The World Health Organization officially declared a pandemic one year ago. This time last year the world was beginning to grind to a halt as new temporary shutdowns were being announced each day. Many of us left our offices on Friday afternoon thinking we would quarantine for a couple of weeks before returning to the office. Students left their classrooms that same day with the thoughts of having two weeks off. Sports leagues and NCAA games were shutting down without a known return date. The stock market was already down over 20% from its peak in February, and no one knew the low had not been reached. Volatility in the market that had started in February would continue through the rest of March. Lockdowns and restrictions that were thought to be short term in nature have now lasted a year. After a year of change, let’s take a look at the current COVID-19 situation.
Any discussion of COVID-19 needs to start with some grim numbers to which many have become numb, after dealing with the pandemic for a year. According to Johns Hopkins Coronavirus Resource Center over 2.6 million people have died related to COVID-19, including over 530,000 in the United States, by far the most in the world. There have been over 118 million cases worldwide including over 29 million in the U.S. New daily cases, deaths and hospitalizations are all trending down after peaking in January, but are still around last summer’s highest levels. However, better testing, therapeutics and most importantly vaccines are providing much optimism.
Testing has improved dramatically since the beginning of the COVID-19 response in the U.S. In the early days, tests not only took time to develop, but once developed the limited supply and turnaround times created headaches. The lag in the time that it took to get results was a big hindrance. Today, testing is readily available. A number of healthcare diagnostic companies stepped up to the challenge and have made entire product lines of COVID-19 tests. Danaher, Thermo Fischer, Becton Dickinson and Abbott Labs to name a few, all now have PCR and antigen testing. Testing will be around longer than one may think, at least for now. For example, people will still need to get a test before medical procedures. Will employers or schools require testing before returning from trips or breaks? Rapid testing is available where results are known within 15 minutes. Testing will move away from the gold standard of the PCR tests in some cases to more rapid tests, but either way testing will remain.
Treatments for COVID-19 have made progress over the past year. At the start of the pandemic COVID-19 was a mystery and there was no standard of care, which resulted in bad outcomes. Now there are treatments, and doctors have more insights on how to help patients recover. It is important to treat COVID-19 as early as possible. At a certain point, much like the flu, one has to treat the symptoms more than the actual disease. While there are many drug companies still working on treatments, the FDA has approved 9 drugs for Emergency Use Authorization.
Vaccines have been a bright spot in the medical field and continue to offer a positive outlook. The quickest a vaccine had previously ever been developed was 4 years, and now multiple companies have developed highly effective vaccines in less than a year. In the U.S. there are currently three vaccines that have Emergency Use Authorization from the FDA. The Pfizer#/BioNTech and Moderna vaccines are two-dose shots and have been approved since December, while the Johnson & Johnson# vaccine is a one-shot vaccine which was approved just a few weeks ago. The biggest challenge at this point is getting enough supply to meet demand. Production of all three vaccines continues to ramp up, and with the addition of the JNJ vaccine, supply continues to grow. According to the CDC, as of yesterday there have been more than 98 million doses administered in the U.S. Over 64 million people have received their first dose and 33 million people have received both doses. That means 19% of the U.S. population has received at least one dose of a vaccine. When you remove children from the population, as they are not able to get the vaccine yet, 25% of the population 18 and over have received at least one dose. In the higher risk demographic of people age 65 and older, 62% have received at least one dose. The U.S. has purchasing agreements with all three vaccine makers for millions of doses, and the U.S. should have enough vaccines for its entire population by the end of the Summer. In the beginning it was tough to get a shot due to limited supply and poor distribution plans by some states. That is changing, the current 7-day average is over 2 million shots per day. The distribution plans change state by state but many states are beginning to expand vaccine eligibility. Alaska now says that anyone over the age of 16 is eligible for a shot. Within the next week, Texas, Georgia, New York, Ohio and Minnesota are all lowering the age requirement as well. Last night President Biden announced he would like to see all adults eligible for a shot by May 1st. There are questions that remain around vaccines that cannot be answered yet. How durable is the vaccine? Will a booster shot be needed and if so when? How effective are the vaccines against different strains of the disease? Are there any long-term side effects? These are all questions that will be answered over time.
On Thursday, President Biden signed another COVID-19 economic relief package. This is the third relief package signed since the beginning of the pandemic, and the largest. The $1.9 trillion bill includes $1,400 direct payments to Americans making less than $75,000. The White House says those payments will begin to go out this weekend. This is the third direct payment, including $1,200 last spring and $600 in December. This package will also include an increase in the child tax credit, direct funding to state and local governments, funds for schools, and more money for vaccine distribution. The economic support from the U.S. government as well as governments around the world during the pandemic has been tremendous in size. The Federal Reserve’s balance sheet has grown by more than 60% in the last year alone.
Lockdowns, restrictions and recommendations have ebbed and flowed much like case counts over the past year, and have been very different state by state. Texas is leading the way with reopening, as it lifted all restrictions on businesses and removed its mask mandate. In response, some cities and some major retailers are keeping their mask mandates in place as they feel the state is moving too quickly. Warmer weather should aid in the reopening as well. The CDC finally acknowledged in October that COVID-19 spreads through the air, so being outdoors is safer than indoors with regard to transmission. We also know that masks work to help curb the transmission, and for the most part adoption of wearing masks is high. Many states are now lifting their travel restrictions and even New York City is increasing its indoor dining capacity to 50% next weekend. Some parts of the world that we knew are opening back up.
Other parts of world that we knew have changed forever. The rise of working remotely is here to stay. Over the past year a lot of the world learned they could do their jobs at home, and while offices will start filling back up, we are probably past peak office occupancy. If people can work from home and are not tied to living close to the office, will this continue to drive a move to the suburbs? Video conferencing became prolific and is here to stay. Companies like Zoom and WebEx by Cisco# are working to make the experience even better. Last summer’s travel season was dominated by people driving. This year air travel and tourism should snap back. However, all those video conferences we have become accustomed to will continue to weigh on business travel. Within three days the sports world came to a halt, with golf returning first to no fans and eventually all sports returning at first in bubbles, and then with no fans in attendance. Fans are finally starting to return in a limited capacity in indoor arenas and there will be more when outdoor sports like baseball and football return next fall.
Are we out of the woods with regard to COVID-19? No, not at all, but we are getting closer. The breakthroughs in the past year, especially with vaccines, are helping us get a lot closer. The world is intertwined more than ever these days, so until the entire world can be vaccinated, it will not be fully controlled. There will continue to be hotspots with different variants popping up. Brazil is going through one right now as a second wave of a new variant is overwhelming hospitals there. Over the past year we have learned a lot about COVID-19 and have worked tirelessly to end the pandemic through restrictions, mandates, and most importantly science. We are getting closer every day but there is still work to be done.
A quick look at the markets yesterday saw high quality technology names continue to lead the NASDAQ higher after touching correction territory earlier in the week. The S&P 500 posted an intraday all time high as banks and energy related stocks joined technology in the rally. This all comes as the U.S. 10-year Treasury continues to trade above 1.5%. All of these are signs of optimism and a healthy economy with some pent-up demand as we come out of a year with the pandemic.
Unrelated to COVID-19 I wanted to offer an update to a point Jim made earlier this week. The nonfungible token (NFT) digital art work that Jim mentioned, was up for sale and had a bid of $3.4 million on Monday. It sold on Thursday for $69.3 million. This is easily the record high for an NFT work, at least for now, and the NFT market has now exceeded $400 million in transactions so far in 2021.
Liza Minnelli, Mitt Romney and James Taylor all share March 12th as their birthday.
Daniel Rodan # 610-260-2217