COVID-19: Controlling a Second Wave

Published on March 19, 2020

We are pleased to share with you the latest report produced by Dr. Sarah Zaidi for SGH Macro Advisors on the COVID-19 pandemic — this one titled “Controlling a Second Wave”.

We urge you to read the full report, but with an eye to sharing her thoughts on some of the questions front and foremost on all our minds, we have taken the liberty of highlighting in our best efforts some of the key points of the report below:

A great deal of attention is being paid to a just published Imperial College London COVID report, especially, not surprisingly, to some of its very alarming mortality forecasts if no measures are taken to contain the spread of the virus. That is clearly not the case now.

The more important takeaway of the study, Dr. Zaidi notes, is in its analysis of the trade-offs between a “suppression policy,” which the global democracies are now generally pursuing, and a “mitigation policy,” which the UK attempted but swiftly abandoned, as the latter allows for some spread of the virus, resulting in greater near-term deaths, but helping create a “herd immunity” to the virus in the population as time goes on.

The challenge with the “suppression policy” is that until a vaccine is developed, it leaves the general population more immunologically vulnerable to a second wave of the disease, and so until there is a vaccine or treatment, any relaxation of the current, stringent social distancing measures will have to be tenuous, and swiftly reinstated as needed in cases and areas of renewed outbreaks.

This could have profound implications for economic activity forecasts, as well as for how we should be prepared to operate as a society for the foreseeable future.

In other points highlighted by Dr. Zaidi, data just released from South Korea, with the highest portion of testing per million population in the globe, shows an alarming spike in infectiousness in the 20-29 year old demographic, who are often asymptomatic, and have until recently been resistant to social distancing.

Also, in a rough attempt to draw parallels to the pace and stages of disease spread with other countries, she notes that the death rate in the US is currently doubling every 5 days, similar to Iran, and only slightly better than Italy (every 4 days), while South Korea doubled every 12 days. In the UK, that rate is an even more alarming 2 days.

As in the previous COVID reports, SGH has not produced the content of this report, and any edits to the document have been for flow purposes alone. The report is for informational purposes only and does not constitute investment advice.

Finally, I would like in these challenging and sad times to pause and personally wish everyone a happy Persian New Year (“Nowruz,” or New Day), that will be celebrated in a few hours, on the advent of spring, a time of new beginnings and rebirth for all.

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