Viewpoints
Bullish and bearish COVID-19 developments for early August

Timely insights from portfolio managers and industry experts on key financial, economic and political issues.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

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      By Marshall L. Stocker, Ph.D., CFADirector of Country Research and Portfolio Manager, Eaton Vance Management

      Boston - Headlines tracking the scope of the coronavirus pandemic — such as new daily cases and death rates — may be driving investor sentiment. We continue to monitor key reports to gain some visibility into how much longer this global crisis could continue. Here are the latest health and public policy updates related to COVID-19, developments that we consider either bullish or bearish, and the economic and market impacts.

      Health and policy updates

      • Alphabet Inc.'s Google will let employees work from home until July 2021, once again pushing back the reopening of its offices. Google's CEO indicated that the decision was made to allow parents flexibility to address uncertain return-to-school policies.
      • The second-largest teachers' union in the US announced on July 28 its support of 1.7 million members if they choose to strike in districts and states that move to reopen classrooms without adequate health and safety measures.
      • The insurer for Arizona schools won't provide liability coverage for COVID-19 if there are claims or lawsuits that allege liability for injuries or damages — including parents who sue because they think their children contracted the coronavirus at school.
      • The NFL has cancelled all preseason games.
      • Less than five days into the delayed MLB season, the Miami Marlins and Philadelphia Phillies cancelled baseball games on July 27 after players tested positive for COVID-19. More than half of the Marlins team ultimately tested positive.
      • Boston Red Sox pitcher Eduardo Rodriguez confirmed he is dealing with a heart issue stemming from COVID-19 infection. The team has benched Rodriguez for a week.

      Bullish virus developments

      • One pharmaceutical firm reported that it had dosed the first patient in the Phase 3 study of its COVID-19 vaccine. During the study, half of the 30,000 participants will receive two vaccine doses and the other half will receive a placebo.
      • That same vaccine protected against the virus in a trial that inoculated 16 monkeys. Two injections of the vaccine protected against heavy exposure to the virus at two different levels of dosage, according to findings published on July 28 in the New England Journal of Medicine.
      • Nonprofit foundation XPrize has launched a $5 million competition for better COVID-19 tests. The goal is to develop a low-cost (less than $15) and easy-to-use test with a turnaround time of no more than 12 hours, though some types of tests could provide results in about 15 minutes, the organization said.
      • Researchers in Germany have been able to train dogs to identify COVID-19 positive samples. Their next objective is to demonstrate that the dogs can separate a COVID-19 scent from the scent of the influenza virus. So far the dogs have been working with a deactivated virus, so we don't know if dogs would become infected in a real-life setting.

      Bearish virus developments

      • COVID-19 infections leave an impact on the heart, raising concerns about lasting damage. One study found that 78% of recovered patients had evidence of ongoing heart involvement.
      • The World Health Organization says the COVID-19 pandemic is "one big wave," not a seasonal virus.
      • China reported 61 domestic COVID-19 infections — the most in more than four months — as the country battles outbreaks in the western and northeastern regions.
      • The UK confirmed the first case of a pet cat testing positive for COVID-19, after the animal apparently caught the disease from its owners. Both the owners and the cat have already fully recovered.

      Economic and market impacts

      • The dollar index, which measures the US currency against a basket of peers, slipped 0.9% on July 27 to its lowest level since May 2018.
      • Trump's top advisors are still pointing to signs of a V-shaped economic recovery, despite surging COVID-19 cases.
      • Bloomberg reports that new stimulus talks bogged down last week over demands by Senate Majority Leader McConnell to shield businesses, schools and other organizations against litigation stemming from COVID-19 cases. Senate and House Democrats are opposed to the litigation protection.
      • Republicans have introduced their plans to extend the COVID-19 relief package. Broadly characterized, Democrats want to extend the relief as-is through January, while Republicans are looking to adjust benefits to replace roughly 70% of former wages, saying this will encourage workers to return to their jobs.
      • Republicans will also seek to extend a federal ban, which expired on July 31, on evictions from properties with federally backed mortgages. Democrats seek the same extension but with an additional $175 billion in housing assistance.

      Source of all data: Eaton Vance Research as of July 31, 2020, unless otherwise specified.