The Week in Review: June 29, 2020
COVID Flare-ups
Much has been made in recent days about a spike in COVID-19 cases (left side of the graph). The Wall Street Journal reported on Friday that 29 states are seeing a rise in daily cases, with notable spikes in Arizona, California, Florida, and Texas. On Friday, Texas rolled back some plans to reopen amid an increase in confirmed cases and hospitalizations.
On a more favorable note, the number of daily deaths from COVID-19 remains in a downtrend (right side of the graph). That may be due to demographics, as it has been reported that the surge is more concentrated in younger people. Or it simply may be the fact that daily mortality rates lag daily infection rates—we shall see in a few weeks.
An increase in hot spots was probably inevitable as states reopened amid social-distancing fatigue. Yet not all states are seeing an uptick.
Another lockdown may not be realistic, as it creates another set of problems. The moderation in the number of deaths also argues against shutting down the economy again.
The rise in cases has created renewed volatility in stocks because it may slow economic progress. But it has yet to create the kind of instability we saw in the early days of the pandemic.
We remain in uncharted territory. The economy is attempting to wake up from a government-induced coma, and new flare-ups are creating some concerns.
For context, The Wall Street Journal pointed out on Wednesday: “New York City had about 12 times more COVID-19 patients per capita in intensive-care units at the peak of its hospital surge in April than California does today, six times more than Miami-Dade, five times more than Arizona, and four times more than Harris County (Houston).”
Since the early days of the crisis, the Federal Reserve has acted with impressive firepower to prop up the economy, shore up credit and financial markets, and provide needed liquidity. Congress has passed various stimulus measures. More may be on the way.
Though economic activity remains well below pre-COVID levels, overall economic reports in May far exceeded expectations (LPL Research Citi Surprise Index), as businesses began to reopen.
Medium and longer term, the path of the virus, a potential vaccine, and an effective treatment remain important wild cards that will help determine the overall strength of the recovery.
If you have any questions or concerns, feel free to reach out to me, Tyler, or Will.
Two for the Road
As many as 25,000 hotel rooms, or roughly 20% of the New York total, may not reopen. For perspective, the number of closing rooms is equivalent to the entire hotel market of Jacksonville, Florida. —The Wall Street Journal, June 16, 2020
Because of the stay-at-home order, California highway police say that overall traffic levels are down 35% from last year. However, the number of speeding tickets for driving faster than 100 mph has increased 87%, with one motorist caught doing 165 mph. —Los Angeles Times, April 22, 2020
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