Gilead’s remdesivir treats the novel coronavirus
As we turn the page on another month, have you noticed that we’re entering a new phase in this global pandemic?
The panic to deal with the novel coronavirus, as a threat to health and life, seems to have dissipated. The curve has rolled and we’re sixteen days on the other side of the peak. The health care system has gained some level of control over the virus outbreak. Health policy administrators are rolling out various measures to further contain it and prevent another spike in infections. Yet, we continue to wait on increased testing, a contact tracing system, treatments and a vaccine.
We’ve become somewhat accustomed to spending most of our time at home. We’ve developed new routines to maintain our physical and mental health. When we do venture out, we’ve adapted to the new physical distancing measures we find wherever we go. We know that we’ll soon be required to wear face masks in public.
Some states are slowly beginning to relax the strict measures which were invoked to contain this highly contagious virus. Some businesses are reopening, and workers in certain industries are being allowed to return to work. Some public places in some states are becoming accessible.
COVID-19 Numbers
Globally, across 187 countries, there have been over 3.3 million confirmed cases and nearly 234,000 deaths. In the US, nearly 1.1 million have been infected and almost 64,000 have perished.
No More White House Briefings
It appears that President Trump has abandoned the daily press briefings which featured the White House Coronavirus Task Force. This is another example of how the pace of the pandemic is changing. For weeks the team assembled to confront Covid-19 provided daily updates on the massive effort, which spanned virtually every department of the government.
The Markets
The Dow Jones Industrial Average ended yesterday down 288 points, or 1.17%. The S&P 500 Index was down 27 points, or 0.92%. The Dow fell 13% in March, but rose 13.7 % in April. The S&P 500 Index fell 12.5% in March, and rose 15.3 % in April.
April produced of the strongest stock market performances in history. But it followed a steep decline that began in late February as the virus went from a distant concern to a full-blown pandemic. The market bottomed out on March 25. The Dow is still down 14.7% year-to-date and the S&P 500 Index is down 9.6% for the year.
Employment
Today is International Worker’s Day and, as is the annual tradition, millions of workers across the globe will be protesting their pay and working conditions. However, the protests this year will undoubtedly be stronger, because millions of laborers are required to work in conditions that have changed from unsafe to life-threatening. Workers in fields and factories around the world cannot protect themselves from the reach of the virus. Many of these workers put food on our tables.
Never before have so many jobs either been lost or put in jeopardy. Yesterday, the Labor Department released numbers for the week of April 24. Another 3.8 million Americans filed for state unemployment benefits. This brings the six-week total to 30.8 million.
Globally, the United Nations projects that over 300 million will lose their jobs in the second quarter of this year. In addition, the UN believes another 1.6 billion workers in the world’s “informal economy” could lose their jobs. There is no precedent for this loss of employment.
The Economy
As we mentioned earlier this week, US gross national product (GDP) fell by 4.8% (annualized) in the second quarter. IHS Markit Research projects that GDP will fall by 37% in the second quarter. If so, it will be the biggest drop since 1947, as the US economy down-shifted after World War II.
As we noted previously, the consumer drives the American economy. Personal consumption fell by 7.6% in the first quarter. Spending across all major categories fell. Saving, however, increased from 7.6% in the fourth quarter of 2019 to 9.6% in the first quarter of this year.
Federal Reserve Monetary Intervention
The Federal Reserve has taken unprecedented action to shore up the US economy. It reduced interest rates twice in March, bringing them to just above zero (0-0.25%). The Fed has also injected $2 trillion into the economy by purchasing Treasury bonds and mortgage securities. It has announced nine lending programs to be backed with another $2 trillion. The Fed’s balance sheet is at a record $6.6 trillion.
Nonetheless, Fed Chairman Jerome Powell urged Congress this week to deliver more to support the US economy. Powell brushed aside concerns about the scale of the federal government’s intervention and has essentially said that the Federal Reserve and the Congress need to do whatever is required to support the economy.
Federal Fiscal Emergency Funding
Congress has provided several relief packages. The first phase was the Coronavirus Preparedness and Response Supplemental Appropriations Act, passed on March 6, 2020. It provided $8.3 billion in emergency funding to combat the spread of the coronavirus and counter the pandemic in America.
The second phase was the Families First Coronavirus Response Act, enacted March 18, 2020. It provided $104 billion for paid sick leave and unemployment benefits for workers and families.
The third phase was the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed by the President on March 27, 2020. It provides $2 trillion for individuals, public health, state and local governments, small business and large corporations.
We will likely see additional action by Congress to rescue states and local governments, which have been hard hit by Covid-19. The Trump Administration is also lobbying Congress for a massive infrastructure package that will help rebuild roads, bridges and highways.
A Promising Drug
The recent news about the use of remdesivir as a treatment for Covid-19 was well-received by health experts and the markets. The drug, which is produced by Gilead Sciences, appears to reduce the number of days that those with the virus spend in the hospital. While the drug seems to be helpful, we really need more effective treatment and, of course, a vaccine.
Testing Remains Disorganized
We continue to address the subject of testing, because it is the issue. Until we can test large numbers of our population, we won’t be able to identify those who have the coronavirus. We’re beginning to understand that our existing testing capacity is underutilized, because it is disorganized. Testing is done in private, public and academic facilities. The federal government needs to step in. The President should use the Defense Production Act to organize, coordinate and direct testing.
We Remain Optimistic
The pace of the pandemic has shifted from a sprint to a marathon. We expect that the race will be long and hard on many levels. But we remain highly optimistic that America will win. We will corral this virus. We will create a society in which we are safe. The economy will recover. The stock market will bounce back.
Springwater’s Correspondence
We have been writing to you every day throughout the work week since this crisis began many weeks ago. Many of you have told us that you value these communications. We appreciate your feedback.
Beginning today, May 1, we’re transitioning to an every-other-work day schedule. We will, of course, write more frequently if the pace of the pandemic accelerates again, or if we feel a need to correspond more urgently.
Keep the faith, be safe and stay healthy.
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