With over half of the year already going by, the novel coronavirus which first appeared in Wuhan, China in late 2019 has certainly made a case for itself as the single most defining feature of 2020. Thanks to its long incubation period, asymptomatic contagion, and simple airborne transmission, Covid-19 spread around the globe like wildfire, leaving no land untouched.
But after almost seven months of the pandemic, no one has even come close to the United States when it comes to infections rate. The US being the biggest economy in the world, what goes on there affects everyone on the planet. This is why it is crucial to understand what is happening in the United States, why the outbreak there has not peaked like it has in other countries, and what this means for the markets in the future.
As of this morning, the United States is home to about 3.2 million people who got infected with the coronavirus. This is about twice as many cases as Brazil, who is the second most affected region at the moment. Yesterday the US reported an increase of over 61,000 cases, the second day in a row that the country marked over 60,000 new infections.
It is important to note that the states in the south and west of the US that are currently dealing with the most serious outbreaks - Florida, Arizona, Texas, and to a certain extent California, all reopened their economies too quickly. This is not a second wave of Covid-19, it is the first wave that never got a chance to die out because the lockdowns in May were too short.
Data pointing to the virus peaking in May was compromised (due to insufficient testing), and people protested against the social distancing measures, which they saw as an infringement upon their freedoms. Plus, the economic burden of the crisis was mounting - more than 21 million people lost their jobs in the United States during the pandemic alone.
The President, Donald Trump, has repeatedly shown a disregard for the safety measures that Anthony Fauci and other medics have tried to champion to curb the spread of the virus. Trump has repeatedly visited enclosed public spaces without a mask and without keeping a distance from the people he was meeting with.
To top it off, he has now formally asked the Center for Disease Control to change the guidelines of how to prevent Covid-19. The official list of recommendations (which include proper ventilation, masks, frequent hand washing, social distancing) was deemed too difficult and cumbersome by Trump. The CDC guidelines are what public institutions, schools, offices, and other businesses rely on for information about the virus. Experts have argued Trump wants the guidelines weakened in order to have grounds to reopen schools soon, even though there is not enough data to prove that children will be safe.
Looking beyond politics, medical experts have deemed the US handling of the pandemic a complete disaster. With the President ignoring the seriousness of the situation, Anthony Fauci’s prognosis of 100,000 cases per day could very well become a reality. It is simply too early to speak about a peak in the United States. Thus, we expect more infections, possibly more lockdowns, and more harm to the economy as a result.
The current situation is beneficial for safety assets. The dollar is strengthening while stocks are under pressure. Gold is another asset that has shone brightly in recent weeks and could well continue to do so.
