Viewpoints
Bullish and bearish COVID-19 developments for late May

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'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

      • TSA prepares to begin temperature screening passengers at some airports. Those with temperatures above 100.4 degrees will be denied boarding.
      • Live-broadcast professional sports set to begin to return, featuring no fans, social distancing among participants, and medical tests before competition.
      • US Treasury Secretary Mnuchin says employees who reject offers to return to work are ineligible for unemployment benefits.
      • Taiwan's government and Stanford University are preparing a quarantine and testing protocol for international travelers to determine the shortest safe quarantine period.
      • Boston College and NYU will resume in-person classes for Fall 2020 amid the pandemic. A growing list of colleges report financial peril resulting from the crisis.
      • Cambridge University, for the first time in its 800-year history, is cancelling all in-person lectures for 2020-21.

      Bullish virus developments

      • CDC reports that COVID-19 "mainly spreads through person-to-person contact" rather than through contaminated surfaces, with the caveat that more is still being learned about the virus.
      • FDA approves an at-home nasal swab test kit for COVID-19, available for a nominal cost without a prescription for those who meet CDC testing guidelines.
      • One medical biotech company reports their vaccine created an immune response to COVID-19 in 8 out of 8 initial patients; the length of the immune response is undetermined.
      • Researchers at La Jolla Institute for Immunology find that the body builds a robust antiviral immune response after fighting COVID-19. This improves prospects for a successful vaccine.
      • Institut Pasteur Korea announced nafamostat, a blood anticoagulant component, has antiviral effects against SARS-Cov-2 in cell culture experiments. Efficacy is approximately 600 times stronger than Remdesivir.
      • Korea Centers for Disease Control and Prevention (KCDC) found the virus samples of "re-positive" patients to be non-infectious and concluded people should not be required to test negative for the virus before returning to work or school.

      Bearish virus developments

      • Chinese publication Caixin notes that 5% to 6% of a sample of 11,000 people in Wuhan tested positive for antibodies. That implies 550,000 cases among the 11 million residents in Wuhan, alone, while China has only reported 82,947 cases, nationwide.
      • Iran, an epicenter of the outbreak in the Middle East, is experiencing a "second wave" of infections three weeks after reopening the country in late April without meeting health experts' guidelines.
      • CDC confirms that coronavirus is linked to the emergent multi-system inflammatory disease in children and young adults; NYC now has 145 cases and the syndrome has been reported in half of all US states.
      • Meat-processing factories have been joined by bakeries, mushroom farms and date-packing houses as new COVID hot spots emerge in Tennessee, Wisconsin, Texas and elsewhere; worker proximity is blamed.
      • Arkansas COVID-19 outbreak linked to church services: Of the 92 people who attended March 6-11 services at a rural Arkansas church, 35 (or 38%) tested positive for the COVID-19, and three have died.
      • In the two to three weeks following Wisconsin's in-person polling, districts with a lower percentage of absentee ballots had a higher COVID-19 infection rate. Researchers also traced 52 cases of transmission to contact at the polls.

      Economic and market impacts

      • An April survey by the National Federation of Independent Business found more than 6 in 10 small businesses could fold if the damage lasts until Labor Day.
      • China's traffic is back to 100%, subway ridership is 70%, air travel is 60%, restaurant orders are back to 60% and hotel occupancy is back to 50% of pre-coronavirus levels.
      • A coalition of 116 countries back Australia's push for an independent COVID-19 inquiry, causing a rift with China; all 27 EU members support the plan.
      • Italian business lobby Confcommercio said as many as a third of shops in Milan may fail to reopen.
      • Sweden now has the highest COVID-19 daily deaths per capita in the world and is reportedly in "very deep economic crisis" despite the soft lockdown.
      • Starbucks has asked its landlords for a range of concessions, including to lease terms and base rents, for at least 12 months. A number of other retail tenants have done the same, reports the WSJ
      • In travel, Qatar Airways cabin crews are to wear hazmat suits, while Seychelles bans cruise ships through 2021 to prevent COVID-19 spread.