Governor Jay Inslee is working with other governors on a plan to reopen their states

The Markets
Yesterday, the Dow Jones Industrial Average and the S&P 500 Index both closed down slightly, by 1.4% and 1.0%, respectively. Nevertheless, the major indices are up nearly 30% from their most recent lows in mid March. This is good news for investors, who experienced one of the most precipitous market declines in history in the first quarter of the year.

However, as we discussed yesterday, we think the stock market and investors may be somewhat overly optimistic, as the conditions required for our economy to fully re-open – mass testing, contact tracing and effective quarantining for the infected – are still not in place.

Big Tech to the Rescue?
At the end of last week, two of America’s iconic companies announced a cooperation for an ambitious emergency project. Google and Apple are working together on an automated contact tracing system.

How does it work? In a nutshell, the system lets your smartphone make a record of other smartphones that have been nearby. As long as the system is running, your phone will periodically send out a small, unique, and anonymous code, based on your phone’s unique identifier. Other phones in range will receive your phone’s code and record it, building up a log of the codes they’ve received and when they received them.

When someone using the system receives a positive coronavirus diagnosis, they can choose to submit their phone’s unique ID code to a central database. When your phone checks back with that database, it runs a local scan to see whether any of the codes in its log match the IDs in the database. If there’s a match, you get an alert on your phone saying you’ve been exposed.

Will it work? Well, similar projects have been successful in Singapore and other countries, but it remains to be seen whether US public health agencies would be able to manage such a project, even with the assistance of two of the world’s largest and most sophisticated tech companies.

Because it’s coming from Apple and Google, some of this functionality will also eventually be built in to Android and iPhones at the operating system level. That makes it potentially available to more than three billion phones around the world – something that otherwise wouldn’t be possible.

Who Can Decide to Reopen the Economy?
On Monday, two groups of governors announced that they were planning for the eventual relaxation of the social and economic restrictions related to the pandemic. Seven states in the Northeast – New Jersey, Connecticut, Pennsylvania, Delaware, Massachusetts and Rhode Island – will begin working on a plan for when to reopen businesses and schools, and how quickly to allow people to return to work safely.

Shortly thereafter, the governors of California, Oregon and Washington – three states that were among the first to experience the effects of the pandemic before it erupted on the East Coast – announced a similar agreement.

By moving ahead on their own, the thirteen governors were effectively disregarding the White House, just as the President was trying to assert his control over the question of when and how to reopen the country and the economy.

In what can only be described as surreal, the President spent the vast majority of his daily Coronavirus Taskforce Briefing yesterday arguing with reporters about his authority to do so – which he described as “total”, despite not having any legal or constitutional basis for this claim.

Looking Forward
In addition to the good news about the Google and Apple partnership, indicators in New York continue to improve. Although the death toll in the state passed 10,000 and it remains the epicenter for the outbreak in the US, the rate of hospitalizations has slowed, and Monday’s fatalities were the lowest in a week.

We leave you with the words of Governor Cuomo of New York, who, when asked if the improving numbers would encourage people to disregard warnings about social distancing and other containment efforts, said, “Stay the course, stay the course, it’s working, stay the course, stay inside, take precautions”.

Keep the faith, be safe and stay healthy.

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