Market comment 2020

[admin]

One might keep the following in mind, coming from a Bloomberg newsletter:

Larry Fink had a stark message for a private audience this week: As bad as things have been for corporate America, they’re likely to get worse. The BlackRock CEO said he expects a cascade of bankruptcies, empty planes, cautious consumers and a corporate tax rate as high as 29%. Fink’s words carry particular clout at the moment: He’s been advising President Donald Trump on how to navigate the effects of the coronavirus pandemic, and BlackRock is playing a key role in the Federal Reserve’s efforts to stabilize markets. Others seem similarly fearful. An analysis of earnings calls show corporate America is more scared now than in 2008. Small businesses are worried as well: 52% expect to be out of business within six months, according to a new survey.—Josh Petri

[admin]

In a sealed lab at Columbia University, researchers say they have found a way to destroy coronavirus in the air and thus make it safer to resume using public spaces like subways, theaters, stores, offices, airports, restaurants and even bars. If the scientists have it right, their invention would address one of the most daunting challenges to reopening businesses that depend on crowds of people or to workers getting to their jobs. Even with hand washing and social distancing, the virus is transmitted in at least a portion of cases by floating in the air until someone breathes it in, scientists report.

 A 'Far Light' Solution?

The race to find effective coronavirus treatments has led to an unlikely hero: a 4-year-old Belgian llama named Winter, whose antibodies show promise in blocking the novel coronavirus that causes COVID-19 from infecting cells. Researchers from the University of Texas at Austin, the National Institutes of Health and Ghent University in Belgium began researching llama blood four years ago while looking for antibodies to fight the 2003 SARS virus and the 2012 MERS virus, which are also coronaviruses. And members of the camel family, such as llamas and alpacas, produce two types of antibodies to detect bacteria and viruses: one similar to human antibodies, as well as smaller antibodies called nanobodies that are about a quarter of the size. And these nanobodies are not only easier for scientists to work with, but they can also be nebulized and used in an inhaler.

 A llama named Winter could be the key to fighting the coronavirus - MarketWatch

[admin]

To Giesecke, a mild-mannered veteran World Health Organization virologist, Covid-19 is “a tsunami sweeping the world”, but he notes that it threatens older, sick people above all. He admits that Sweden’s higher-than-average death rate shows it made mistakes. “At first we failed to shield the old and vulnerable.” Its economy has suffered from a collapse in exports, but it has kept itself open and at work, and has not seen the surge in “all-causes excess deaths” of the UK and other high-lockdown states. This surge seems to be increasing due to a partial collapse in other areas of critical health care.

Where I find Sweden’s policy more of a gamble is in its faith in developing a “collective immunity” that will protect it from future outbreaks. Giesecke talks of half of all Swedes probably infected in some degree, and tests suggest that a quarter of people in Stockholm have the virus and will probably – but by no means certainly – be protected against any resurgence. This compares with just 2% of people in Oslo. That divergence in vulnerability can only be tested in the event of a second spike..

 As Europe emerges from lockdown, the question hangs: was Sweden right? | Simon Jenkins | Opinion | The Guardian

[admin]

This paper uses transaction data from a large bank in Scandinavia to estimate the effect of social distancing laws on consumer spending in the COVID-19 pandemic. The analysis exploits a natural experiment to disentangle the effects of the virus and the laws aiming to contain it: Denmark and Sweden were similarly exposed to the pandemic but only Denmark imposed significant restrictions on social and economic activities. We estimate that aggregate spending dropped by around 25 percent in Sweden and, as a result of the shutdown, by 4 additional percentage points in Denmark. This implies that most of the economic contraction is caused by the virus itself and occurs regardless of whether governments mandate social distancing or not. The age gradient in the estimates suggest that social distancing reinforces the virus-induced drop in spending for individuals with low health risk but attenuates it for individuals with high health risk by lowering the overall prevalence of the virus in the society.

 2005.04630.pdf

[admin]

This poll — and others like it — suggest reopening may not solve the US’s economic problems. The picture that emerges from the survey is that while there are a substantial number of people inclined to resume their habitual activities, many of them — and sometimes more of them than not — aren’t yet ready to do so. And that Americans on the whole are not ready to resume life as usual. This would suggest that reopening nonessential businesses may have a limited effect on a struggling economy. As Vox’s Matt Yglesias has explained, the economic crisis is not one induced simply by government shutdowns of nonessential businesses designed to contain Covid-19, but genuine, widespread concern about contracting the coronaviruss

 Poll: Americans are still too worried about Covid-19 to patronize nonessential businesses - Vox

[admin]

So what happened? One big difference that sets Ceredigion apart was that even before it had recorded its first case of Covid-19, it had set up a "homemade" in-house test track and trace system. The man behind it, Barry Rees, the corporate director for Ceredigion Council, is a scientist by training. He believes contact tracing is the only way of "pursuing the disease then rather than following it". Is this the reason for why the county has emerged unscathed? Has a simple contact tracing system saved hundreds of lives, and what does it mean for the population in life after lockdown who haven't yet built up immunity?

 How one British town managed to swerve coronavirus outbreak with simple system - Mirror Online

[admin]

Zetta, a spinout from the Tokyo Institute of Technology, also known as Tokyo Tech, has developed a nonwoven nanofiber material that can be washed repeatedly without losing its ability to protect the wearer from viruses. The startup, based in the western Japanese city of Matsuyama, plans to get into the business of making masks from the high-tech fabric. Zetta will begin by making and marketing sheets designed to be attached to cloth masks. It will then work with a manufacturer to develop high-grade masks for health care workers... 

The nanofiber has a diameter of 0.08 to 0.4 micrometers (millionths of a meter). That is less than one-tenth the size of an N95 respirator's fibers, which are designed to block at least 95% of airborne particles as small as 0.3 micrometers across. The materials used to make N95 masks have fiber diameters of 3 to 5 micrometers. The Z-Mask can block viruses smaller than 0.1 micrometer, such as the new coronavirus using the intermolecular forces that mediate interactions between molecules, including molecular attraction. In an experiment conducted by the government-run New Energy and Industrial Technology Development Organization, or NEDO, the Z-Mask was able to catch nearly 100% of particles roughly the same size as the coronavirus. 

N95 masks generally use static electricity in the fibers to attract particles like a magnet. After several hours of continuous use, the performance of such masks starts to decline because of the effect of the wearer's moist breath. Health care workers typically must replace N95 respirators several times a day, one reason for the shortage of such masks in hospitals. Because the Z-Mask uses molecular attraction to catch viruses, its performance does not deteriorate unless the fiber is broken, according to the company. In an experiment carried out by Zetta, the mask retained its ability to filter out particles even after it was hand-washed 100 times with detergent.

 Tokyo university startup develops coronavirus-catching fabric - Nikkei Asian Review

[admin]

When throngs of tourists and revelers left their homes over Memorial Day weekend, public health experts braced for a surge in coronavirus infections that could force a second round of painful shutdowns. Two weeks later, that surge has hit places like Houston, Phoenix, South Carolina and Missouri. Week-over-week case counts are on the rise in half of all states. Only 16 states and the District of Columbia have seen their total case counts decline for two consecutive weeks. 

But instead of new lockdowns to stop a second spike in cases, states are moving ahead with plans to allow most businesses to reopen, lifting stay-at-home orders and returning to something that resembles normal life. “There is no — zero — discussion of re-tightening any measures to combat this trend. Instead, states are treating this as a one-way trip. That sets us up for a very dangerous fall, but potentially even for a dangerous summer,” said Jeremy Konyndyk, a senior fellow at the Center for Global Development who oversaw the U.S. Agency for International Development’s Office of Foreign Disaster Assistance during the Obama administration.

 US showing signs of retreat in battle against COVID-19 | TheHill

[admin]

One indicator that helps fill this explanatory void is market sentiment. Only this week did bullishness among short-term market timers start to reach a dangerous extreme; contrarians therefore were not particularly surprised by Thursday’s decline. As recently as a week ago, short-term stock market timers were “surprisingly subdued.” Because of that, contrarians were predicting that “the Nasdaq is likely to hit an all-time high.” The Nasdaq Composite COMP, -5.26% did indeed reach a new high earlier this week, closing above the 10,000 level on Wednesday — only to lose 5.3% a day later. Unfortunately for stock investors’ near-term prospects, market-timer sentiment won’t shift back to supporting higher prices until there’s a lot more skepticism. Thursday’s plunge started that process, but there’s a long way to go.

 The real reason for the stock market’s 7% plunge shouldn’t surprise you — and it happens every time - MarketWatch

And here is that indicator:

[admin]

The hope is the waves of stimulus doled out by governments and central banks should eventually buoy economies and spark a revival in hiring. Furloughed or redundant workers would then return to their employers. The risk though is that the pandemic is inflicting a “reallocation shock” in which firms and even entire sectors suffer lasting damage. Lost jobs don’t come back and unemployment stays elevated. That would force workers to retrain or relocate, both of which are hard, and governments to do more than just try to spend their way out of trouble... 

Unfortunately, new research by Bloomberg Economics reckons 30% of U.S. job losses from February to May are the result of a reallocation shock. The analysis -- based on the relationship between hiring, firing, openings and unemployment -- suggests the labor market will initially recover swiftly, but then level off with millions still unemployed...

Other studies carry similar warnings. Research published in May by the Becker Friedman Institute at the University of Chicago estimated 42% of recent layoffs in the U.S. will be permanent.

 U.S. Job Prospects Now: Millions Could Find Jobs Cut for Good - Bloomberg