Coronavirus Watch: 10+ Million Cases Worldwide, A Reckoning in the South and West, and the Economic Implications of a Face Mask Mandate

Coronavirus Watch

The latest on COVID-19, its economic impact, and how companies are meeting its unprecedented challenges in remarkable ways.

COVID-19: THE LATEST

U.S. Stocks Finish Best Quarter in More than 20 Years (Wall Street Journal)

Global Dealmaking Drops to Lowest Level in More than a Decade (Financial Times)

Covid Changed the Definition of Leadership. Meet Barron's New Top CEOs (Barron's)

How the Virus Won (New York Times)

The Three Weeks that Changed Everything (The Atlantic)

Pandemic Raises CIO Role to Next Level (Wall Street Journal)

We Thought She Was Crazy. Why Values Guide You in a Crisis (Forbes)

Daniel Pink: How Not to Be Overwhelmed Right Now (Inc.)

Coronavirus Brings American Decline Out in the Open (Bloomberg)

White House Ordered NIH to Cancel Coronavirus Research Funding, Fauci Says (ArsTechnica)

Here's How We'll Know When A COVID-19 Vaccine Is Ready (National Geographic)

BIG PICTURE

With over 10.6 million confirmed cases of the coronavirus worldwide, more than 514,000 deaths from Covid-19, and nearly 60,000 critical cases, the pandemic is not showing signs of slowing. Europe and Asia have managed to flatten the curve, but the U.S. has completely failed to do so.

Daily new cases in the U.S. have been over 40,000 for six consecutive days, and yesterday the 7-day average was just shy of 43,000, nearly twice the pace seen on May 31. America now has over 2.7 million cases and has lost more than 130,000 people to the pandemic.

Dr. Anthony Fauci testified before members of Congress yesterday, and in response to questioning from Senator Warren on what the overall U.S. death toll is likely to be, he said, "We are now having 40-plus thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around. And so, I am very concerned."

The number of people hospitalized for Covid-19 is rising rapidly in 7 states (Arizona, California, Georgia, Nevada, Montana, South Carolina, and Texas), with their 7-day averages up at least 25% from last week.

Los Angeles has ordered all beaches closed over the Fourth of July weekend after a record-high increase in new cases on Monday, but LA County Sheriff Alex Villanueva has said he will not be enforcing the order.

In Texas, about 80% of all beds are occupied, and according to Federico Vallejo, a pulmonary critical-care doctor in South Texas, "It's going to become unsustainable to have this number of admissions if this trend continues."

The ranks of amateur virologists have skyrocketed on social media, and the seemingly innocuous phrase "face mask" has led to the posting of countless videos in which those for and against debate in a truly inspiring manner, reminiscent of the great Lincoln-Douglas debates. Even Goldman Sachs' chief economist Jan Hatzius has weighed in on what will surely be known as the defining issue of 2020. In a note to clients, Hatzius said his team investigated the link between face masks and Covid-19 health and economic outcomes and found that masks are, in fact, associated with, "significantly better coronavirus outcomes." By their calculations, a federal face mask mandate "could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP." More on in our Data Download section, below.

On the other hand, Milton, Florida, is having none of this mask business. Its city council voted unanimously on Monday to rescind Mayor Heather Lindsay's emergency declaration stipulating face covering on Friday. Despite having the bulk of positive infections in Santa Rosa County, residents at Monday's meeting were unimpressed with any evidence concerning the efficacy of mask-wearing. Who would have imagined that just five months away from a presidential election, masks would be the big debate?

Europe, which was hit hard by the virus more than a month before the U.S., has seen daily new cases drop to between the very low hundreds to single digits. Nations in the European Union have reopened their economies and are increasingly opening up their borders. Back in mid-March, the EU imposed a travel ban on nonessential travel from outside the bloc. Yesterday the bloc voted to open their external borders as of July 1 to a number of countries, with one notable exception.

Missing from the EU's list is the world's largest economy – the U.S. – as travelers from the United States remain barred due to the magnitude of new daily cases. Russia, Brazil, and India are also on the unsafe list next to the U.S. Under the EU plan, member states will review the list every two weeks and make adjustments as necessary. For those wondering just exactly what this means, the European Commission has no direct control over the borders of its member states; therefore, it is ultimately up to each individual nation to decide if they wish to stick to the list.

As if the coronavirus wasn't enough, on Monday, the National Academy of Sciences published peer-reviewed findings by scientists who have identified a new strain of a flu carried by pigs in China that they believe has the potential to become a pandemic. This strain, named G4 EA H1N1, is descended from the type of swine flu that first emerged in 2009, causing the first global flu pandemic in 40 years. According to Dr. Fauci, this virus has the characteristics of both the 2009 H1N1 and the 1918 pandemic flu.

The CDC has updated and expanded the list of those who are most at risk of developing severe complications from Covid-19. The list includes:
• Mild obesity
• Moderate to severe asthma
• Pregnant women
• Cardiovascular disease
• Chronic kidney disease
• Chronic obstructive pulmonary disease
• Sickle cell disease
• Poorly controlled HIV
• Bone marrow transplants
• Organ transplants

Today we kick off what is typically the weakest quarter of the year after a blockbuster second quarter -- but there is nothing typical about this quarter. The first quarter of 2020 was one for the record books, experiencing one of the steepest declines in stock market history and the Dow experiencing its worst quarter ever.

Yesterday closed out the second quarter, which was also one for the record books, experiencing one of the strongest quarters ever, with the Dow seeing its second-best performance since 1938. What will Q3 bring? We're about to find out.

CHART OF THE WEEK: A COVID Reckoning in the South and West

As coronavirus infections in the U.S. rose a staggering 80% in the last two weeks, so did the rate of positive testing. As indicated in the Statista chart above, the positive case rate in Arizona surged to a rate of 24.4 percent on June 30th. According to WHO guidelines, a state must have "a positive case rate at or below 5 percent for two weeks before restrictions on movements can be loosened."

At a Senate panel discussion yesterday, Anthony S. Fauci said, "We are now having 40,000+ new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around."

SPOTLIGHT

This week, Nasdaq's Mike Sokoll analyzes the recent market trends and what to expect going forward.

After posting its best quarter in decades, rebounding sharply off March lows, the market moves into the second half of the year amid swelling IPO momentum and with sustained confidence in the tech sector, which continues to outperform. Yet, the market continues to monitor each COVID-19 development, from treatment and vaccines to testing and reopenings, taking a forward-looking approach in determining how the rise in coronavirus cases could impact recovery efforts.

"We really had a V-shaped recovery in the market, without having a V-shaped recovery in the economy yet," Mike Sokoll, CFA, associate vice president on the Market Intelligence Team at Nasdaq, said during a recent LinkedIn Live with SoFi, in which he discussed market trends, sector performance and IPOs.

The Nasdaq Composite gained nearly 30% during the last quarter, representing its best quarter since 1999. Meanwhile, the Dow Jones Industrial Average and the S&P 500 rose almost 18% and 20%, respectively. The tech sector, most notably work-from-home stocks, such as Zoom (ZM ) and Peloton (PTON), have done exceptionally well during the pandemic, along with biotech.

"I have a hard time betting against the tech sector, it's just done so well and is a market leader," said Sokoll.

While first-time unemployment claims surged as thousands of small businesses closed during the second quarter, the market seems to have largely brushed off the economic data, instead taking a forward-looking approach that anticipates that businesses will be in a better position by year-end, according to Sokoll.

"The market is paying attention to the reopening of states, COVID virus and other countries opening up, and not necessarily looking at backward-looking data," such as unemployment claims, said Sokoll.

"Second-half corporate earnings are going to be what eventually supports the markets," Sokoll continued.