Navigating Turbulence

"As of March 1, 2020, the growth rate of COVID-19 cases in countries other than China is running at 25% daily. The expansion in the number of locations is also problematic, because the first person in each new location is local ‘patient zero.’ Unless serious containment efforts reduce this growth rate substantially, a continuation would produce a 1000-fold increase in cases over the coming month. Even that might not seem so bad, until the end of April, when the same rate of growth would push the number of COVID-19 cases beyond the 45 million U.S. flu cases observed in 2017-2018. That is exactly how this little coronavirus with twice the R0 of the seasonal flu, and a mortality rate that is evidently an order of magnitude higher, will produce utter chaos if containment efforts are not taken seriously."
– John P. Hussman, Ph.D., March 1, 2020

Public health notes

I want to begin with an update and extension of observations and analysis relating to SARS-CoV-2 (COVID-19) that I’ve included in these commentaries since January. As usual, I’ll try to separate my comments about this epidemic from investment discussion as much as possible.

As March began, there were 68 U.S. cases of SARS-CoV-2 (COVID-19). At present, less than a month later, there are over 68,000. Though containment efforts were broadly dismissed early in the month, they have become more pointed in the past two weeks, particularly in certain states like New York. Even with a 1000-fold increase in cases during March, several corners of the media characterize containment efforts as an overreaction, and describe this epidemic as “like the flu.”

We still have a chance of limiting the number of fatalities that result, but not with dismissive approaches to containment, which I view as menacing to public health.

A few observations regarding the public health implications surrounding the novel coronavirus may be helpful (see some of my research papers, this article in Nature for example, to assure yourself that I’m not shooting wildly from the hip).

First, this is not influenza (the “flu”). It’s actually a novel variant of SARS. The proper name of this virus is SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), and the associated disease is called COVID-19 (coronavirus disease 2019). As the name implies, SARS-CoV-2 can, in its severe cases, produce acute inflammation of the respiratory system, which is the typical cause of fatalities.

Outside of China, daily case growth has eased to 15% since January, down from 25% in early-March as a result of strong global containment efforts. In the U.S., case growth has averaged over 30% per day during March, but shorter-term compound growth has recently dipped to 29% a day.

With over 68,000 U.S. cases already, even if present containment efforts were to immediately crush the growth rate to just 10% per day, the U.S. will exceed one million cases during April. Needless to say, that’s a narrow window to boost equipment, personnel and capacity. Reducing case growth to a 15% rate would put U.S. cases over 4.5 million in 30 days, potentially with hundreds of thousands of fatalities. We need these numbers to be wrong, and that’s exactly why containment is critical. Lack of containment is exactly what produces 30 million U.S. influenza cases every year, though with a far lower fatality rate than SARS-CoV-2.