Containing the Crisis

Every new case in every new location acts as local ‘patient zero.’

– John P. Hussman, Ph.D., February 3, 2020

There are three important topics in this comment.

One addresses public health, extends the discussion of SARS-CoV2 (COVID-19) that I began on February 2, when the U.S. had only 5 cases, and the continuing need for crisis response.

One addresses financial market conditions, the implications of recent Federal Reserve actions – partly appropriate, partly misguided, illegal, and unlikely to survive challenge from Congress – and the appropriate investment decision-tree in any event.

One addresses the U.S. economic situation, prospects for recovery, and the structure of economic policies that would be most supportive of families, businesses, and near-term resilience.

Let’s dive in.

Public health note – SARSCoV2/COVID-19

I worry that the virus is more patient than people are.

– Ron Klain, U.S. Ebola Response Coordinator 2014-2015, March 20, 2020

In recent days, just as COVID-19 daily new cases reached their peak, giving the U.S. its strongest chance to shift from exponential growth to logistic flattening, the impatience of many communities to abandon containment efforts has abruptly pushed the U.S. trajectory off of the “optimistic” scenario. Unfortunately, relaxing containment at the point of “peak” daily new cases also means relaxing containment at the point of peak infectivity. As a result, the best case outcome now includes tens of thousands more U.S. fatalities than were already likely.

One of the benefits of having initiated discussion and analytics about this epidemic back on February 2, when the U.S. had only 5 reported cases, is that it helps to disabuse the idea that case growth and fatalities are independent of containment efforts, or that this epidemic was impossible to foresee. The following is a quick walk through a few of the posts I’ve maintained in a threaded Twitter discussion since then. Note that some of the charts below are for the U.S., and some are for all global cases ex-China. The case and fatality counts are end-of-day figures, and may substantially exceed those from even a day earlier.

Feb 3 (U.S. cases: 11, U.S fatalities 0): Early international seeding – reported U.S. cases rose from 5 to 11 over the weekend w/new locations. Each acts as local “patient zero,” so containment and China flight restrictions look essential. The hopeful news is new case reports down from ~50% to ~27%/day.

Feb 5 (11, 0): It’s important to remain vigilant about the possibility that unreported cases remain, and we shouldn’t be terribly surprised if they show up near New York, D.C., or Houston. Containment remains critical.

Feb 11 (12, 0): Growth of reported cases outside of China still moving the wrong way. Each case in a new location is local patient zero, so containment remains critical. Potential transmission hubs in New York, D.C. and Houston remain on watch.

Feb 26 (57, 0): While ascertainment of cases remains an issue, containment efforts remain the best way to shift growth from exponential to logistic.

Mar 5 (217, 12): The genie is out of the bottle. The combination of limited testing capacity and high mobility means “community spread” will be a dominant phrase in the days ahead.