about their deliveries.
Customers called in saying their pizza was delivered cold. Or the wrong pizza was delivered and they wanted a new pizza.
Again, none of his restaurants delivered.
He realized that a delivery option had mysteriously appeared on their company's Google Listing. The delivery option was created by Doordash.
To confirm, he had never spoken with anyone from Doordash and after years of resisting the siren song of delivery revenue, certainly did not want to be listed. But the words "Order Delivery" were right there, prominently on the Google snippet.

He messaged me asking me if I knew anything about Doordash, and oh boy, did I get Softbank-triggered. I had just read about their $400 million Series F and it was among the WeWorkian class of companies that, for me, represented everything wrong about startup evolution through the 2010s. Raise a ton of money, lose a ton of money, and just obliterate the basic economics of an industry.
Doordash was causing him real problems. The most common was, Doordash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold. It led to his employees wasting time responding to complaints and even some bad Yelp reviews.
But he brought up another problem - the prices were off. He was frustrated that customers were seeing incorrectly low prices.
A pizza that he charged $24 for was listed as $16 by Doordash.
My first thought: I wondered if Doordash is artificially lowering prices for customer acquisition purposes.
My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.
My third thought: Cue the Wall Street trader in me…..ARBITRAGE!!!!

If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You'd net a clean $8 profit per pizza [insert nerdy economics joke about there is such a thing as a free lunch].
He thought this was a stupid idea. "A business as successful a Doordash and worth billions of dollars would clearly not just give away money like this." But I pushed back that, given their recent obscene fundraise, they would weirdly enough be happy to lose that money. Some regional director would be able to show top-line revenue growth while some accounting line-item, somewhere, would not match up, but the company was already losing hundreds of millions of dollars. I imagined their systems might even be built to discourage catching these mistakes because it would detract, or at a minimum distract, from top-line revenue.
So we put in the first order for 10 pizzas.

The Numbers

He called in and placed an order for 10 pizzas to a friend's house and charged $160 to his personal credit card. A Doordash call center then called into his restaurant and put in the order for those 10 pizzas. A Doordash driver showed up with a credit card and paid $240 for the pizzas.
It worked.

Trade 1

We went over the actual costs. Each pizza cost him approximately $7 ($6.50 in ingredients, $0.50 for the box). So if he paid $160 out of pocket plus $70 in expenses to net $240 from Doordash, he just made $10 in pure arbitrage profit. For all that trouble, it wasn't really worth it, but that first experiment did work.
My mind, as a combination trader and startup person, instantly had the though - just run this arbitrage over and over. You could massively even grow your top-line revenue while netting riskless profit, and maybe even get acquired at an inflated valuation :) He told me to chill out. Maybe this is why he runs an "actual business" while I trade options while doing brand consulting and writing newsletters.
But we did realize, if you removed the food costs this could get more interesting.

Trade 2

The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings (he indicated at the time dough was essentially costless at that scale, though pandemic baking may have changed things).
Now suddenly each trade would net $75 in riskless profit ⇒ $240 from Doordash minus ($160 in costs + $5 in boxes).
This got a bit more interesting. If you did this a few times a night, you could start to see thousands in top-line growth with hundreds in pure profit, and maybe you could do this for days on end.
So over a few weeks, almost to humor me, we did a few of these "trades". I was genuinely curious if Doordash would catch on but they didn't. I had visions of building a network of restauranteurs all executing this strategy in tandem, all drinking from the Softbank teat before the money ran dry, but went back to work doing content strategy stuff.
Was this a bit shady? Maybe, but fuck Doordash. Note: I did confirm with my friend that he was okay with me writing this, and we both agreed, fuck Doordash.

Google Hijacking and Fake Phone Numbers

Tricking businesses onto your platform and creating additional headaches for small business owners in the pursuit of Softbankian growth is a bad as it gets. Many restauranteurs were complaining about their Google listings being "hijacked" by Doordash, sometimes even usurping their own preferred delivery.
These underhanded tricks aren't unique to Doordash though. In recent weeks there has been some great work coming out around a Yelp - Grubhub phone scam. This one is just priceless (seriously, read this Buzzfeed piece). Grubhub for their own sites generates a phone number for each restaurant that goes to a centralized, Grubhub owned call center. If someone calls in and orders via this number, the restaurant gets charged a fee. Apparently, some enterprising BD folks came up with the idea that Yelp could put the Grubhub phone numbers in place of the real restaurant phone number on the Yelp listing. Customers who think they’re “helping” their local restaurants by calling in the order are still creating a fee for Grubhub.

Food Delivery Platform Existentialism

Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble?
Grubhub just lost $33 million on $360 million of revenue in Q1.
Doordash reportedly lost an insane $450 million off $900 million in revenue in 2019 (which does make me wonder if my dream of a decentralized network of pizza arbitrageurs does exist).
Uber Eats is Uber's "most profitable division” 😂😂. Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.
Amazon just bailed on restaurant delivery in the U.S.
What is it about the food delivery platform business? Restaurants are hurt. The primary labor is treated poorly. And the businesses themselves are terrible.
This Business Insider piece did a good job covering the problematic dynamics of the industry:
As this conflict comes to a boil, one thing is becoming clear: there are no winners in this fight.
Restaurant owners are losing money. Diners are seeing their costs raised, either by delivery companies that need to pay delivery drivers or by the restaurant owners who raise prices to offset delivery fees. And delivery drivers still make low, unpredictable wages frequently with no benefits.
How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion “delivery is a shitty margin business” when discussing this post. But I don’t think that’s sufficient here. Delivery can work. Just look at a Domino’s stock chart. But, delivery has been carefully built as part of a holistic business model and infrastructure. Maybe that’s the viable model.
After the start of this pandemic, my friend actually launched in-house delivery at one of his restaurants. He said he’s starting to get a sense of the economics and explained he’s starting to get a sense of the volume required per location to make the economics reasonably work. That’s what is so odd to me about third-party delivery platforms. The business of food delivery clearly is not intrinsically a loser. Domino’s figured it out. Every Chinese restaurant in New York City seemed to have it figured out long before any platform came along. My friend is figuring it out.
That’s the thing about how industries have evolved over the past decade. I know I ascribe ZIRP as the cause of all ills in the world, but this sometimes feels like the greatest ZIRP story ever told.
You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?
Third-party delivery platforms, as they’ve been built, just seem like the wrong model, but instead of testing, failing, and evolving, they’ve been subsidized into market dominance. Maybe the right model is a wholly-owned supply chain like Domino’s. Maybe it’s some ghost kitchen / delivery platform hybrid. Maybe it’s just small networks of restaurants with out-of-the-box software. Whatever it is, we’ve been delayed in finding out thanks to this bizarrely bankrolled competition that sometimes feels like financial engineering worthy of my own pizza trading efforts.
The more I learn about food delivery platforms, as they exist today, I wonder if we’ve managed to watch an entire industry evolve artificially and incorrectly. Arbitrage is about taking advantage of market inefficiencies and for all the newly minted day-traders out there, perhaps it’s time to start looking into frontier markets like pizza.
*  *  *
Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform. If we had to pay a customer fee on the order, it would’ve further cut into our arbitrage profits (though maybe we could’ve incorporated DashPass as part of the calculation). 
Note 2: A few months ago, in the pre-pandemic times, I was at an East Village pizza place and watched as the owner was arguing with a Doordash driver. The owner insisted the driver take the pizza in a heated bag so the customer didn’t get cold pizza, but leave an ID so the driver would be compelled to return the bag. The driver argued the amount of time it would take to come back to return the bag would mean he couldn’t make enough deliveries to “pay my rent”. #Innovation.
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ProAssurance Corporation (PRA) investigation by Glancy Prongay & Murray LLP GPM a leading national shareholder rights law firm


LOS ANGELES, May 18, 2020 (GLOBE NEWSWIRE) — Glancy Prongay & Murray LLP (“GPM”), a leading national shareholder rights law firm, continues its investigation on behalf of ProAssurance Corporation (“ProAssurance” or the “Company”) (NYSE: PRA) investors concerning the Company and its officers’ possible violations of the federal securities laws.
If you suffered a loss on your ProAssurance investments or would like to inquire about potentially pursuing claims to recover your loss under the federal securities laws, contact Charles H. Linehan, of GPM at 310-801-2829, via email or visit our website at to learn more about your rights.
On January 22, 2020, after the market closed, ProAssurance disclosed a $37 million charge to its loss reserves for fourth quarter 2019 due to “deteriorating loss experience, driven by a large national healthcare account.”
On this news, the Company’s share price fell $4.18, or over 11%, to close at $33.40 per share on January 23, 2020, thereby injuring investors.  On May 7, 2020, ProAssurance announced its first quarter 2020 financial results, reporting 2.6% decline in total revenues over the prior year period, and slashed its dividend from $0.31 per share to just $0.05 per share.  On this news, the Company’s share price fell $4.38, or over 21%, to close at $15.95 on May 8, 2020, thereby injuring investors further.
Whistleblower Notice: Persons with non-public information regarding ProAssurance should consider their options to aid the investigation or take advantage of the SEC Whistleblower Program. Under the program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Charles H. Linehan at 310-801-2829 or email