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What caught my eye this week.

Mixed events in the global soap opera saga Coronavirus this week.

The good news is the Prime Minister returned from that episode to tell us we’re probably past the peak of Covid-19.

The focus now is on R0 – or R, as it’s been sensibly rebranded – aka the basic reproduction number. Keep it under ‘1’ and the pandemic is not spreading exponentially.

As a nation our R0 number is now somewhere under 1. Probably between 0.5 and 0.75, although it may still be higher in some places like (tragically) care homes.


The lower the R0 the better, obviously, but the question will increasingly be how much more [insert what matters most to you] damage we can take to lower it further?

Getting R0 down from the 4-5 that looked like it might overrun the NHS was a no-brainer. But there’ll be diminishing returns.

Full lockdown – or even milder social distancing – has health as well as economic consequences, too. Some people will die earlier because we brought a recession upon ourselves.

Yet equally, every micro-notch higher in R0 that we accept means someone somewhere will die before their time from Covid-19.

That’s the equation for the upcoming weeks.

There are no easy answers. Perhaps there was a more promising hypothesis, but the past seven days looks to have done for it.

Spread ’em

I’ve been mildly obsessed with Covid-19 since January (and mildly infected, I believe, in early March). I’ve ridden a rollercoaster from being precociously concerned to evasive action to believing things might not be as bad as was thought and now I’m halfway back again.

Long story short1 a series of intuitions (or guesses, if you prefer) informed by endless reading about Covid-19 convinced me the virus was spreading far faster in the UK than was generally thought likely.

All the experts knew the virus was spreading more quickly than reported cases, of course. But I (no expert) believed it was circulating faster again.

That was a comforting thesis because it suggested (1) the virus wasn’t as deadly as even the more middling predictions suggested and (2) we might reach some level of herd immunity sooner rather than later.

It has long been clear this virus has a Great White Shark’s nose for the elderly and vulnerable, and I’ve been very frustrated we either couldn’t or didn’t shield them better.

But in a super-infectious scenario, for the vast majority of us Covid-19 would be a very mild infection, mostly asymptomatic.

And by the time full lockdown was called, I felt it was possible a large number of us in London at least had already had it.

That proved to be right… a bit.

Peak deaths for the virus occurred in early April. Working backwards gets you to peak infections towards the end of the second week of March.

But how many? For that we can first consider deaths.

It’s hard to unpick the roughly 30,000 or so excess deaths we’ve seen so far in England and Wales in 2020.

Most will be due to Covid-19, but some may have been attributed to the virus incorrectly. For example, there were fewer heart disease related deaths in March. Perhaps some were blamed on Covid-19?

But just crudely guessing 30,000 and assuming an infection fatality rate (IFR) of 1%, that gets you to three million or so infected, with peak infection probably occurring in or around the period of voluntary lockdown, but just before mandated lockdown.

So overall millions have been infected – but not enough to be good news.

Unless… the IFR was much less than 1%, because far more people had been infected.

Start spreading the blues

That left antibody testing carrying the baby.

The hope was antibody testing would reveal that in areas of rampant morbidity to the coronavirus – such as Italy, London, and New York – many MANY more people had been infected.

If this was true then you could indeed pull down the IFR.

Well, over the past seven days we got the first large scale data – from New York City and Stockholm – and it’s not good enough.

The New York City testing is the most promising, implying 25% of its citizens have had Covid-19. However, while that shocked the media it was much lower than I’d been hoping for.

Indeed as reader @Vanguardfan points out, 25% implies an on-consensus IFR of around 1%, if you take into account the number of presumed deaths to Covid-19 in New York City.

And 1% is no comfort if you apply it to the UK’s population of 67 million, either.

Not every last citizen will need to throw the viral dice – we should get some natural resistance to the virus on a population level, before everyone has had it.

However if we assume the chunky herd immunity thresholds that most experts think we’d need to see – at least 50%, possibly more like 70+% – even New York is far from having ‘earned’ an inherent resistance through its deathly exposure2.

This is disappointing to me, though it won’t be unexpected to the experts. It looks like they called it.


Much is still unknown about this virus. For every potential fact I find in early research about it, you can retort with another. Anyone waiting for scientific confidence (proof, for shorthand) better have a lot of series lined up on Netflix.

The huge list of Covid-19 links below (perhaps 20% of what I’ve read this week) gives just a taster.

It’s possible that amid this uncertainty there may be other off-ramps from the bad (though not worst-case) scenario:

  • Maybe a large number of people can kill the virus with their immune system so easily that they don’t develop antibodies.
  • Or maybe it’s spread much more widely among the most vulnerable parts of society, which is terrible news right now, but may have elevated the fatality rate and hopefully left the survivors with some resistance.
  • Summer could well curb the spread anyway, which at the least should give us time to better prepare for any resurgence.
  • Maybe the herd immunity threshold will prove lower than presupposed.
  • Or more likely it may turn out that just a few key social distancing actions – no handshakes, avoiding crowds indoors, and washing your hands – will do 90% of the R0 lowering. (The Swedish approach.)
  • Kids may not be infectious, too, taking them out of the equation altogether.

I have reasons for making all those suggestions, based on my own reading et cetera.

But the truth is there’s an equally long list of reasons to be pessimistic.

An ‘ell of a recession

Bottom line: I no longer hope for a very quick exit from this nightmare, unless perhaps R0 collapses extremely rapidly in the next few weeks and we can go back to trying test and tracing.

And this probably kicks the V-shaped recovery into the long grass. The drag from physical distancing and other anti-viral precautions alone could knock a few percentage points off GDP, even if we go back to semi-normal.

What are football matches, trade conferences, pubs, easy air travel, and the Glastonbury Festival worth to GDP, to name but a few lost causes?

Even if fatal Covid-19 cases do plunge and more normality can be reinstated, for as long as outbreaks flare up it may be hard to persuade some people to take their chances.

We’ve been bombarded with deathly warnings about the virus and kept under house arrest for a couple of months on its account. Dinner and a show on Friday night? Many may continue to Deliveroo and chill instead.

And while a cocktail of better treatments (drugs and regimens) will probably be assembled by the end of the year, that’s, well, the end of the year.

So L-shaped recovery it is. Probably what’s priced in by the global stock markets, anyway.

You see, a lot of people are talking about market mania after the quick bounce from the March lows.

But this is mostly a US market thing. And in the US market it’s mostly a tech thing. And of the tech companies, it’s mostly a bunch of cloud giants who couldn’t have come up with a better driver of demand than ‘shelter in place’. Strong demand now, plus their valuations anyway turn on the years of prodigious earnings they’re expected to make long after Covid-19.

No, if you want a market that’s geared to the global economy, look to the UK’s FTSE 100. Its 2020 performance (red) already looks like an ‘L’, versus the (blue) S&P 500’s squint a bit ‘V’:

[Click to increase the suffering]

Source: Yahoo Finance

I’ve always been more worried about the financial impact of global lockdown than most, even while I was slightly more sanguine about the virus itself.

And now I see economy-dinging restrictions continuing.

So I’ve a horrible feeling that while the virus may be passed the peak, when it comes to the economy it’s like we’re back when people were gasping at footage of Italians stuck inside, seemingly never realizing the sort of misery we’d soon face here.

Note: Fed up with virus chat? I’m planning to drastically reduce the number of Covid-19 links here next week. We’ve just hit that peak, too!

From Monevator

Do US Treasury bonds protect UK investors better than gilts? – Monevator

From the archive-ator: Reminiscences of a stock market wallflower – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!3

Sales of almost 400,000 homes stalled due to lockdown, says Zoopla – Guardian

Millions face ‘financial cliff edge’ due to Covid-19 crisis, says Citizens Advice – Guardian

Nationwide: Pre-pandemic house prices rose 3.7% – Financial Reporter

British manufacturers record worst slump since records began 30 years ago – ThisIsMoney

Royal Dutch Shell cuts its dividend for the first time since 1945 – Guardian

Virtual rate cut forces Nintendo Animal Crossing gamers into riskier assets [Free to read]FT

The US has now seen 30 million people file for unemployment – NPR

[Click to enlarge]

Good letter to investment partners on the current Covid-19 reality [PDF]Mary Meeker

Products and services

Treasury to allow first-time buyers to access Lifetime ISAs without penalty – ThisIsMoney

Investment platform account openings surge, despite coronavirus uncertainty – Which?

Tui cancels all beach holidays until June; a million customers affected – Guardian

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

How to apply for a three-month mortgage payment holiday – Which?

Homes on a hillside for sale [Gallery]Guardian

Comment and opinion

Three points to note on active funds and bear markets – Evidence-based Investor

Less is more – Humble Dollar

A defensive move: Looking at gilts – DIY Investor

What was the catalyst for the market rising? – The Irrelevant Investor

Talk is cheap – Of Dollars and Data

Quick look at what a bear market does to a real-life financial plan – Where Eagles Fear To Perch

But what if we’re wrong and the market never bounces back? – Abraham Okusanya

Why I’m not invested in gold – Get Rich Slowly

When you have no idea what happens next – Morgan Housel

Why value died – A Wealth of Common Sense

Naughty corner: Active antics

Terry Smith: If you must do dividends, look to family-owned firms – Portfolio Advisor

Three burning questions for Warren Buffett at tomorrow’s Berkshire event – Morningstar

When Buffett was a quant [On deep value]Verdad [via Abnormal Returns]

This market-timing model just flashed a bullish four-year outlook for stocks – MarketWatch

Musings on misadventure and market madness – Simple Living in Somerset

Timing, luck, and surviving – Fred Wilson


[In email? Visit Monevator if you can’t see a YouTube lecture from CMO Chris Witty]

Self-care in a coronacrisis

This is why you can’t remember yesterday – Medium

Why you should give up on your social life when you’re in a pandemic – Slate

People are having less sex in lockdown – BBC

Feelin’ Groovy – Humble Dollar

Nobody knows what is going on – Mark Manson

All about those antibodies

Antibody testing: A user’s guide to the immune system [Great primer]The Atlantic

It usually takes about 13 days for antibodies to show up in the blood [Research]Nature

25% of NYC residents test positive for Covid-19 [Sadly, result supports a c.1% IFR]Newsweek

Can antibody tests tell if you’re immune to Covid-19? – LiveScience

The false hope of antibody tests – The Atlantic

What policymakers need to know about Covid-19 protective immunity – Lancet

The rest of Covid-19 cornered

Social distancing reduces ‘overshoot’ on the way to herd immunity – Carl Bergstrom via Twitter

Why the Coronavirus pandemic is so confusing [Primer]The Atlantic

Experts fail to find a single case of children passing virus to adults – The Age

Social-distancing at airports is ‘impossible’, says Heathrow boss – BBC

What drug trials tell us so far about the anti-viral treatment remdisivir – Science

US germ warfare lab creates test for pre-infectious Covid-19 carriers – Guardian

How does Britain compare with other countries? [It’s too soon]Guardian

Covid-19 deaths twice as high in poorest areas in England and Wales – Guardian

Low Covid-19 death toll raises hopes Africa may be spared worst [Free to read]FT

AI models suggest that masks can ‘significantly’ reduce the spread of coronavirus – Venture Beat

Masks & emasculation: Why some men refuse to take safety precautions – Scientific American

A cautionary tale from San Francisco’s re-opening in the 1918 flu pandemic – NBC News

Many US prisoners test positive in four US jails; reportedly few with symptoms… [to-date]Reuters

…although later stories talked about deaths [Seemingly earlier in breakout?]NBC News

Sweden had no lockdown, but its economy is expected to suffer as badly as neighbours – CNBC

What is the hidden health cost of coronavirus? – BBC

How Italy became ground zero for Europe’s coronavirus crisis [Deep dive, blames business]CNBC

Political prison

Coronavirus & Brexit: the connections and their consequences – Chris Grey

Has Sweden’s coronavirus strategy played into the hands of nationalists? – Guardian

Kindle book bargains

The Basic Laws of Human Stupidity by Carlo Cipolla – £0.99 on Kindle

What You Do Is Who You Are: How to Create Your Business Culture by Ben Horowitz – £1.99 on Kindle

Money: A User’s Guide by Laura Whateley – £0.99 on Kindle

The Hating Game [‘The very best book to self-isolate with’] by Sally Thorne – £0.99 on Kindle

Off our beat

Meteorologists say 2020 on course to be hottest year since records began – Guardian

Microsoft Word now flags double spaces as errors, ending the great space debate – The Verge

Pentagon releases three UFO videos taken by US navy pilots – Guardian

And finally…

“Even the darkest night will end and the sun will rise.”
–Victor Hugo, Les Misérables 

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  1. Read the past two months of Weekend Reading comments for the real-time discussion!
  2. Presuming such an immunity actually exists, which isn’t definitively proven, but which seems likely
  3. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

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