Where we are with the Coronavirus (COVID-19) today is a place with the broadest disconnect between conventional thought and reality. I say this looking back over my 20-plus years of experience as a market and investment advisor.
I do not at all intend to make light of the spread of the virus, with new cases being reported daily across the globe. As a father of four, I’m concerned about the health aspects for my family. As a financial professional, I’m interested in the economic impact that COVID-19 stands to have.
I want to focus on the economic impact COVID-19 is having by looking at the data behind the “king statistic” – the mortality rate.
My goal is that, by the end of this article, readers will be left with a sense of rational optimism.
Right now, the media is in a panic. The news spilling out affects markets and economics, and American companies in real-time. I spoke to several business leaders throughout the southeast, many here in Atlanta, and they said they’re canceling all travel. Why? Because other businesses are, too.
This practice is a self-fulfilling prophecy, friends. Deciding to slow down because others are is a reactive measure that doesn’t help the economy. Still, companies are doing it, and they are pulling back because they’re frightened.
It’s the mortality rate that will determine whether commerce as we know it halts and we go into recession, or whether business carries on. The news on COVID-19 has already roiled the market. Last week was the most volatile week on Wall Street since the Financial Crisis.
I do believe, though, that we will find out new information over the coming weeks and months that will alleviate much of the anxiety we feel right now.
If you listen to the headlines, led in large part by the World Health Organization (WHO), it’s no wonder you’re in a state of fright. The data we have now suggests the mortality rate (calculated by dividing the number of deaths by the number of reported cases) for COVID-19 topples over 3%. Right now, it’s being pegged at 3.4%, to be precise.
The conventional narrative, in my opinion, is much worse than what forthcoming data will uncover as more information is collected, and broader research is conducted.
The crux of the matter is the question of the accuracy of the mortality rate. This number could well be the difference between a pandemic with an economic shutdown or without one. As investors, it’s essential to understand what’s happening in the world and in the economy and market. Then it pays to question it.
For this reason and more, I’ve been tracking this issue closely for the past several weeks. I’ve interviewed many experts on the virus and its spread to get out front in understanding the severity of this terrible situation.
On a recent airing of my radio show, Money Matters, I interviewed Dr. Amesh Adalja. He’s the leading voice on bringing sanity to the COVID-19 conversation. To say it was an eye-opening talk is a tremendous understatement.
If anyone knows about infectious diseases, it’s Adalja. He was just cited in a brand-new report on COVID-19 and is a well-vetted expert on the situation with COVID-19. Adalja is a Senior Scholar at Johns Hopkins University’s Center for Health Security and focuses on emerging infectious disease, pandemic preparedness, and biosecurity.
According to Adalja, the current mortality rate is likely very inflated.
Based on his knowledge and experience, it’s higher now than it actually is because of “severity bias.” What this means is that the data being gleaned is from patients who are very sick, are hospitalized and may have complication factors.
In a word, Adalja believes we don’t have enough data on those of us who have COVID-19 but only get mildly sick (like a case of the sniffles). And there is plenty of controversy over this. But Adalja’s bottom line is that we simply aren’t testing enough people.
This point leads Adalja to say that the accurate mortality rate is, in reality, much lower.
As a comparative model, Adalja points to testing being done in South Korea. This country is no stranger to infectious disease outbreaks; they were struck hard by Middle East Respiratory Syndrome (MERS) in 2015. With COVID-19, the country is proactively screening as many of its citizens as possible. They even have “drive-thru” testing setups so they can collect more data on the spread of the virus.
In South Korea, health care professionals have tested 160,000 people and identified 6,300 cases of COVID-19. Of those with the virus, approximately 40 patients have died. That translates into a mortality rate of 0.6%.
“I do think that even though the sample size, we want it to be bigger in South Korea, we wish it would be bigger,” says Adalja. “I do think, however, that it’s enough to give us a hypothesis that has evidence behind it. So, it’s not something that’s an arbitrary assertion that’s based on small numbers and based on a hasty assertion.”
Adalja hypothesizes that the king statistic – once we have additional data to give a more accurate number – will be south of 1%. His guess is 0.5%. Now, this is still a scary number, but it’s a far cry from the WHO’s current 3.4% for the mortality rate.
While we have to use the numbers that we have right now, explains Adalja, there should be a caveat explaining that there is a limitation to the current testing.
This caveat could include information such as we’re currently only testing sick people and that a large number of fatalities fall into a subsection of the population. According to Adalja, not every country is doing robust testing yet, so while the mortality rate given by the WHO is a real number, we don’t yet have an accurate numerator – or denominator – for the equation. The accuracy is in question for now until we have more data.
In addition to collecting data, our world’s health professionals are racing to develop a vaccine and identify treatments.
Vaccines have been rapid to get to clinical trials. Still, it may take another 12 to 18 months before they hit our pharmacies, but that’s because of the duration and thoroughness of testing.
As for treatments, some places are using existing anti-viral drugs with mixed success. Patients in some countries have already received anti-malarial and anti-Ebola drugs, as well as some other experimental medications. If these approaches work, we’ll have data in the coming month as to their efficacy.
In China, doctors are using plasma from people who were sick but got better. This approach may or may not work in current patients, but Adalja says it could lead to the development of therapeutic drugs.
Our bottom line is this: a 3.4% mortality rate is scary to any and everyone. But we always need to consider the data behind big statistics like this.
Dr. Amesh Adalja was able to walk us through the current king statistic from a scientific perspective and show us that it’s likely not as bad as it now seems.
I hope I am, indeed, leaving you with a sense of rational optimism. Or at least with a feeling of being more informed.