‘A Very, Very Serious Situation’

The mood was cautious Tuesday, as the pandemic fight, now in its second year, weighed on sentiment.

The locus of concern is Europe, where vaccine rollout is hampered by delays, logistical snags and recrimination, all with disconcerting nationalist overtones.

Germany is set to enter what’s being described as a “radical” lockdown for Easter. Stores will be closed for five days from April 1. Angela Merkel described “a very, very serious situation.” Caseloads, she warned, “are rising exponentially” and ICU beds are becoming scarce. If infections don’t slow, Germany’s efforts to vaccinate the public won’t have time to catch the virus (no pun intended).

Finance Minister Olaf Scholz called the forthcoming crackdown appropriate, telling ZDF that using “the Easter period to brake the infections so that the ramp up of inoculations can help control the virus” is the “correct” decision.

Germany extended its existing lockdown through April 18. The country’s key infection metric, the seven-day rate of cases per 100,000 people, hit 108.1 on Tuesday. It’s been above the “emergency brake” threshold of 100 for three days in a row and is nearly twice the low reached on February 19.

“News has once again been negative with Germany announcing a hard lockdown for Easter and Asian stock markets struggling,” AxiCorp’s Stephen Innes said. “Over the last couple of days, the dire European situation has done limited damage to risk sentiment… but the 15-hour meeting between the German chancellor and regional leaders ended with unexpectedly harsh measures… nudg[ing] things in a negative direction.”

This is setting the stage for a rather wide transatlantic growth divergence, with implications for the dollar. “The big debate will be whether you can have a weaker dollar at the same time as the US economy outperforms,” SocGen’s Kit Juckes wrote Tuesday. “History says you can, but many people – including some who have had the most influence over how I think about markets – disagree,” he added.


Germans will be required to stay in their homes for five days starting on April 1. Large family gatherings are forbidden. Churches are being asked to confine services to the internet.

“We are now basically in a new pandemic. The British mutation has become dominant,” Merkel said, at a press conference. “We face a new virus of the same kind but with very different characteristics — more deadly, more infectious and infectious for longer.”

(Soooo, you’re saying things are bad, then?)

The reversal of Germany’s tentative steps towards lifting virus curbs could be politically perilous. Recent polling showed support for CDU/CSU falling to just 29%, the lowest in a year. That, after the bloc’s lackluster showing in regional elections.

“The focus on the German federal election (on 26 September) has increased following recent state elections on 14 March, which resulted in losses for the ruling CDU and gains for the Greens, and may have widened the spectrum of potential outcomes in September,” UBS wrote Tuesday. “The progress of the (so far relatively slow) vaccination campaign may contribute to shifting opinion polls over the next few months.”


Estimates for German growth were revised lower last week. “The greatest risk for the German economy is a possible third wave of infections,” one member of Merkel’s economic advisory panel cautioned.

Germany plans to borrow more and increase spending in order to help bolster companies impacted by restrictions and fund testing. Don’t worry: They can afford it. Borrowing costs are negative and besides, the country’s debt burden is still the lowest among major developed economies.

All of this underscores the intractable nature of the pandemic, especially across Europe, where the vaccination push is well behind the UK and the US. The Stoxx 600 Travel & Leisure Index underperformed broader equity gauges on Tuesday.

There are more than 3,000 Germans in ICU with COVID. “We want to avoid our health system becoming overburdened,” Merkel pleaded.


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14 thoughts on “‘A Very, Very Serious Situation’

  1. It is foolish to try and read too much into the now daily sector and theme rotations, but yesterday I noticed that airline & Boeing stocks were down noticeably. I wondered if that was thanks to the scenes from Spring Break which showed us that many Americans are no longer willing to follow anti-Covid protocols. Or maybe that a few investors had noticed the horrors unfolding in Brazil.

    Perhaps the German lockdown the #1 culprit? “We are now basically in a new pandemic. The British mutation has become dominant,” Merkel said, at a press conference. “We face a new virus of the same kind but with very different characteristics — more deadly, more infectious and infectious for longer.”

    1. What’s unfortunate is because they haven’t been able to get their vaccine rollout on track we don’t have enough data to determine the efficacy of the various vaccines against this new variant. That information would be prescriptive for the rest of the world about whether or not these vaccines are configured correctly to end this pandemic. And that’s really what we need to know right now.

      1. Errr. I would think the best place to see how effective the vaccines are against the British variant would be Britain??? The British vaccine rollout has progressed well.

  2. When do we start to question the narrative that herd immunity is days away which will trigger an inflationary travel & leisure boom?

    Sadly, it appears that Powell was right to wait for hard evidence before choking the economy.

    1. While many older ones have been vaccinated the younger ones (20-40) have not and unfortunately these are the ones at the airports and beaches over spring break. I can only hope enough of them have already had covid but I think we will be lucky to escape a third wave here in the U.S.

  3. About a year ago, American’s were in shock about how Covid was killing so many people in Italy — we were told, that in a matter of weeks, similar pandemic trends would take hold in our country, as well as around the world. What unfolded was a shock, which was greatly amplified by polarized political chaos, which continues to aid and abet the virus. So, here we are again, a year later with a massive group of inbred teenagers rioting in Miami, aided by an insane governor, who in turn is supported by millions of people that continue to believe that Covid is a hoax.

    Meanwhile, instead of panic waves in Italy, this year we have the crusty old Germans in fear of the new wave of variants, and the same governor and political party in America that simply don’t have the cognitive ability to process reality.

    The vaccine rollout is going ok, but there’s still high uncertainty as to how well the vaccines can be fine-tuned for variants; it’s obviously possible to reformulate new genetic coding into vaccines, but the vaccines already in distribution were not designed with our current understanding of the variants.

    The global vaccination effort is providing the framework to make humans less susceptible to Covid and future mutations, but, the virus has a huge head start in this game and it’s been highly adaptive. The virus we knew of last year is essentially gone, yet, it’s offspring are totally upgraded and far more dynamic. The virus has been busy learning about human immunity, studying people and learning how to adapt — the amazing process of convergent mutation shows that Covid evolutionary progress has spontaneously taken place all around the world. It’s as if the virus is working just as hard as as our global scientists, it’s like collaborative mirroring. As our scientist share discoveries, the virus uses sick humans like guinea pigs to search for weakness.

    In that light, it’s stunning that so many people that are so brainwashed by politics are partnering with this super smart virus, if you were writing a science fiction horror story, what could be more evil than a massive amount of lemmings helping the virus to connect with more hosts?

    1. It’s tough to shed bright light on such a politically charged situation, but the above comment nails it. Winning against a dangerous virus requires a rational heard mentality or heard immunity will be impossible.

  4. China is a one way street. Europe unvaccinated along with Third World. USA started the celebration 3 Months too early.
    Humans presume that life is on our genetic journey.Our big brains form so many falsehoods.

  5. This “tip” (below) is from a NYT article posted last July.

    The Coronavirus Could Dodge Some Treatments, Study Suggests

    “But the new findings also hint that single-antibody formulations “may not be as successful,” Dr. Taylor said, at least in the long term. Developing a cocktail containing a diverse blend of antibodies could be a safer bet.”

    ==> That doesn’t mean people should not be vaccinated ASAP, but indicates that we need to adapt our management plans for the virus, which implies, looking at the virus and vaccine evolutions. It should be obvious, but we all need to continue wearing masks in public, social distance and avoid large crowds and places where air circulation is minimal — like planes, restaurants, stadiums, bars and places where lots of people exhale vast amounts of secondhand air particles (think of garlic breath and secondhand smoke lingering near a person). There was already a huge amount of poor hygiene out in the world, before the pandemic, thus it’s only logical to realize that it’s still very critical to beware of all the people that are dropping their guards!

    As far as I know, CDC and most health experts and vaccine manufactures are not 100% sure of vaccine efficacy long-term, but taking preventative actions now, with a vaccine, seem like a very smart way to keep out of a hospital — and prevent the possibility of long-term damage from Covid infection. This shouldn’t be an option that people weigh, but, if a really stupid person wants to drink raw sewage, there’s not a lot that anyone can do, other than provide information. Apparently some horses are unwilling to consume fresh water …

  6. Last year we were supposed to be cautious in March and people weren’t taking it seriously and the first big wave came after spring break. This year… people think it’s all over and are repeating last years mistakes for the same ultimate reason. We’re presently 5x worse off than last year. The odds we duck the worst plausible scenario of one or more vaccine resistant strains from running around the US all summer is almost negligible. Which puts us back into continued travel lockdowns, redeveloping vaccine boosters for vaccines that aren’t even fully rolled out (13% vaccinated presently). We’re very close to losing another year for no gains like we did last year.

  7. Most people are burned out on Covid stories and vaccine developments after a year, but this is worth a read. I follow a lot of Twitter feeds from various medical and genetic experts and I’m still watching this unfold. I’m not posting a link, but here’s the simplified bottom line:

    COVID-19 Variants: ‘The Virus Still Has Tricks Up Its Sleeve’
    — Warner Greene on how the virus has mutated, and whether it’s done yet (medpagetoday, February 9, 2021)

    “Now, another question is, is the virus throwing everything at us right now that it’s got? Is this it and can we expect a pretty much static situation from here on out? And, you know, I don’t think so. I think the virus still has tricks up its sleeve, and will continue to evolve as we put additional immune pressures on it. So, that would be my guess, but we’re right at the cusp of the evolving science. And to think that where we were a year ago with no defense, no innate or no intrinsic immunity to this virus, and nothing really therapeutic or preventive. And now we’re in a situation where we have multiple, highly effective vaccines.”

  8. I just can’t understand how the virus keeps on mutating and evolving. As I understand it, the stable genius non-scientists among us have been assuring us (and our children) that COVID is a hoax and evolution is just a theory, isn’t it?

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