Terrifying COVID-19 Report: Damned If We Do, Damned If We Don't

Dear Reader,

The U.S. government has dramatically ramped up its response to the coronavirus (COVID-19) outbreak this past week. In a matter of a few days, we’ve shifted from the White House insinuating COVID-19 was on the brink of disappearing to President Trump declaring a national emergency and invoking the Defense Production Act.

If you’re wondering what was behind this stark reversal in tone, a plummeting stock market and official “pandemic” declaration from the World Health Organization had something to do with it…

But the primary influence behind the sudden change in U.S. policy is rumored to be an epidemic-modeling report from across the pond. This report, which comes from Imperial College London, tested the expected impact of COVID-19… and the findings were alarming.

If you’ve yet to read the report, you can view it here. I think every investor needs to read it because, as the New York Times reports, it is this very model that “influenced the White House to strengthen its measures to isolate members of the public.”

In short, this is now the prevailing impact model for the spread of COVID-19. Questions of accuracy aside, this is one of the primary sources of U.S. government guidelines for the time being.

Now, I’ll share some of the biggest takeaways from this report, but I will warn you; the findings will seem outright terrifying to some. 

Imperial College London considers three non-pharmaceutical intervention strategies and their outcomes.

The first strategy is to do nothing: make no changes to our daily lives and behavior to let the virus spread through the population unchecked. In this scenario, 2.2 million Americans would die, with the daily death toll peaking in three months.

The second strategy is full-on suppression: stopping human-to-human transmission indefinitely, until vaccination is widely available. In this scenario, we would reduce deaths to the thousands, but it would require a draconian government shutdown of the economy and nationwide quarantine between 12 to 18 months, at a minimum. The researchers note that there is no guarantee we will find a reliable vaccine in this time frame.

The third strategy is mitigation: reducing the disease’s spread not entirely, but to where we try not to overwhelm the national healthcare system. In this scenario, 1.2 million Americans still die.

There is no winning scenario here. The researchers ultimately lean towards suppression, but recognize the following in their commentary [emphasis mine]:

We do not consider the ethical or economic implications of either strategy here, except to note that there is no easy policy decision to be made. Suppression, while successful to date in China and South Korea, carries with it enormous social and economic costs which may themselves have a significant impact on health and well-being in the short and longer-term. Mitigation will never be able to completely protect those at risk from severe disease or death and the resulting mortality may therefore still be high.

Unfortunately, policymakers and the mainstream media are largely hand-waving this critical section of analysis from Imperial College. The only thing they can see right now is the headline: “Millions Will Die If the Government Does Not Act”.

The reality, though, is that with no ethical or economic impact studies on these strategies, it’s impossible to tell what the best course of action is. It’s easy to say that we need to rescue as many lives as possible, but there’s a world of implication here you need to ignore to make that argument.

Weekly claims for unemployment insurance have already risen to 281,000 between March 8 and 14, spiking 70,000 from the week prior. According to an analysis from the Economic Policy Institute (EPI), at least 3 million people could lose their jobs by summer. This doesn’t just pose a financial burden for those who are affected but a safety and health burden.

Many airlines are already being driven into technical bankruptcy, according to the CAPA Centre for Aviation. Retail and local businesses are sure to follow.

Putting strict and widespread quarantine measures in place, although well-intentioned, may very well end up doing more harm than good in the long run. I believe I said this last week, but everyone needs to put food on the table and a roof over their heads to survive. 

You’re probably not seeing this discussed very much in the media, but I expect that will change once the world feels the brunt of a recession and Americans are hurting.

This is an ugly situation with no good answers, but I don’t see a suppression or mitigation strategy remaining in public favor for too long. That said, I think the market will continue to face pressure until the sentiment flips. Either that or in 18 months when we have a working vaccine.

In the meantime, there will only be a few safe havens and upside opportunities for investors. If you’re on the lookout, I’ll be revealing my top four “Stay at Home” stock picks this weekend (Sunday) in my investment advisory Technology and Opportunity. These will be your safe havens during the COVID-19 meltdown. 

I’ll also be talking about several stocks with a big upside over the next couple of weeks in a video series for members of our healthcare-focused “Topline Trader” investment service

Call us at (877) 303-4529, Monday through Friday, during regular business hours if you’re interested in joining us. I know the market might appear scary, but as long as stocks are moving, there are ways to make a profit. 

Until next time,

Jason Stutman

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