The Ireland Event

For the past year, I’ve been consumed with how Covid numbers are used/manipulated to create political narratives. From China to WHO to don’t-test-don’t-tell to Covid Trutherism in all its forms … that’s been the windmill I’ve tilted at for almost 12 months now.

Last week I became consumed by a new twist on all this – Covid numbers that were being largely ignored. Insane infection numbers coming out of UK and Ireland, apparently driven by a new virus strain, that we acknowledged over here but didn’t seem to be too mussed about.

It reminded me of the Covid numbers coming out of Italy last February. Was Europe once again our crystal ball? Were we once again going to ignore THAT?

And when I say “insane infection numbers” I mean a 30x spike in Covid cases in Ireland over the span of two weeks in late December, where the R number – the basic reproductive rate of the disease – went from something around 1.2 to something around 3. Where you suddenly went from a few hundred new Covid cases every day to more than six thousand cases every day. All in a country the size of Alabama (which, btw, currently has about 4 thousand cases every day).

Want to continue reading this and the other 1,500+ essays you won't find anywhere else?

Already a subscriber? log in here

To learn more about Epsilon Theory and be notified when we release new content sign up here. You’ll receive an email every week and your information will never be shared with anyone else.


  1. Avatar for TARS TARS says:

    Anyone buying the popular narrative that we’ll avoid hyperinflation? Another massive outbreak, and a large round of stimulus on top of that, seems inevitable. Also seems as though we’ve already reached hyperinflation when looking at assets like real estate. What am I missing here, and how can we protect the value of our holdings?

  2. Avatar for bhunt bhunt says:

    An “Ireland Event” outbreak, with draconian shutdowns, an unemployment shock and small business bankruptcies, would be massively deflationary.

  3. Hi Ben,

    Thanks for another fantastic and frightening analysis.
    Writing from my smug position in Sydney I hope you’re wrong of course.

    It’s worth considering the Australian and New Zealand perspective on shut-downs.
    I grant that we have certain favourable conditions (being an island is one), but our leaders, nationally in NZ and state based here in OZ, have done exactly what you said the public would not accept, namely lockdowns over a few cases. Other state borders to New South Wales shut over Christmas when we had less than a hundred cases in total (all cases here come from overseas arrival quarantine lapses).Apart from inconvenienced holiday makers trying to cross borders, no one has really complained.

    In Queensland, the state with one of the stricter border closure policies in 2020, the government was re-elected last year with an increased majority.

    That the UK and US are only now demanding overseas arrivals be COVID free quite frankly seems insane to us

    I don’t know if it’s more effective messaging, a compliant national character, whatever, the go hard go early policies adopted in this part of the world have worked spectacularly well, so far at least.

    Good luck up there.


  4. Yes, the voters will forgive our politicians for locking down an entire city over a few cases… But guess what? In China where there is no worry about voter reaction, that is exactly what they are doing. They are being every bit as draconian over a few cases today as they were back in Wuhan in March. The Chinese know what they are dealing with; no need to spin it this way or that. They are just getting it done no matter what. As if we needed anything else to push us further behind China!

  5. Maybe we have herd immunity… maybe not… Either way, God bless the front line workers, first responders and the medical professionals. My experience would lead me to understand that more tests = more positives. Most of the positives that I interact with have had a cold. Hope that is all there is to it, and prayers for those who’ve experienced much worse because I know that is true also. That is what is awful about CV19… both experiences are true. No Fear… Hold the Line… Lead from the Front.

  6. Wish you had an “Edit” function here. My topic sentence is blown!
    Meant to say voters in US will definitely NOT forgive politicians for any further lockdowns…

  7. So Ben, what percent chance is “nontrivial”? Obviously, the crowd is positioned for the vaccine to save us, that we want have the exponential virus growth like a 1918 pandemic year. US dollar down and 10 year treasury down had gold and silver trading higher. US dollar down and 10 year treasury yield up has put a halt on gold and silver with real rates rising. Having puts on HYG going into spring last year was my single best trade, but that’s been neutered by the Fed. Gotta believe 10 year treasury yields would be cut in half by a deflationary event, would also take the air out of the banks. And ohhhhh those bitcoin bulls would just get crushed. The problem with any of those trades, what is the Fed’s response to an “Ireland event” and how quickly would they be pushed to the point of buying equities. I live in a suburb of Houston, Texas, just my anecdotal view, virus was rampant in July/August, but mostly controlled before cases started rising again in the last 30 days. I grew up in the small town of Meridian, Mississippi, parents and friends still live there. Virus has been steady there since July, just know that up whatsoever. My friend is an RN at the local hospital in Meridian, they have been on drive-by on/off for the last 45 days with only 2 hospitals in the small town. With the poverty rate in Mississippi and lack of resources, and Ireland event would be devastating. *** If any part of this comment crosses the line for Ben and Rusty’s lawyers, don’t hesitate to delete. I write these comments as much for myself, as anything else. What I’d really like is for everyone to tell me where I’m wrong?

  8. Assessing the reaction function of retail odd lot call option buyers topped off with more stimulus checks (and hopes of even more) that know the Fed has their backs! There’s something I never thought I would be contemplating while trying to devise a set of trades for a potentially wrong-footed consensus. There are so many crowed, consensus trades. But I wonder if all that buy the dip retail money won’t just flow back into the stay at home stocks again as rates would collapse, they are perceived as less vulnerable to fundamental misses, and they are very long duration vehicles. Some parts of the market seem to be figuring out the path ahead- like REIT’s that haven’t overcome the first vaccine Monday opening print in mid-November. But, the balance of action seems to be driven by either cash that is put back in as every potential risk event passes or hedges are unwound.

    If past is prologue credit stress has to be a driver for a break as it forces unwinds of carry trades, slows share repurchase, and pressures quant driven strategies. Forecasts of a 9% default rate in '21 have scared no one off of the Fed put in HYG. I would say shorts in the Russell 2000, where everyone is moving for the reopening trade will work again. And, so many investors are in that trade just for beta, there is no real market cap worth worrying about from an index perspective. But, it may take until after Valentine’s Day for all of the fund flow to finish getting over their skis there.

  9. In my home state of Mississippi, Oct 1, 2020 started the MOM campaign. All my FB friends were buying T-shirts and using profile picture filters for MOM. That is “Mask Off Mississippi”. It was great until the hospitals starting filling up and people started dying.

Continue the discussion at the Epsilon Theory Forum

16 more replies


Avatar for bhunt Avatar for jim.miller105 Avatar for totallysolvent Avatar for Carl_Richards Avatar for jpclegg63 Avatar for lpusateri Avatar for Desperate_Yuppie Avatar for mattdailor Avatar for william.hobi Avatar for PJSPHD Avatar for tromares Avatar for rmcpherson Avatar for wirejimmy Avatar for DonJuanBlackSwan Avatar for TARS

The Latest From Epsilon Theory


This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.