The Fog Of COVID-19 Is Lifting
US deaths match Diamond Princess cruise ship cases, which Stanford University professor John Ioannidis published in March...that is that 99% of those who contract the virus come out okay
forbes.com
The Fog Of COVID-19 Is Lifting
Kenneth Rapoza Senior Contributor
I write about business and investing in emerging markets.
The fog of COVID-19, the deadly disease caused by the new SARS coronavirus, is starting to lift.
States are slowly opening. Georgia seems to the chosen petri dish by the press as the state that will set an example — for better or for worse — of opening up too soon, or just right. Illinois, meanwhile, is going to be closed until Memorial Day. Californians have had enough, tired of hearing about social distancing and watching their celebrities sing and tweet homages to medical workers, have opted to take their lives in their own hands and went to the beach in droves this weekend.
In Europe, economies are slowly letting people out of their homes again and some businesses are allowed to be open, with restrictions.
In China, crowds are returning, but everyone is still in face masks in public.
Although the number of dead has surged past 50,000 and is likely to hit the 60,000 mark this week, Stanford University professor John Ioannidis’ findings in Santa Clara, California match up with his previous work on Diamond Princess cruise ship cases, which he published in March. And that is that 99% of those who contract the virus come out okay.
The article talks about the Santa Clara lab test study of random people, which implied that the fatality rate for COVID-19 in the U.S. could potentially range between 0.02% to 1%.
What’s more, in comparing recent data from New York and Italy, he and his wife, an infectious-disease specialist at Stanford, found "that people under 65 without underlying conditions accounted for only 0.7% of coronavirus deaths in Italy and 1.8% in New York City."
New York has been the epicenter of the viral spread, followed by southern California. Of the top 10 counties with the highest caseload of infected persons, New York has seven of them. The other three are in Chicago, Detroit and Los Angeles, based on Johns Hopkins University data.
Ioannidis told the WSJ that, "Compared to almost any other cause of disease that I can think of, it’s really sparing young people."
If the patterns holds, models such as the Institute for Health Metrics and Evaluation’s "Murray Model" are likely underestimating the spread of infection (likely due to its asymptomatic nature among large sections of the population) and its severity in those under 65 and without co-morbidities.
The data gives policy makers something more to chew on.
Ioannidis is not anti-quarantine, or anti-mask. He’s not wearing MAGA hats and attending rallies waving American flags. He believes in science. He believes the Earth is round. He says the initial decisions to go into economic lockdown were "fully justified."
An Earnings Surprise?
What matters to investors at the moment is the pace at which the global economy can re-open without risking life and limb to get there.
Bloomberg data late last week pointed out that its aggregate indicator for China is showing a stalled economy in April. That make sense considering China’s main trading partners — Europe and the U.S. — all caught the coronavirus first discovered in Wuhan in December.
“China households have been shaken in their sense of security and will take time to normalize, especially among younger households,” thinks Sebastien Galy, senior macro strategist for Nordea Asset Management. He is still bullish on a China-led rebound, driven by pent up middle class demand and investments in IT. “We expect a mix of a U and a V shaped recovery in China,” he says.
Treasury Secretary Steve Mnuchin said on Fox News Sunday that the economy would be ready to rip at some point this summer.
“I think as we begin to reopen the economy in May and June you’re going to see the economy really bounce back in July, August, September,” he said. “And we are putting in an unprecedented amount of fiscal relief into the economy. You’re seeing trillions of dollars that’s making its way into the economy, and I think this is going to have a significant impact.”
Meanwhile, U.S. earnings season is underway and just around 10% of companies listed on the S&P 500 have reported their first quarter numbers. In terms of earnings, the percentage of companies reporting actual earnings per share above estimates is below the 5-year average. Some 66% of companies beat their EPS estimate, based on Factset data.
In terms of sales, 70% of companies are reporting actual sales above estimates and that is above the 5-year average, suggesting that the American consumer started the year off strong.
In aggregate, companies are reporting sales that are 1.2% above estimates, which is also above the 5-year average.
So far, first quarter earnings are down 14.5%. If that holds, it will mark the largest year-over-year decline in earnings for the index since the third quarter of 2009, the low in the Great Financial Crisis, when earnings fell by an average of 15.7%.
“There’s going to be more volatility for weeks and months to come especially as we get more economic data, and more information about the disease,” says Elizabeth Evans, managing partner of Evans May Wealth.
“We likely saw the bottom of the equity market this year, but all that hinges on the assumptions we don’t get a second round of shutdowns in states that are starting to re-open,” she says, adding.
“There’s are a lot of things to be optimistic about. The pandemic is stabilizing here. I’m optimistic about biotech companies. I’m optimistic about the government working with state and local leaders, and with industry leaders to get the best input on how to end quarantines safely.” |
