Issue 66
April 12, 2020
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A week after our last post on March 15th, this author became symptomatic and subsequently tested positive COVID-19. It was a relatively mild case. However, the adverse effects of the virus disrupted our schedule. We thank you for your patience during these unprecedented times.

In the weeks following the maelstrom caused by the coronavirus, we have been intently focused on the corresponding data. Many areas of America are only now beginning to see an exponential uptick in infections. But at the epicenter of the U.S. outbreak in New York City, and in other “hot spots” like Detroit and the state of New Jersey, evidence suggests that we have reached the peak in terms of infection rates, hospitalizations, intubations and casualties. Worth noting is that while death rates remain elevated, bear in mind that mortality is a lagging indicator. Indeed, in these parts of the country, we are cautiously optimistic that we have inflected towards recovery, albeit in nonlinear fashion.

In New York City, hospitals are operating at or near capacity and health care workers are short of protective gear. But unlike Italy where care has had to be rationed – when doctors pick who lives and who dies – it appears that NYC will get through the apex of its crisis with enough ventilators, ICU beds and other necessary equipment to avoid the unthinkable.

Below we highlight nine key themes that have emerged from the coronavirus pandemic:

The Victims

The coronavirus pandemic is a human tragedy. The speed and ferocity with which COVID-19 has claimed, and disrupted lives is unprecedented in recent history. As of April 12th, in New York City alone, over twice as many people have perished from the coronavirus than on 9/11. On a national level ~22,000 people have died in just ~2 months. To help put these numbers in perspective: over nine years (1965-1974) ~58,000 U.S. troops were killed in Vietnam. Regrettably, despite evidence of the “curve flattening,” we might eclipse that number in a matter of weeks.

Globally, the coronavirus has infected close to ~2,000,000 people (the true number is probably exponentially higher as many people are never tested and/or are asymptomatic) and killed ~114,000 in a few short months. Italy (~20,000 deaths) and Spain (~17,000 deaths) have suffered tremendously, especially in proportion to their overall populations. France (~14,000 deaths) has been hard hit, as has the U.K. (~11,000 deaths), who’s Prime Minister Boris Johnson was recently hospitalized with the virus.

At TQC, we empathize with those people who have been directly or indirectly affected by COVID-19, and with those who might be in the future.

The Healthcare Providers

Every evening at 7pm EST, New Yorkers have taken to clapping, cheering, banging on pots, pipes and pans, and playing music in recognition and appreciation of the healthcare workers who are risking their lives to care for COVID-19 patients. This exercise has been repeated in similar formats around the world.

Let us all join in and take a moment to express our gratitude to all the health care professionals - doctors, physicians’ assistants, nurses, nurses’ aides, EMTs, support staff, and all others who have and continue to put themselves at the greatest level of risk – sometimes without adequate protective equipment - caring for coronavirus patients. Hats off to you all.

Doctor Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, has proven himself to be a true leader and a face of reason, transparency and prudence, keeping Americans well informed about the coronavirus epidemic. Let us not forget, Dr. Fauci is nearing 80 years old and still on the front lines fighting tirelessly to keep the American public safe.

Recently, while discussing hygiene and disease, Dr. Fauci said, “I don’t think we should ever shake hands again.” If we ever get an opportunity to do so, we sincerely hope Doctor Fauci makes an exception for us. A handshake is the very least we could do to recognize his courageousness.

The Government’s Response

Our government’s initial “response” was lackluster to say the least. One of the basic functions of a government is to take all reasonable measures to keep its citizens safe. The US government fell well short of that responsibility. We had a 6-week head start to prepare but instead took a lackadaisical approach. President Donald Trump did not act swiftly enough. At first, he minimized the threat of COVID-19 likening the virus to the flu, contradicted the advice of Dr. Fauci, made no effort to secure more N95 masks, protective gowns and ventilators, and failed to invoke the Defense Production Act (DPA) in a timely manner. (The DPA was passed in 1950. It enables the Federal government to force private companies to manufacture specific products in the event of a war or national emergency). The fact that there were not even enough testing kits to go around – and they are still in short supply - after witnessing the outbreaks overseas was a gross abdication of responsibility to American citizens.

To be fair, in addition to Trump & Co, many people, including scientists, also did not take the threat of coronavirus seriously. Some experts believed the outcome would be analogous to the respective SARS & MERS epidemics, and remain mostly contained to China and the Middle East. (There were 27 reported SARS cases in the United States; nobody perished. There have been two reported cases of MERS in the US, both patients survived).

Furthermore, during Barrack Obama’s tenure in office, our nations’ stockpile of N95 masks and other protective gear was depleted and his administration did not take adequate steps to replenish it. According to USA Today: “There is no indication that the Obama administration took significant steps to replenish the supply of N95 masks in the Strategic National Stockpile after it was depleted from repeated crises. Calls for action came from experts at the time concerned for the country’s ability to respond to future serious pandemics. Such recommendations were, for whatever reason, not heeded."

On the flip side, Trump has been in office for over three years, ample time to have rectified the Obama administrations’ mistake. However, according to The Economist, “When the Trump administration took office in January 2017 it inherited, among other things, plans to make cheaper ventilators and 20m reusable face masks, should the country need them. Nobody followed up. In 2018 John Bolton, the national-security adviser, ‘streamlined’ the National Security Council and, in the process, closed its pandemic preparedness office”

Belatedly, the administration pivoted. Presently, Trump & Co are scrambling to procure supplies. But “before the federal government stepped in, a handful of states went as far as arranging their own flights carrying protective equipment. While states were waiting for the federal government to do something, governors were banding together to place a large order of gear from China…several criticisms of how the White House is responding persist. The first comes from state governors, who say they are bidding against each other and against the federal government for supplies.”

The Chinese Data

Undoubtedly, Chinese government officials have been opaque about their nations’ infection rate and death toll. To date, according to official data, China has reported ~84,000 cases coupled with ~3,400 casualties. It impossible to fathom that in a country of ~1.4 billion people, only ~84,000 were infected and ~3,400 perished, especially when you consider the following:

• The virus originated in China.

• Before locking down the country, officials first tried to cover the outbreak up.

• The outbreak intensified during the lunar new year, a time period in which many rural migrants travel on the nation's network of bullet trains and buses to reunite with family; each passenger a potential host of, and agent to pass on.

• Wuhan is a logistics and transportation hub, an effective ingredient to facilitate the spread of the virus.

• Italy’s population (~60,000,000) is ~4% of China’s. Italy currently has ~144,000 cases and ~18,000 deaths.

• Stories abound how crematories in Wuhan have been running 24/7 since the inception of the New Year.

Clearly, the aforementioned data points do not coincide with official Chinese data. In fact, the death toll in the city of Wuhan alone appears to be at least 40,000 as of this writing.

COVID-19 is mostly in China’s rear-view mirror; infections and fatalities have dropped precipitously. If the Chinese were more forthcoming about the severity of the disease, the United States and other nations might have taken COVID-19 more seriously, and potentially been better prepared.

America should be mindful about lobbing too many criticisms at Chinese law makers. Because of our own ill-preparedness, we are now dependent on China to help us produce the protective medical gear our healthcare workers so desperately need.

Recently, Beijing has offered help in the form of N95 masks, ventilators and other gear. These should not be refused. However, we would be remiss not to point out that when any country obfuscating the truth indirectly contributes to the deaths of thousands of people, offering a few hundred body bags as a gesture of goodwill, is not completely altruistic.

The Misinformation

There are political extremists on both sides of the aisle who have leveraged the coronavirus pandemic to spread disinformation about the virus and its implications to suit their own personal and/or political agendas. Some of the claims are utterly ridiculous. We will not dignify such assertions with explicit examples, but they are plentiful. Unfortunately, some of these “pundits” have cohorts of followers.

Irresponsible, politically driven statements regarding the coronavirus are nothing short of moronic, dangerous, and subversive to humankind. The people who engage in this type of activity should be ashamed of themselves.

The Moral Quagmires

Soon after testing positive for COVID-19, I faced a plethora of moral quandaries. My dog walker would be arriving at my apartment. Should I disclose my status to the dogwalker? Who else should I tell? What are the costs and benefits? What is ethically the correct thing to do? Are there legal implications? My thought process went along the following lines:

“I was tested March 18th. I received my result on March 23rd. From my understanding the average run rate of this thing is ~14 days. I’m probably 3-4 days away. Yes, it’s possible that some cases last longer. That said the majority last ~14 days. For now, I’m being prudent donning a mask, gloves, distancing and disinfecting.”

“We are way past the point of containment. Hundreds of thousands of people probably have this (and many do not know it) in NY”

“How would I feel if somebody I worked with failed to disclose, they were COVID+?”

“How do I balance somebody’s economic wellbeing, with their health.”

“What is the least bad solution, because there is no good answer? Let’s assume the dog walker is living paycheck to paycheck (many are). Ok now, let’s assume that if the dog walker does not work, he cannot pay rent. So, I tell my dog walker I have COVID-19. And he may temporarily refuse to walk my dog and lose part of his income. Alternatively, he might become infected regardless. He might be infected right now. Instead, let’s assume I am prudent. I wear a mask, gloves, stay 6 ft away and disinfect. He continues to walk my dog (and other dogs) and get paid. There is a chance he catches the coronavirus from me. There is a chance he gets it from somebody else. He might already have it.”

I made the decision to disclose my positive status to my dog walker, employer, family and friends. Ethically, I thought it was the correct thing to do. My dog walker thanked me. Ultimately, he made an informed decision to continue working.

I was fortunate, my predicament was a relatively low stakes affair. But my experience is a microcosm of what many COVID-19 positive people, and the people who interact with them are, or will be, faced with. And some choices might very well mean the difference between health and harm, or a paycheck and financial distress. There is no black and white answer, in fact, there are way more than fifty shades of grey.

The Social Distancing

President Trump, mirroring the sentiments of his medical advisors, recently warned that the next two weeks will be brutal, with more casualties than we have seen to date, and that now is the time to take our stay at home orders even more seriously. NY Governor Andrew Cuomo has urged local authorities to step up distance enforcement and increased fines for violations. Dr. Fauci implored American’s “to intensify, not pullback on virus efforts.”

Social distancing requirements are not in place to infringe upon anyone's individual rights; they help curb the spread of the coronavirus. Unfortunately, some individuals are not adhering to the advice of medical experts. Young adults represent the largest cohort of the population that are not taking the virus seriously. Their careless actions: partying on the beach during spring break and congregating in large groups, is extremely dangerous. However, it is not just young people that are putting entire communities – especially older American’s and those with pre-existing conditions – at risk.

Last week, members of NYC’s Ultra-Orthodox Jewish community were reprimanded for a large funeral gathering. Certain Church leaders are also refusing to adhere to social distancing guidelines. To be certain, many ultra-orthodox Jews in New York and elsewhere, Church leaders, and other religious figureheads are indeed following social distancing rules, but a disproportionate number of certain fantastically religious groups, are not. That is leading to clusters of cases in those respective communities. Indeed, their selfish actions are promoting the spread of the coronavirus, a disease that can kill their own loved ones. Might they hope God is not their ultimate judge?

In our view, anybody egocentric enough not to adhere to social distancing rules should not only be ticketed, they should be charged with reckless endangerment.

The Economic Impact

We are already in a recession. The rapidity at which we got there is nothing short of stunning. Less than two months ago, America’s economy was humming. Unemployment was at historic lows (~3.5%); wages were rising, corporate profits were strong, and gross domestic product (GDP) was growing at a handsome pace. And then the coronavirus reared its ugly head.

Today, the economy is virtually shut down. All but “essential businesses” have been ordered to close. People are terrified and justifiably so. Millions of workers have been laid off. The unemployment rate has surged and is most likely well into double digits. Small businesses – responsible for employing the largest number of Americans – are suffering.

To help mitigate the economic damage, The Federal Reserve has cut interest rates to zero and injected unprecedented amounts of liquidity into the banking system. Lawmakers passed emergency legislation that will result in direct payments to qualified Americans, expanded programs for small business loans and various other supportive measures for the economy. More will be needed. This quarter will probably mark the worst contraction of GDP since the great depression in 1929.

The Future

At TQC, we think America will rebound sooner than the consensus. Very soon, antibody testing for COVID-19 will be available to the masses. This is imperative. Because once somebody becomes infected and subsequently clears the virus, their body builds up an immunity to it. Antibody testing will enable people to re-enter the workplace without the fear of infection. A successful antiviral drug or a vaccine would be a game changer.

The coronavirus pandemic has jolted American companies out of complacency and brought out the best in American ingenuity with an unprecedented sense of urgency and speed. Stalwarts like Minnesota Mining & Manufacturing (MMM), Honeywell, Abbot Labs, Ventec Life Systems, and many others have quickly ramped up production in an all hands-on deck effort to satisfy demand for precious medical equipment. The Wall Street Journal highlighted smaller, nimble firms like Eclipse International, a New Jersey based bedding manufacturer and Aunt Flow, an Ohio based feminine hygiene maker, that are now producing face masks. “British vacuum cleaner giant Dyson Inc. designed the CoVent ventilator in 10 days. Pittsburgh’s Thar Process Inc., a carbon dioxide extraction and purification company, is bottling a new hand sanitizer that a staff chemist ginned up practically overnight.” Ford is making face shields.

In due time, our respective routines will normalize. However, there will be changes at the margins. Some firms will continue to enable more of their workforce to toil remotely, potentially reducing the need for office space. Commercial real estate could be negatively affected; but this will translate into benefits for networking gear manufacturers, collaboration software companies, and related technology providers. Telemedicine will become a more accepted medium to treat patients, especially as insurance companies have embraced paying for the practice. More people - especially older Americans - will have gotten accustomed to, and appreciate the comfort of, shopping online. Some will continue to avoid brick and mortar locations. This is bullish for e-comm firms and negative for some traditional retailers.

In matter of weeks, data is indicative that we will witness a sharp decrease in the number of coronavirus infections. By the time production of highly coveted N95 masks, protective gear, and ventilators are ramped up to meet current demand, we most likely will not need all of it. A silver lining of the coronavirus outbreak: when the next pandemic arrives – and one will – there will be supplemental resources readily available.