Riff's / Rave's / Random Questions and Musings

Hey there!

We are thrilled that you are here.

This is our sand-box, the area where play with and comment upon subjects from the serious to the practical - plus anything else that is important, cool or is interesting. Hopefully, you will find this section informative, entertaining as well as worthy of repeat visitations.

Patrick Keenan
Fund Manager

By definition, a pandemic is never convenient. It is also always problematic and deadly. What makes them so is that in the beginning of a pandemic, very little is understood about what causes them, how it is transmitted and how to combat it effectively.

Rest assured, the concern over the coronavirus and the fear about its transmissions are far from superficial. Quite simply covid-19 is a very deadly contagion.

In the United States, covid-19 has a death rate of one-point three percent (1.3%). Now that figure may not occur as significant, however the fact remains that in the United States influenza has a death rate of point one percent (0.1%). As such, covid-19 is ten (10) times deadlier than the flu.

To put that figure in perspective, in 2019 the world’s population grew at a rate of 1.08%. If the covid-19 death rate was the same around the world as it is in the United States, at the current rate of death, covid-19 would nullify all of world’s population growth in 2019’s and then some.

To add further context, the flu kills between thirty thousand and sixty thousand (30,000 – 60,000) people a year in the United States. For the two and half months since the first U.S documented case, the coronavirus has killed 80,001 citizens.

Sadly, a recent World Health Organization report stated that in certain countries covid-19 is killing three percent to four percent (3% to 4%) of their population. Should those percentages become the average rate of death in each country around the world, the total number of deaths world-wide would total 227,885,000 people. That’s the equivalent of wiping out the entire population of both Brazil and Greece.

Again, covid-19 is very contagious. One person with the covid-19 virus tends to infect two other people. This is a 100% increase over the infection rate by a person who is ill with influenza. Further, nineteen percent (19%) of those who contract coronavirus become hospitalized, while only two percent (2%) of those that are infected with influenza result in inpatient care. Why the big difference between the rates of hospitalization? There is a vaccine as well as an effective antiviral treatment for the flu. As of this writing, there is neither for the coronavirus.

While wearing a mask and gloves and practicing physical distancing may be bothersome, it is nevertheless, neither as inconvenient nor as permanent as death. So be smart and be considerate. Remain social but do so wisely. Remember, you are not only protecting yourself and your family but your fellow citizens.

Thanks for the question. We appreciate your concern, the seriousness and timeliness of the topic and fact that you thought we had some unique insight on this matter.

In our estimation, China has a lot more to lose than gain by not sitting down at the negotiating table. First, China is the world’s largest importer of oil and the world’s largest exporter of goods. What do both those things have in common? Most of their importing and exporting is water-borne and occurs though shipping lanes the U.S. Navy protects. If the United States stops protecting the world’s shipping lanes, every country that relies on safe ocean trade could suffer. And because China is the world’s largest exporter, the Chinese could suffer the most.

Secondly, the United States is China’s largest customer. In short, the U.S. imports more from China than it exports to China. In actuality, the ratio of goods the U.S. imports from China is three times larger than the amount of U.S. goods that China imports. Which means that China has less imports to tax. As a result, few U.S. manufactures and their employees could be affected by a Chinese tariff. A fact that is not lost on the politicians in Washington D.C.

So, what exactly is the United States demanding of China and are these demands unreasonable? Regarding the former, the U.S. has provided Beijing with a list of 142 demands. Most of the demands center around the Chinese Government’s ongoing economic espionage programs, cyber theft of intellectual and sensitive property, the removal of significant tariffs and non-tariff barriers for American products and the decrease of Chinas $200 billion trade surplus with the United States. In our opinion, the demands are not unreasonable.

With that said, we do believe them to leave little room for the Chinese politburo to maintain the appearance that they truly are in control of all things that affect them. This, we think, is the underlying problem stopping forward progress in getting a mutual acceptable agreement signed. Therefore, it is our belief that until the United States figures out how to get both its demands met and allow China to save face with its citizens and other trading powers, this matter will not be resolved.

Chinese President Xi Jinping knows this, and he will continue trying to lessen the U.S. demands by utilizing any and all political channels of influence. While he is doing this, he will also continue to try to lessen the power imbalance by using this time to build up both China’s Navy as well as other markets for China’s manufactured goods. The problem with that approach is that neither of those things can occur overnight as they are matters that take several years to establish.

Then again, we could be wrong. - PK

Drink mint tea. We find it calming yet refreshing. As you are enjoying the tea, the Plan will summon its titanium-like-will and direct it toward forestalling any recessionary effects against the economy and your portfolio.

But seriously, the Local 697 Funds staff cannot offer any financial investment advice, it can nevertheless offer some non-financial guidance. To that end we believe the smartest investment a person can make is in that which improves their life and helps them to attain their goals. As it relates to your Annuity Fund, we recommend that you read the Summary Plan Description Book to find out exactly how this Plan works.

We also encourage all participants to attend educational seminars and read books or listen to audiobooks to become more knowledgeable on the subjects that interest them. If investing is of interest to you, a good book to start off with is Benjamin Graham’s “The Intelligent Investor.”

Let us know your thoughts on the book after reading it. - PK

Fascinating question. However, in age of information overload, should not the proper question be “what should we be ignoring?”

If so, we would say people need to ignore that which does not move them forward toward their goals. We would also add that we should strive to focus on and improve upon the things of importance to ourselves, our families and mankind.

The world is moving at a fast pace and it does not appear that it is going to slow down. Which is reason enough to set some time aside to refocus on and understand the things that could potentially impact us personally or as a nation.

Of course, we could be wrong. But, then again, what if we are right? More importantly, and to paraphrase, Lyle Lovett, “What would you be if you didn’t even try”. Where will you be a year from now if you did not try?


Wow. Hegemony! Great use of a SAT word.

This is a very interesting question. Simply put, we don’t know.

With that said, the significance of these bombings should not be underestimated. The fact is that the two bombed refineries produce well over half of the world’s largest oil exporter’s (Saudi Arabia) daily output. As such, the world’s energy supply was attacked. Secondly, these refineries were struck using drones. Drones that cost less than $15,000 a piece. What does all this mean? Well, at the onset these attacks showed the world that it has a fundamental weakness within its energy supply chain. Moreover, it revealed to every radical political fraction on the planet how to make an impact on the cheap.

We will be the first to admit, well actually the second after the people who call that region of the world their home, that the Middle East has been, remains and is a hot geopolitical mess. What is new to the equation is that the United States appears to be no longer willing to “play big-brother” in that region. For anyone born after 1945, this is new territory.

All in all, recent U.S. policies indicate to us that the framework of global security that was created after World War II is changing and changing fast. How Washington responds to these bombings is going to speak volumes about where we and the world are heading.

Then again, we could be wrong.

Thanks for the question. - PK

Hey, let me ask you something - in the last two months, have you noticed that you have been stuck a little less frequently waiting for cargo trains to pass? How about your morning or evening commute, has it been a little easier? We think it has and we think this may be a problem.

So why do we think this? It is a little complicated but stay with us on this one. First, rail deliveries are down by 5.5% by the end of the third quarter. Why? First, the trade war has resulted in less cargo hitting or leaving our shores and fewer carloads needing to be shipped. Secondly, this year’s weather has resulted in a delayed harvest which means less agriculture to ship. Add to that a UAW strike that has caused fewer cars and parts for cars needing to be delivered, and the result is that you have an industry that is now lagging.

Moreover, less cargo also means more competition in the trucking industry. Any teamster will confirm that competition to secure the delivery of fewer goods will push cheaper rates within the trucking industry. Which is exactly what is happening within that business sector across the nation.

Oh, did I mention that the slight upsurge in coal exports that occurred earlier this year has died? And then there is steel. Prices for steel peaked in May of 2018 but have since backed away because demand has dropped. Demand has dropped primarily due to the economic uncertainties created by recent geo-politics. And as all of those who grew up in a region built on steel know, less demand means fewer pieces of steel being shipped and fewer jobs.

It may not be the cherry on top of this economic Sunday, but the fact that new auto sales in the U.S. have declined during the past two years is nothing less than the equivalent of the sprinkles and nuts.

What’s the bottom line? Fewer trucks are traveling the crossroads of America and fewer rail freight cars are going through “the town that came to the tracks”. I don’t know about you, but this occurs to us as a rather decent “bell-weather” of the current state of the economy.

So, the next time you did not get stuck at a crossing, or arrived at your destination quicker than normal, think about how an easier commute may be underscoring a larger issue. An issue that will not only be an eventual problem for the region, but for all Americans.

Then again, you could also just tank up, turn up the tunes, put the windows down, hit the accelerator and enjoy rolling on down the highway.

Either way, we hope that these better commutes don’t last so long. Well, at least not for the reasons stated above.

- PK

This is a doozy of a question. Ok, here we go.

Drugs cost more in the United States than in other countries for several reasons, but three of the biggies are:

  1. Governmental Point of View. Most other counties have a governmental bureau that will not only check the effectiveness of the new drug but also negotiate a suitable price for that drug. The United States has no such governmental agency that does that. Yes, we have the Food and Drug Administration (FDA), but FDA’s sole function is to determine whether or not a drug is safe for human consumption. That’s it. The FDA does not evaluate whether or not new drugs are a marked improvement over what currently exists, nor does it negotiate a fair price to ensure that medication remains affordable for all citizens. The result is that patients in other countries pay about 50% less for the same drug than their American counterparts.
  2. Fragmentation within the Insurance Industry. As stated above, there is no one governmental entity whose job it is to set drug prices. As such, each health insurance company or Plan separately negotiates with drug manufactures the prices it pays. Very few of these insurance carriers or Plans negotiate as a cohesive unit, and the few that do, do not have the number of lives that would have the drug manufactures significantly reduce their pricing. I think we can all agree that negotiating for both the physical and financial wellbeing of 327 million citizens carries a lot more weight with a drug manufacture than negotiating on behalf of five thousand or even five hundred thousand lives.
  3. Patents. The length of a patent naturally reduces the amount of competition. Couple that with the lack of any regulatory oversight as it relates to the effectiveness and price of a new drug and it creates the perfect environment for sizable price increases. Proof of that is the cost of brand name oral drugs and injectable drugs between the years of 2008 and 2016. The cost of the former rose nine percent (9%) annually and the cost of injectable drugs rose fifteen percent (15%) per year during that same time period.

Here are two questions for you to ponder: 1) Did the effectiveness of those drugs increase by nine and fifteen percent year after year? And 2) Was there an equivalent amount of additional research and development performed on these drugs that would warrant such year after year increases? (Answer: No and no.)

There is also the significant cost associated with the marketing of the drug and the cost of dealing with the supply chain pharmacy benefit manager (read “the middle men.”) Regarding the latter, click the following link to see a short yet very informative video on how the pharmacy benefit manager increases the final cost of your drug:

WSJ on drug prices / supply chain

For those of you who will cite innovation as a major factor that increases drug costs, recent studies suggest otherwise. As a matter of research, these studies indicate that rising prices have more to do with the five factors in bold print in the preceding paragraphs than anything else. A great read on this can be found at the following link:


Are you sorry you asked?

Nonetheless, if you watched that video and read that article you will be more informed on the subject than eighty-five percent (85%) of America. If nothing else, you now have the information that will up your Holiday party repartee or political discussions to a new level. Worst case scenario is that you just a read a piece that utilized the word “doozy.” And in the grand scheme of things, that is not so terrible. - PK