“Expectations have declined… point[ing] to increasing risks… such as from a possible fourth COVID-19 wave starting in autumn or a slowdown in growth in China,” ZEW President Achim Wambach said Tuesday. “The clear improvement in the assessment of the economic situation, which has been ongoing for months, shows that expectations are also weakening due to the higher growth already achieved.”
Although that brief commentary was a summary of the prevailing mood among investors in Germany, it could easily double as a quick take on the macro zeitgeist more generally.
Risks are proliferating — again. Chief among them, worrying trends associated with the Delta variant, a slowdown in the world’s second-largest economy and the notion that “peak growth” is already behind us.
Note that the ZEW expectations gauge tumbled in August to 40.4 from 63.3 the prior month (figure below). The market was expecting 55.
The current conditions index also missed.
Until now, market participants remained mostly sanguine about Delta and the ramifications for major economies, even as case loads rise, rapidly in the US, but also in China, where some fear draconian containment measures associated with the country’s “zero tolerance” policy will serve as an extra drag on growth at a time when policymakers were already warning of a slowdown.
A trio of Chinese think tanks lost their collective mind this week when “some US media outlets” (Xinhua’s words) ranked the US highly on its response to the pandemic. In a report called “America Ranked First?! The Truth about America’s Fight against COVID-19,” the think tanks lambasted US lawmakers for putting “partisan competitions” ahead of “lives” in the battle against COVID and for initially adopting measures that were “anti-science and anti-common-sense.”
It’s difficult to argue with that assessment, the source notwithstanding. The report also accused the US of papering over the pandemic with “monetary measures” (ironic, considering the PBoC is now shifting into easing mode amid the Delta outbreak) and went so far as to suggest that the pandemic actually originated in America. (I won’t link to the report, nor will I link to Xinhua. Good propaganda often contains kernels of truth, but it’s still propaganda and besides, the pages aren’t secure.)
Rabobank’s Michael Every summarized the same report in his daily. It “vilifies Bloomberg’s ranking of the US as #1 in the COVID Resilience Ranking; describes the US COVID objective as to ‘save the stock market, not to save lives’; and states ‘The freedom of movement and ‘normal functioning’ of society advocated by Bloomberg’s rankings are not about the safety of the American people. They are only about the need for the free flow of capital, and the desire for excessive profits.'”
“So somebody else brought up Das Kapital for me!,” Every quipped.
Corporate profits in America recovered in record time from the pandemic. In Q2, S&P 500 companies posted earnings growth of more than 85%, besting lofty expectations by a country mile (figure below).
Considering the broadside from Beijing, you’d be forgiven for thinking Bloomberg was trying to make a point when it published a somewhat caustic article Monday called “China’s COVID-Zero Strategy Risks Leaving It Isolated for Years.”
With apologies to whomever they’re due, the following excerpt from that linked Bloomberg piece sounds like propaganda:
The aggressive moves to tame a relatively small caseload in a country with one of the world’s highest vaccination rates shows how politically invested the Communist Party has become in achieving zero COVID-19 infections. Chinese authorities are increasingly trumpeting their success in containing the virus as an ideological and moral victory over the US and other nations now treating COVID-19 as endemic.
The very same Bloomberg also published “Delta Wave Goes Coast-to-Coast in US, Showing Variant’s Force,” on Monday. I suppose that’s just “balanced” journalism. Or maybe it’s cognitive dissonance.
Whatever it is, the problem is always the same. It’s impossible to give Xi the benefit of the doubt for at least two reasons. First, the official case and fatality counts in China were almost surely fabricated during the early stages of the pandemic, if not on purpose then simply because tallying up anything in a nation with that many people is mostly impossible. More importantly, though, the Xinjiang “situation” is simply too disturbing to ignore, even when discussing totally unrelated matters like COVID.
It’s possible (albeit difficult) to overlook the Hong Kong crackdown and Xi’s Taiwan ambitions. The same goes for the South China Sea. It’s not possible, though, to overlook what’s going on in Xinjiang. No sarcastic appeal to “Whataboutism” will work when it comes to systematic efforts to eradicate an entire people in an (extremely) compressed timeframe by way of organized roundups, surveillance and mass detention. You might fairly point to egregious injustices in the US, where African Americans are systematically disadvantaged, surveilled, disenfranchised and disproportionately incarcerated to the point of making them second-class citizens, but the only way it’s not a false equivalence vis-à-vis Xinjiang is if the reference is to slavery in the Americas and/or the Native American genocide. In its daily efforts to deflect international ire around Xinjiang, China typically doesn’t draw those parallels because they’re not contemporaneous.
In any event, coming back to COVID, the linked Bloomberg piece (the one documenting what’s happening in the country Bloomberg ranked first in the world in pandemic resiliency as late as June), noted that the “US COVID-19 wave that started in low-vaccination states in the Ozarks and Deep South has now engulfed the country [with] thirty-eight states [reporting] transmission levels considered high by the CDC.”
Somehow (and Bloomberg will tell you how if you consult their methodology), the US still ranks fifth in the world on pandemic resiliency, behind only Norway, Switzerland, New Zealand and France.
On Monday, the CDC told people in the fifth-best country for COVID resiliency on Bloomberg’s rankings to avoid traveling to the fourth-best country on the list due to the “very high” level of virus transmission. In parallel, the State Department issued a “Level 4: Do Not Travel” advisory for France.
From one “resilient” country to another.
“Why the U.S. Delta Wave Could Be Far Less Deadly
— We may see a decoupling between cases and deaths in the fourth COVID wave, experts say”
From med page today this morning.
The rise of the Delta variant in the U.S. has led to outbreaks of COVID-19 across the country. But as more people get vaccinated, the death toll in the fourth wave of the pandemic may not spike as high as it did in previous surges, according to experts.
Increasing vaccination rates among Americans may result in a decoupling between infections and deaths — meaning that new cases might rise more steeply than fatalities.
This trend was evident across the pond: At the peak of the U.K.’s most recent spike in mid-July, the 7-day average of new daily infections was around 47,000 cases (approaching its 60,000 peak from January). But so far this month, the country has seen around 80 deaths per day.
“In the past with that level of infection, we would have seen over 1,000 deaths a day,” said Graham Medley, PhD, professor of infectious disease modeling at the London School of Hygiene & Tropical Medicine.
Before vaccines, Medley said that the number of deaths was the clearest metric to assess the severity of the pandemic. But since the U.K. has fully vaccinated the majority of high-risk individuals — more than 90% of its oldest and most vulnerable populations, according to government data — “deaths are no longer the most obvious outcome of infection to the public.”
There are lower vaccination rates in younger age groups, and as a result more young people are being hospitalized this time around, Medley noted.
“The Delta variant is able to overcome the vaccine, especially one dose, in terms of its ability to infect, but the vaccine is still very effective against Delta when it comes to death,” Medley said. “Vaccination has changed this pandemic for the better.”
A similar trend may follow in the U.S., according to experts. However, in areas with low vaccination rates, death tolls may mirror earlier pandemic waves.
“We will see an uptake in infections, but I don’t think that we’ll see a significant drive in hospitalization and death in the areas that have very high vaccination rates,” said Syra Madad, DHSc, MSc, an infectious disease epidemiologist based in New York City. Communities with a 50% to 60% vaccination rate will likely be protected from the most severe outcomes, she added.
Currently, the 7-day average of new daily COVID cases in the U.S. is nearly 100,000. Average daily deaths, which lag a few weeks behind new infection data, are around 450.
One of the reasons why there may be a decoupling between daily infections and deaths in the U.S. is because the majority of the elderly are vaccinated. Just over 80% of people ages 65 and older — the group at highest risk for hospitalization and death — have been fully inoculated against COVID-19.
“The surge of death that we would have seen is blunted because of our success thus far in vaccinating the most vulnerable,” said Leana Wen, ??MD, MSc, an emergency physician and health policy scholar at George Washington University in Washington D.C. and former health commissioner of Baltimore.
“However, we are already seeing an increase in hospitalizations and deaths, the majority of which are preventable,” Wen added. “That is truly tragic.”
This is China’s biggest problem. The west has better medicine. Johnson and Johnson vaccine will be produced in South Africa and widely distributed.
Who the hell knows what’s really going on in China? But if it gets a real Third World look to it, it would make it harder for China to win over the Third World.
“Ravaged by delta outbreak, Southeast Asia shifts away from China’s vaccines“ Washington post headline this morning
What if this past year has been the largest and longest “dead cat bounce” in market history?
What if dead cats float? I mean the trick is what does the Fed do… because I think we all know now they can levitate a dead cat OR drop it in a well.
Both China and the US tell a reasonably true story about each other (sans virus origin). The key will be if each society can look in the mirror and address its failings. Biden is doing a super job trying to get the US on a better path- if his 2 spending bills pass the US will be on a far better trajectory. It needs to pass before the midterms as the window is likely to close when (god help us) Kevin McCarthy becomes House speaker in 2023. Good chance Mitch closes in on majority leader as well in the Senate although it may take him until 2025- Arizona and Georgia are the only vulnerable seats there and the incumbents should be slight favorites there.
There are few or no positive outcomes of COVID for the world or the United States.
With that said, if there is one positive outcome, it’s that the disease has caused a change in thinking. The U.S. has never been isolated or independent of the rest of the world, and now that is painfully obvious. Whether it is a virus, or climate change, or the economy, for better or for worse, were all in this together now.