What caught my eye this week.
Mixed events in the global soap opera saga Coronavirus this week.
The good news is the Prime Minister returned from that episode to tell us we’re probably past the peak of Covid-19.
The focus now is on R, aka the reproduction number. Keep it under ‘1’ and the pandemic is not spreading exponentially.
As a nation our R number is now somewhere under 1. Probably between 0.5 and 0.75, although it may still be higher in some places like (tragically) care homes.
The lower the R the better, obviously, but the question will increasingly be how much more [insert what matters most to you] damage we can take to lower it further?
Getting R down from the 3 to 4.5 level that looked like it might overrun the NHS was a no-brainer. But there’ll be diminishing returns.
Full lockdown – or even just heavy social distancing – has health as well as economic consequences, too. Some people will die earlier because we brought a recession upon ourselves.
Yet equally, every micro-notch higher in R that we accept means someone somewhere will die before their time from Covid-19.
That’s the equation for the upcoming weeks.
There are no easy answers. Perhaps there was a more promising hypothesis, but the past seven days looks to have done for it.
I’ve been mildly obsessed with Covid-19 since January (and mildly infected, I believe, in early March). I’ve ridden a rollercoaster from being precociously concerned to evasive action to believing things might not be as bad as was thought and now I’m halfway back again.
Long story short1 a series of intuitions (or guesses, if you prefer) informed by endless reading about Covid-19 convinced me the virus was spreading far faster in the UK than was generally thought likely.
All the experts knew the virus was spreading more quickly than reported cases, of course. But I (no expert) believed it was circulating faster again.
That was a comforting thesis because it suggested (1) the virus wasn’t as deadly as even the more middling predictions suggested and (2) we might reach some level of herd immunity sooner rather than later.
It’s long been clear this virus has a Great White Shark’s nose for the elderly and vulnerable, and I’ve been frustrated we either couldn’t or didn’t shield them better.
But in a super-infectious scenario, for the vast majority of us Covid-19 would be a very mild infection, mostly asymptomatic.
And by the time full lockdown was called, I felt it was possible a large number of us in London at least had already had it.
That proved to be right… a bit.
Peak deaths for the virus occurred in early April. Working backwards gets you to peak infections towards the end of the second week of March.
But how many? For that we can first consider deaths.
It’s hard to unpick the roughly 30,000 or so excess deaths we’ve seen so far in England and Wales in 2020.
Most will be due to Covid-19, but some may have been attributed to the virus incorrectly. For example, there were fewer heart disease related deaths in March. Perhaps some were blamed on Covid-19?
But just crudely guessing 30,000 and assuming an infection fatality rate (IFR) of 1%, that gets you to three million or so infected, with peak infection probably occurring in or around the period of voluntary lockdown, but just before mandated lockdown.
So overall millions have been infected – but not enough to be good news.
Unless… the IFR was much less than 1%, because far more people had been infected?
Start spreading the blues
That left antibody testing carrying the baby.
The hope was antibody testing would reveal that in areas of rampant morbidity to the coronavirus – such as Italy, London, and New York – many, MANY more people had been infected.
If this was true then you could indeed pull down the IFR.
Well, over the past seven days we got the first large scale data – from New York City and Stockholm – and it’s probably not good enough.
The New York City testing is the most promising, implying 25% of its citizens have had Covid-19. However, while that shocked the media it was much lower than I’d been hoping for.
Indeed as reader @Vanguardfan points out, 25% implies an on-consensus IFR of around 1%, if you take into account the number of presumed deaths to Covid-19 in New York City.
And 1% is no comfort if you apply it to the UK’s population of 67 million.
Now, not every last citizen will need to throw the viral dice – we should get some natural resistance to the virus on a population level, before everyone has had it.
However if we assume the chunky herd immunity thresholds that most experts think we’d need to see – at least 50%, possibly more like 70+% – even New York is far from having ‘earned’ an inherent resistance through its deathly exposure2.
This is disappointing to me, though it won’t be unexpected to the experts. It looks like they called it.
Much is still unknown about this virus. For every potential fact I find in early research about it, you can retort with another. Anyone waiting for scientific confidence (proof, for shorthand) better have a lot of series lined up on Netflix.
The huge list of Covid-19 links below (perhaps 20% of what I’ve read this week) gives just a taster.
It’s possible that amid this uncertainty there may be other off-ramps from the bad (though not worst-case) scenario:
- Maybe a large number of people can kill the virus with their immune system so easily that they don’t develop antibodies.
- Or maybe it’s spread much more widely among the most vulnerable parts of society, which is terrible news right now, but may have elevated the fatality rate and hopefully left the survivors with some resistance.
- Summer could well curb the spread anyway, which at the least should give us time to better prepare for any resurgence.
- Maybe the herd immunity threshold will prove lower than presupposed.
- Or more likely it may turn out that just a few key social distancing actions – no handshakes, avoiding crowds indoors, and washing your hands – will do 90% of the R-lowering. (The Swedish approach.)
- Kids may not be infectious, too, taking them out of the equation altogether.
I have reasons for making all those suggestions, based on my own reading.
But the truth is there’s an equally long list of reasons to be pessimistic.
As Freddie Sayers concludes in a sober piece on UnHerd that pits Sweden’s top epidemiologist against our own leading figure:
…it’s time to stop pretending that our response to this threat is simply a scientific question, or even an easy moral choice between right and wrong.
It’s a question of what sort of world we want to live in, and at what cost.
An ‘ell of a recession
Bottom line: I no longer hope for a very quick exit from this nightmare, unless perhaps R collapses extremely rapidly in the next few weeks and we can go back to trying test and tracing.
And this probably kicks the V-shaped recovery into the long grass. The drag from physical distancing and other anti-viral precautions alone could knock a few percentage points off GDP, even if we go back to semi-normal.
What are football matches, trade conferences, pubs, easy air travel, and the Glastonbury Festival worth to GDP, to name but a few lost causes?
Even if fatal Covid-19 cases do plunge and more normality can be reinstated, for as long as outbreaks flare up it may be hard to persuade some people to take their chances.
We’ve been bombarded with deathly warnings about the virus and kept under house arrest for a couple of months on its account. Dinner and a show on Friday night? Many may continue to Deliveroo and chill instead.
And while a cocktail of better treatments (drugs and regimens) will probably be assembled by the end of the year, that’s, well, the end of the year.
So L-shaped recovery it is. Probably what’s priced in by the global stock markets, anyway.
You see, a lot of people are talking about market mania after the quick bounce from the March lows.
But this is mostly a US market thing. And in the US market it’s mostly a tech thing. And of the tech companies, it’s mostly a bunch of cloud giants who couldn’t have come up with a better driver of demand than ‘shelter in place’. Strong demand now, plus their valuations turn on the years of prodigious earnings they’re expected to make long after Covid-19.
No, if you want a market that’s geared to the global economy, look to the UK’s FTSE 100. Its 2020 performance (red) already looks like an ‘L’, versus the (blue) S&P 500’s squint a bit ‘V’:
I’ve always been more worried about the financial impact of global lockdown than most, even while I was slightly more sanguine about the virus.
And now I see economy-dinging restrictions continuing.
So I’ve a horrible feeling that while the UK pandemic probably is past its peak, with the economy it’s like we’re back when people were gasping at footage of Italians stuck inside, hardly realizing the sort of misery we’d soon face.
Note: Fed up with virus chat? I’m planning to drastically reduce the number of Covid-19 links here next week. We’ve just hit that peak, too!
Do US Treasury bonds protect UK investors better than gilts? – Monevator
From the archive-ator: Reminiscences of a stock market wallflower – Monevator
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!3
Sales of almost 400,000 homes stalled due to lockdown, says Zoopla – Guardian
Millions face ‘financial cliff edge’ due to Covid-19 crisis, says Citizens Advice – Guardian
Nationwide: Pre-pandemic house prices rose 3.7% – Financial Reporter
British manufacturers record worst slump since records began 30 years ago – ThisIsMoney
Royal Dutch Shell cuts its dividend for the first time since 1945 – Guardian
Virtual rate cut forces Nintendo Animal Crossing gamers into riskier assets [Free to read] – FT
The US has now seen 30 million people file for unemployment – NPRGood letter to investment partners on the current Covid-19 reality [PDF] – Mary Meeker
Products and services
Treasury to allow first-time buyers to access Lifetime ISAs without penalty – ThisIsMoney
Investment platform account openings surge, despite coronavirus uncertainty – Which?
Tui cancels all beach holidays until June; a million customers affected – Guardian
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
How to apply for a three-month mortgage payment holiday – Which?
Homes on a hillside for sale [Gallery] – Guardian
Comment and opinion
Three points to note on active funds and bear markets – Evidence-based Investor
Less is more – Humble Dollar
A defensive move: Looking at gilts – DIY Investor
What was the catalyst for the market rising? – The Irrelevant Investor
Talk is cheap – Of Dollars and Data
Quick look at what a bear market does to a real-life financial plan – Where Eagles Fear To Perch
But what if we’re wrong and the market never bounces back? – Abraham Okusanya
Why I’m not invested in gold – Get Rich Slowly
When you have no idea what happens next – Morgan Housel
Why value died – A Wealth of Common Sense
Naughty corner: Active antics
Terry Smith: If you must do dividends, look to family-owned firms – Portfolio Advisor
Three burning questions for Warren Buffett at tomorrow’s Berkshire event – Morningstar
This market-timing model just flashed a bullish four-year outlook for stocks – MarketWatch
Musings on misadventure and market madness – Simple Living in Somerset
Timing, luck, and surviving – Fred Wilson
[In email? Visit Monevator if you can’t see a YouTube lecture from CMO Chris Witty]
Self-care in a coronacrisis
This is why you can’t remember yesterday – Medium
Why you should give up on your social life when you’re in a pandemic – Slate
People are having less sex in lockdown – BBC
Feelin’ Groovy – Humble Dollar
Nobody knows what is going on – Mark Manson
All about those antibodies
Antibody testing: A user’s guide to the immune system [Great primer] – The Atlantic
It usually takes about 13 days for antibodies to show up in the blood [Research] – Nature
25% of NYC residents test positive for Covid-19 [Sadly, result supports a c.1% IFR] – Newsweek
Can antibody tests tell if you’re immune to Covid-19? – LiveScience
The false hope of antibody tests – The Atlantic
What policymakers need to know about Covid-19 protective immunity – Lancet
The rest of Covid-19 cornered
Social distancing reduces ‘overshoot’ on the way to herd immunity – Carl Bergstrom via Twitter
Why the Coronavirus pandemic is so confusing [Primer] – The Atlantic
Which epidemiologist do you believe? [Sweden versus UK, with videos] – Unherd
Experts fail to find a single case of children passing virus to adults – The Age
Social-distancing at airports is ‘impossible’, says Heathrow boss – BBC
What drug trials tell us so far about the anti-viral treatment remdisivir – Science
US germ warfare lab creates test for pre-infectious Covid-19 carriers – Guardian
How does Britain compare with other countries? [It’s too soon] – Guardian
Covid-19 deaths twice as high in poorest areas in England and Wales – Guardian
Low Covid-19 death toll raises hopes Africa may be spared worst [Free to read] – FT
AI models suggest that masks can ‘significantly’ reduce the spread of coronavirus – Venture Beat
Masks & emasculation: Why some men refuse to take safety precautions – Scientific American
A cautionary tale from San Francisco’s re-opening in the 1918 flu pandemic – NBC News
Many US prisoners test positive in four US jails; reportedly few with symptoms… [to-date] – Reuters
…although later stories talked about deaths [Seemingly earlier in breakout?] – NBC News
Sweden had no lockdown, but its economy is expected to suffer as badly as neighbours – CNBC
What is the hidden health cost of coronavirus? – BBC
How Italy became ground zero for Europe’s coronavirus crisis [Deep dive, blames business] – CNBC
Coronavirus & Brexit: the connections and their consequences – Chris Grey
Has Sweden’s coronavirus strategy played into the hands of nationalists? – Guardian
Kindle book bargains
The Basic Laws of Human Stupidity by Carlo Cipolla – £0.99 on Kindle
What You Do Is Who You Are: How to Create Your Business Culture by Ben Horowitz – £1.99 on Kindle
Money: A User’s Guide by Laura Whateley – £0.99 on Kindle
The Hating Game [‘The very best book to self-isolate with’] by Sally Thorne – £0.99 on Kindle
Off our beat
Meteorologists say 2020 on course to be hottest year since records began – Guardian
Microsoft Word now flags double spaces as errors, ending the great space debate – The Verge
Pentagon releases three UFO videos taken by US navy pilots – Guardian
“Even the darkest night will end and the sun will rise.”
–Victor Hugo, Les Misérables
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