If you’re wondering how it’s going in the US when it comes to containing COVID-19, Chicago Mayor Lori Lightfoot summed it up in a statement on Thursday.
“This is literally a matter of life or death,” she said, in the course of issuing a stay-at-home advisory effective from Monday at 6 AM. “We all have to step up and do our part.”
For Chicagoans, that means only leaving home for work, school, medical treatment, or food. Gatherings at home with people from outside the household are discouraged. Non-essential, out-of-state travel is a bad idea. Traditional Thanksgiving celebrations should be canceled, the city said, noting that “residents are strongly advised to adhere” to the new restrictions.
“We feel like the surge that we’re experiencing now is the same or worse than the spring,” Lightfoot remarked. “We’ve learned a tremendous amount since then.”
Statewide, Illinois reported a record number of cases for a third straight day. Hospitalizations in the state hit an all-time high of 5,258.
That’s emblematic of what’s taking place across the country, which is recording an average of around 120,000 cases per day. While vaccine optimism boosted markets earlier this week, and will likely do so again in the very near future, concerns about the acute nature of the situation weighed on sentiment Thursday. US equities fell sharply. The Russell 2000, one of the big winners on Monday and Tuesday, fell the most since October.
Caseloads rose in New York, while South Dakota reported a record number of infections.
Things are getting acrimonious. “This one’s a little bit personal because the governor of South Dakota has taken to traveling to other states and criticizing others,” Minnesota Governor Tim Walz said, in irritated remarks aimed at Kristi Noem.
In New Jersey, Governor Phil Murphy has had enough of citizens refusing to wear masks because it’s inconvenient. “You know what’s really uncomfortable and annoying?,” Murphy wondered, while speaking at a press conference in Trenton. “When you die.”
That’s one way to get the point across.
I suppose it was inevitable that markets would give some back after a furious run. You could roll out any number of clichés about “reality setting in.” As you can imagine, Treasurys were bid, with yields richer by up to 10bps out the curve. Supply (i.e., the 30-year sale) didn’t matter. The 2s10s power flattened. The red bar in the figure (below) is Monday’s selloff. The green is Thursday’s rally.
“This week offers a unique perspective on investors’ interpretation of these dueling timelines insofar as not only has the vaccine information become available, but there has also been more significant progress toward pandemic restrictions,” BMO’s Ian Lyngen said. “Admittedly, the take away from [Thursday’s] price action would lead one to assume the present situation outweighs future expectations.”
Indeed. This came even as Anthony Fauci expressed optimism about the vaccine. “Certainly it’s not going to be a pandemic for a lot longer, because I believe the vaccines are going to turn that around,” Fauci said, at a Chatham House event. “Vaccines will help us. What we’ve got to do is just hang on and continue to double down on the public health measures.”
Meanwhile, stimulus hopes for the lame duck session faded further. Donald Trump has reportedly thrown in the towel on more virus relief, leaving it to lawmakers to argue, while he fights to compel the courts to overturn the election results.
Trump did manage to put out an executive order Thursday banning US investments in Chinese companies owned or operated by the PLA. “Key to the development of the PRC’s military, intelligence, and other security apparatuses is the country’s large, ostensibly private economy,” the order reads. “Through the national strategy of Military-Civil Fusion, the PRC increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities,” it goes on to say. “Those companies, though remaining ostensibly private and civilian, directly support the PRC’s military, intelligence, and security apparatuses and aid in their development and modernization.”
How that’s much different from what goes on in the US is anyone’s guess, but that’s a cynical take. As ever, the administration does have valid concerns, hypocrisy notwithstanding. This is likely to weigh on Hikvision, China Telecom, and China Mobile, among others.
Separately, the Commerce Department won’t enforce a shutdown of TikTok. The problem, according to The Wall Street Journal, is a preliminary injunction issued by a judge in Philadelphia.
“The department’s action delays implementation of a regulation, set to take effect Thursday, that would have barred US companies such as Apple from offering TikTok as a mobile app, and companies including Amazon and Alphabet from offering web-hosting service for TikTok–moves that would effectively make it inoperable,” the Journal wrote.
One can’t help but wonder if that isn’t just another example of the administration effectively powering down on the slow realization that, come January 20, it’s over — that none of this stuff matters anymore.
On the bright side, Disney beat after the bell Thursday. Parks, experiences and consumer products revenue plunged 61% YoY, the company said. But, streaming was strong. If you can’t go to an actual amusement park due to COVID restrictions, at least you can binge-watch Marvel movies at home.
And that’s just as good, right? As Martin Scorsese put it last year, Marvel films are just “theme parks.”
Of course, Thanksgiving will not be cancelled by 50% of America.
My team estimates (1SD) that if you get 10 Americans into a room on Thanksgiving, there is a 55-70% probability that at least one of them is actively contagious. Testing doesn’t capture the broad extent of the coronavirus. Full stop.
So here’s the pessimistic, optimistic case: Thanksgiving is perfectly designed to transmit the virus. Think SuperDuperSpreader. Many Americans will gather. Let’s call them the “Thanksgiving Herd.” Many other Americans will celebrate just within their household, or will stay at home. That’s me, and hopefully you. We are the “No Thanks Herd.” I’m using the word “herd” purposely, to provoke you into thinking about the charged concept of “herd immunity.” But my explanation here is different from how you’ve likely read about herd immunity. I’m not advocating for herd immunity as a public health approach! Please don’t send me a link about Sweden.
We all want to predict the future, right? So I will simply try to PREDICT how I think the next few months will play out…a very pessimistic case but also a much more aggressive recovery timeline than is consensus.
Now, there are two herds in this explanation, remember. Stop thinking about the population as one herd. We are, of course, one herd…but we are made of many, many, many groups–all the way down to the family/friend level.
But let’s just say there are two herds. “Thanksgiving” and “No Thanks.” Some generalizations about them:
“No-Thanks Herd”–We aren’t going out, largely. We skew older, perhaps sicker…our higher risk predisposes us to take the virus more seriously. We are more highly educated and more liberal. Lots of us are working from home. We mostly have been doing stuff outdoors. We wear masks. We have the money to pay Instacart shoppers and to hire private tutors for our children, who are in “pods” with other upper-middle class children. We’re holding out for 2-3 months until we can get one of the vaccines–why would we take the risk now of gathering in these winter SuperDuperSpreader events? Most of us don’t have antibodies because we’ve been doing the right thing.
“Thanksgiving Herd”–Goes to restaurants, bars. Younger. There will be a historic number of millennial “friendsgivings” this year. It’s safe if Grandma isn’t there, right? Some of this herd might not even wear a mask when shopping at Walmart…as a political statement. This group is largely poorer. They’ve been working, in-person…delivering our groceries, in some cases…how much riskier is it to go to a family Thanksgiving? A big part of this herd thinks Biden is a pedophile; that vaccines cause autism; that WayFair sells children online in armoires and couches, shipping direct via George Soros to liberals at coastal universities; that the election was stolen, millions of votes changed and millions of “illegals” casting votes; that Fox News now has a liberal bias; that it’s totally OK to go to a Thanksgiving meal with 9 other Americans in a room, unmasked, talking for hours, praying, kissing and hugging, and of course–eating and loving each other!!! It’s true, a lot of this group has already gotten sick…they might not have even known it. Lots of this group is already immune, or damned lucky they haven’t gotten sick yet. The “No-Thanks” herd stays at home, so the infections remain low and stable.
Thanksgiving will be terrible for the Thanksgiving Herd. The luck will run out at 55-70% of those dinners. Many, many people in this group will become infected. Like clockwork, you’ll start to notice the explosion beginning 7 days after Thanksgiving, on December 3/4th. The rate of increase will become violent. Testing won’t be effective in measuring…because it already isn’t. Almost everyone will (finally) know someone dead, in the hospital, or struggling to breathe at home. They will finally believe in the virus by December 10th, which is when TRANSMISSION peaks. Christmas will be a terrible time for the country. We will invent new words to explain how bad it is at the hospitals. The “No Thanks” Herd does what it does best…we continue staying at home and waiting for the vaccine.
Starting two weeks after December 10th, Christmas Eve, hospitalizations will be at their highest, but they will begin a slow and steady decline. Deaths will peak around January 1st–just as the vaccines begin rolling out to high risk and high status groups.
Yes, I keep saying “vaccines” instead of “vaccine.” I strongly believe that because Pfizer’s vaccine was so effective, Moderna vaccine will also work.
VACCINE GROUPS
Messenger RNA–Pfizer/Moderna–Pfizer vaccine 90% effective, Moderna coming out soon…
Live Viral Vectors–JNJ, Astrazeneca–All indications are good. The fact that it’s taking longer to get results speaks well for the efficacy of the virus.
Novavax, Sanofi/GlaxoSmithKline–wild card. May or may not work. They don’t need to work…mRNA vaccine is adequate.
And maybe you’re thinking…”It will be so difficult to logistically vaccinate the population! And so many people won’t even get the vaccine!”
Conveniently for the “No Thanks” herd, all of the qualities that predispose us to stay home also make us most likely to want (and be able to get) the vaccines. And the anti-vaxxers who you’re worried about are already dead or immune by then–because of the whole Thanksgiving thing.
Honestly, a wave of death is coming. It’s terrible and almost completely avoidable, but that describes most of the problems we face.
As it relates to predicting the future…as I laid out as my objective above…does “the economy” or “the market” tank as a result of all of this?
Crazily, definitely not.