The virus endgame

Sometimes it’s hard to be optimistic about the situation, although I remain invested in tech stocks, nonetheless, as I think it is the sector most immune, and in the long-run (18-24 months) things will mostly return to normal. Yes, we can all agree the virus will eventually die down, and the rate of new cases is negative or flat, which is good news, but there is no agreement about how long the shutdowns should be dragged out to get the # of daily cases below an acceptable threshold. Given the asymptotic nature of exponential decay, it can take months , even a year, for the # of daily case in the US to fall below such a threshold.

Trump has unveiled a tentative plan to reopen states in phases, but Trump has a tendency of suggesting that something happen, such as in regard to tech censorship of conservatives or in regard to the opium epidemic in the Midwest, and then little to no further progress is made, or it is delegated, delayed, and deferred to some sort of ineffectual committee, where the issue is forgotten and dies. But in Trump’s defense, in this case the buck really does stop with the state and local governments. This makes the situation worse, because one can reasonably assume that Trump wants businesses to reopen, but he does not necessarily know when or the best way of going about it, but possibly some state politicians would choose to protract the shutdowns, even at the cost of being reelected, if it increases the likelihood of Trump losing that state. Michigan, which has a democratic governor, Gretchen Whitmer , also has one of the strictest stay-at home policies of all states, and in 2016 Trump won Michigan by an astonishingly small .23% margin..

Come late April or early May, I would not be surprised if the shutdowns get extended to June or July, and then probably another stimulus passed. It’s not like the number of daily cases is going to just fall off a cliff, but rather the decline is very gradual owing to the highly contagious nature of the virus, but also due to increased testing. I don’t think anyone high up, Trump included, knows what to do. What I mean is, what is supposed to be the endgame in all of this? Do we keep current policy in place until the number of daily cases falls to zero, which could take a year or longer. A worse case scenario is if we see a sudden big spike in # daily cases, which means that the forecasts have to be bumped significantly because a sudden increase in daily cases means a protracted epidemic (growth along the x-axix) and more daily cases (growth along the y-axis), as the total growth is increased by a squared (x times y) rather than linear factor. This creates a bad sitution made worse if things have recently been reopened.

Because policy is so heavily influenced by daily case data, I think this is why an argument can be made to deliberately under-report the number of daily cases in such a way as to make it seems like the virus is subsiding. Individuals who test positive would still be told to quarantine but enough cases would not be reported as to make it seem like things are getting better, but not so sudden as to arouse suspicion. So if 20,000 people in a day test positive, report only 10,000. Then 9,500 the next day, an then 9,000, etc. Voila…curve flattened, and everyone can get back to work.