A crowded 14er peak in Colorado during the Coronavirus pandemic

 

We’re now entering an experiment.  States are beginning to reopen, after shutting down all but essential functions for several weeks.

It’s not clear that some of the states which are opening have meet the criteria health experts maintain are essential to avoid a second wave of infections.

This morning on National Public Radio, Scott Gottlieb, former head of the Food and Drug Administration, and Andy Slavitt, who led the Centers for Medicare and Medicaid Services, spoke about the reopening process.  They helped draft the guidance that was given to the federal government.  That guidance suggested communities need to have a controllable number of cases, adequate testing, and contact tracing.  They said that the Trump Administration and governors have not been following this guidance.   Also, we should be seeing a steady decline in new cases before reopening, and this is not happening.

In places such as Germany and South Korea, we’re observing that jumping the gun on this process leads to unfortunate flare-ups.  So, governors would be wise to proceed with great caution.

The Formal Name for Our Nemesis
We’ve used many terms to describe the virus that has wreaked havoc on the planet.  The new, official term for this virus is SARS-CoV-2.  We prefer the less formal descriptions.  But now you know.

COVID-19 Numbers
Globally, across 187 countries, there are over 4.1 million confirmed cases and over 283,000 deaths.  In the US, over 1.3 million have been infected and nearly 80,00 have perished.

White House Coronavirus Task Force
President Trump reversed himself last week and indicated that the White House Coronavirus Task Force would remain in place.  However, its efforts would be re-directed to guiding the re-opening of America after many weeks of hibernation.  The President indicated he was surprised by the popularity of the task force.

Administration Shelves CDC Guidelines
The Trump administration decided to not release the CDC’s guidelines on how various venues (including child care facilities, schools and camps, religious groups, employers with vulnerable workers, restaurants and bars, and mass transit operations) should resume operations to prevent the spread of the coronavirus.  Apparently, the White House Task Force found the 17-page document “overly prescriptive.”

The White House provided its own guidelines for reopening.  However, the President has deferred to governors to decide when and how they open.

Health Experts in Quarantine
Several key figures in the fight against the novel coronavirus are in some state of quarantine, because they were exposed to individuals who have tested positive.  Dr. Robert Redfield, Director of the Centers for Disease Control and Prevention (CDC) and Dr. Stephen Han, Commissioner of the Food and Drug Administration (FDA), are both in a 14-day self-quarantine.  In addition, Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, has entered a “modified” quarantine, because he was exposed to a White House staffer who tested positive for the virus.

The White House itself has had two infections among its staff.  Katie Miller, press secretary for Vice President Pence, tested positive.  So did a member of the US Navy who serves as one of the President’s personal valets.

Nonetheless, the President and Vice President continue to demonstrate poor leadership, as they fail to adhere to the health care guidance from the very agencies that advise the White House Task Force.

Antibody Tests Unreliable
There are 160 antibody tests in the market and most of them are unreliable.  You may recall that an antibody test is designed to determine whether a person has been previously infected by the novel coronavirus.  We need this information to determine who has been sick and recovered and who may have some level of immunity.

Unfortunately, the market for these tests is not well-regulated.  The US FDA has issued warnings to the public about using unproven tests.  The FDA has only approved 12 antibody tests for emergency use, as of this writing.

There does appear to be one highly reliable test, produced by Roche Holdings AG.  It is 100% accurate at picking up COVD-19 antibodies and 99.8% accurate at ruling them out.   So, if you’re going to get tested, use that one.

It’s not clear that those who have antibodies are immune from infection.  If those with antibodies were proven to be immune, it’s not known how long such immunity would last.

Round Four on Hold
Another round of economic relief for the country remains in limbo, because of partisan division.  The House has indicated it would like another $750 billion for (among many things) state and local governments, more direct support for individuals and small business, increased testing and resources for front-line worker safety.

The Senate, led by Majority Leader McConnell has a “red line” in place, insisting that any new package include liability protection for businesses that could be impacted (i.e. sued) by workers contracting the novel coronavirus in the workplace.  The Majority Leader has also indicated that Republicans are not interested in “bailing out” states that have mismanaged their finances for years, long before the arrival of COVID-19.

President Trump has expressed his preference for payroll tax relief and for a massive infrastructure spending package.

The parties are at an impasse and we should not expect to see a deal, if there is one, until after Memorial Day.

Unemployment Climbs
An additional 3.2 million Americans filed state unemployment claims during the week ending May 1.  The total for the previous 7 weeks is 33.5 million.  Currently 22.7 million works are receiving unemployment benefits, 15.5% of the workforce.

The actual level of unemployment may be much higher, because the Department of Labor misclassified some workers in previous reports.   The true number is believed to be 23.5%.  For perspective, during the Great Depression 25% of the labor force was unemployed.

The good news is that the numbers of people filing for unemployment benefits has been declining each week.  It appears the damage to the workforce is beginning to ease.  Also, many of the workers who filed for unemployment will be brought back to work once their employers are allowed to resume operations.

The Markets
The Dow Jones Industrial Average ended Friday up 456 points, or 1.92%.  The S&P 500 Index rose 49 points, or 1.69%.   For the week, the Dow added 2.6% and the S&P 500 Index rose 3.5%.  Both indices remain in negative territory year-to-date.  However, the tech-heavy Nasdaq Index is actually positive for the year.

Gratitude
Several of you responded to our suggestion about expressing gratitude in the face of these trying times.  It is one of the best ways to boost your emotional health.

We are grateful for many things, including:

  • The brave women and men who toil in fields, factories and stores to keep us fed.
  • The brilliant scientists who are searching for treatments and a vaccine.
  • The vast majority of Americans who are truly following the guidelines offered by healthy policy experts. We are all in this together and everyone needs to do their part.

Springwater’s Correspondence
As we mentioned last week, beginning May 1 we transitioned to writing to you every other week day (i.e. Monday, Wednesday and Friday).  We’ll maintain this frequency through the current month and then reevaluate, based on the pandemic and its impact on the economy and the markets.

We continue to welcome your questions and comments.

Keep the faith, be safe and stay healthy.

PLEASE SEE important disclosure information at www.springwaterwealth.com/blog-disclosure/.