Viewpoints
Bullish and bearish COVID-19 developments for June

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.

  • All Posts
  • More
    Topics
      Authors
      The article below is presented as a single post. Click here to view all posts.

      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've been monitoring key reports to gain some visibility into how much longer the 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

      • Greece reopened to travelers from 29 countries, hoping to salvage its tourism season. Many other EU nations also reopened their borders on June 15, but Americans and Swedes are generally excluded.
      • Beijing has ordered all schools to close and cancelled more than 60% of domestic flights at its two airports following a COVID-19 cluster outbreak in the city.
      • Houston-area officials are "getting close" to reimposing stay-at-home orders and are prepared to reopen a COVID-19 hospital established but never used at a football stadium.
      • Despite South Carolina's sharp increase in new COVID cases, Governor Henry McMaster said slowing COVID-19's spread is an "individual's responsibility" and he will not shutter businesses again.
      • New Zealand called in the military to help enforce quarantine rules after two New Zealanders arriving from the UK were allowed to leave quarantine early and had close contact with at least 320 individuals before testing positive for COVID-19.
      • House Representative Tom Rice (R-SC) announced that he and his family had tested positive for what he called the "Wuhan flu," becoming the eighth member of Congress to have a confirmed or presumed case of COVID-19. Days earlier he was on the floor of the House not wearing a mask.

      Bullish virus developments

      • According to UK researchers, the low-dose steroid treatment dexamethasone cut the risk of death by a third for patients on ventilators, from 40% to 28%. For patients needing oxygen, it cut the risk of death from 25% to 20%.
      • Mayo Clinic unveiled the first test in the world to identify key COVID-19 neutralizing antibodies, the proteins that fight off COVID re-infection, and says the test will be broadly commercially available. Existing tests show whether people have produced any antibodies in response to the illness, but not these key virus-neutralizing proteins.
      • Moderna's CEO said efficacy data for its COVID-19 vaccine could be available as soon as Thanksgiving if everything goes right.
      • Massachusetts had the third-lowest 7-day average growth rate in new cases (0.3%), after New York and New Jersey (0.2%)
      • Wall Street Journal describes the emerging consensus regarding COVID-19 transmission vectors and assuages some fears. Some takeaways:
        • Prolonged exposure of 15 minutes or more to someone under six feet away wearing no mask is a high-risk vector. If a sneeze or cough is involved, the exposure can be much shorter, perhaps even seconds, so as to present a high-risk of transmission.
        • Surfaces represent a relatively lower risk of transmission.
        • Super-spreaders exist: 10% of people are responsible for 80% of transmissions.
        • Contagion rates for COVID in households range from 4.6% to 19.3% (27.8% for spouses).

      Bearish virus developments

      • US scientists found the first direct evidence that COVID-19 could infect the human brain and replicate inside its cells, heightening concern about the disease's poorly understood neurological symptoms. One-third of patients in Wuhan reportedly had neurological symptoms, including dizziness, headache and seizures. Loss of smell or taste could also be evidence that the virus infects the brain.
      • Delhi's regional government is accused of underreporting coronavirus deaths. Local doctors claim fatalities exceed official figures and cemeteries are overflowing.
      • COVID-19 is spreading among fruit and vegetable packers, worrying US officials that the food supply chain may be further disrupted.
      • Texas hospitalizations have surged along with test-positivity rates, suggesting infections are increasing rather than increased testing. Florida is also showing higher positivity, the percentage of tests with positive results.
      • US Army tested a cohort 640 new recruits and instructors for COVID-19 upon arrival at Fort Benning. Eight days after training started, following a 14-day mandatory quarantine, 142 tested positive; the majority were asymptomatic, implying a 22-day quarantine may not be long enough.

      Economic and market impacts

      • Fauci said lifting the ban on travel to the US from Great Britain could still be months away and, in the worst case, may not come until a COVID vaccine is available.
      • Bloomberg reports an elevated risk of "reallocation shock" from the pandemic, where lost jobs will not come back and unemployment may stay elevated. This would force workers to retrain or relocate, and governments to do more than allocate money to solve problems.
      • Roughly 20% of all container ships globally have stopped moving (twice as much as normal) and are sitting empty. While global shipping volume remains at a standstill, in contrast there has been a pickup in PMI and mobility indicators.
      • US airline passengers who refuse to wear facial coverings could have their future flying privileges revoked, the industry's main lobby group said recently.
      • Retail sales grew 17.7% in May, a growth rate more than double analysts' estimates.
      • Norwegian Cruise Line extended a suspension of global cruising through the end of September. The company's stock fell as much as 15% in after-hours trading, but is still up 160% from its recent lows.