How will Covid-19/Coronavirus Affect my Alternative Investment Portfolio? Part 16: June 13th

U.S.'s mixed progress against the virus may be slowing; Georgia's muted reopening appears to stall; "Houston We Have a Problem" -- signs that a second virus wave is swelling; Economy pinned to the mat by yet more massive unemployment; Almost $1.5 trillion of crucially needed stimulus funds sitting idle due to bureaucracy; OECD expects U.S. recovery will lag behind top-performing countries; The stock market's triumph of optimism over experience; Thousands of "long haulers" claim debilitating symptoms of Covid-19 can last months; Type O blood may be protective against the virus; More unexpectedly fast progress in the race for a treatment; Update on my investment strategy.

(Usual disclaimer: I'm just an investor expressing my personal opinion and not a registered financial advisor, attorney or accountant. Consult your own financial professionals before making any financial decisions. Code of Ethics: I/we do not accept any money from any sponsor or platform for anything, including postings, reviews, referring investors, affiliate leads or advertising. Nor do we negotiate special terms for ourselves in the club above what we negotiate for the benefit of members.).

Quick Summary

Many things happened this week that could affect investors. This week the news was tilted toward the economic repercussions of the crisis, and included a bit more about the virus than it has for the last 2 weeks.

By the way, this is one article in a multi-part series that has been published weekly since the pandemic began back in March 2020. The series started with three introductory articles on the virus, effect on the economy and alternative investment classes. And then it moved on to weekly updates on the latest and greatest developments (along with weekly updates on my evolving personal portfolio strategy). You can see the links to every article in the series here.

U.S.'s Mixed Progress Against The Virus May Be Slowing

This week, the U.S. continued to battle the coronavirus that causes the Covid-19 disease. And this week, more than 5,000 additional people died as the death toll climbed to 117,141 (versus 111,627 last week).

For the second week in a row, the country's overall progress fighting the virus stalled-out. The national death doubling rate (the time it takes for deaths to double) remained unchanged from two months.

Before this, the U.S. had experienced seven consecutive weeks of success in bending the curve (since April 11 in part seven of this series).

In contrast, the U.K. reduced its doubling rate to three months and Italy to eight.

On the other hand, the U.S.'s daily death rate did improve slightly. Last week, it showed a troubling spike and then leveled off. This week, it dropped a little bit below that plateau.

So this was good to see.

Meanwhile, South Korea continued to lead most of the world for another week in minimizing deaths (one of the lowest per million) while also minimizing economic damage (growth is projected to barely shrink this year, and without needing to borrow trillions of dollars for stimulus). It started the week with a large decrease and then bounced back to where it was originally (that is, still in one of the best positions on the planet).

As we talked about in part six, South Korea uses an aggressive mixture of the Three T's of disease control (testing, tracing and treatment).

Japan has gone with a similar strategy, and this week continued to experience similar success:

Meanwhile, Sweden has opted with a lockdown-lite strategy (see part 8). The hope has been that if this works well, it might provide another workable model for other countries looking to deal with the virus.

However, Sweden has been plagued with uneven performance and multiple waves of infection. This week, the country perhaps turned a corner by beating back its fourth wave:

This is potentially promising, but in the past, Sweden has done this only to relapse with another wave. Hopefully, we'll see them successfully sustain this trend into the next week (and beyond).

Sweden's death rate continues to be three to seven times higher than their Scandinavian neighbors (see part 12). And lockdown-lite continues to appear to have failed its main economic objective. The country is still expected to plunge into a severe recession (their GDP is projected to be -5.6% in 2020, versus -5.9% for the U.S.). This is a bit better than the average -8.1% projected for the Euro Zone, but isn't the large benefit many hoped to see.

Georgia's Muted Reopening Appears to Stall

One of the most important questions for investments (as well as the health of the country) is "what will the shape and speed of the recovery be?" If it's V-shaped and quick, then many investments will be just fine. On the other hand, if it's one of the other shapes (U-shaped, swoosh, etc.), then some or many investments might run into problems. (See part 14 for more information on the possible "recovery shapes" and their ramifications)

To monitor the evolving situation, we've been watching Georgia very closely. It was one of the first states to reopen. So this makes it one of the most useful early indicators of what may be in store for the rest of the nation.

On April 24th, Governor Brian Kemp reopened nail salons, hairdressers, bowling alleys and gyms (as long as they followed state protocols). Then, restaurants and theaters were allowed to reopen three days later on April 27th. So they've effectively been open for about a month and a half.

How are they doing? There's no state agency that publishes weekly data on this kind of statistic. But, fortunately, we can get the info from other places. For example, Placer.ai tracks mobile phone usage to different types of businesses to measure foot traffic.

In the past, we've looked at McDonald's, Applebee's, the Cheesecake Factory, Khols, Gold's Gym and IHOP. For the vast majority, progress has been slow (swoosh-shaped) and very unprofitable-looking (ranging from -41% to -48% foot fall versus the previous year).

The one exception was Kohl's. While still looking significantly depressed at about -20% (year on year) this was still twice as good as the others. Also, its pattern of improvement was much more rapid and arguably suggested a slow V-shaped recovery.

So let's take a look at Kohl's this week:

Unfortunately, it looks like Kohl's progress has stalled and foot traffic remains stuck at around -20.22% (year on year). If this continues, it might mean they are experiencing a combo-shaped recovery (V-shaped transitioning into a swoosh). But, one week is not enough data to determine a trend. So we'll continue to monitor.

Next, let's take a look at gyms. Last week, we looked at Gold's Gym, which was hurting pretty badly (-45% year on year). This week, let's look at another gym with a different model.

Anytime Fitness has an unusual "low-staff" model: no receptionist desk and no operating hours. Instead, members have a key to let themselves in and out at anytime. This should, theoretically, result in smaller crowds and less human contact, which might be an advantage in today's environment. Let's see what they look like.

Anytime Fitness has definitely been doing better than Gold's Gym, and last week were at -18.93% year on year. However, this week, they appear to have backtracked to -20.81%. We'll continue to monitor.

Next, let's take a look at sit-down restaurants. Theoretically, these should be having difficult time recovering, since many people say in surveys that they're unwilling to visit one. Here is Denny's:

This is an awful-looking graph that is currently at a very unprofitable -48.51% year on year. The shape is also a slow, painful swoosh shaped recovery.

So overall, this wasn't a great week for virus-sensitive businesses in Georgia.

"Houston We Have a Problem": Signs that Second Virus Wave is Beginning to Swell

As we talked about previously, a second, uncontrolled wave of the virus could be economically catastrophic. If we have to reimplement lockdowns, all of the progress so far could be lost. And the result would probably be a W-shaped recovery which would be painful. (See part 14 for more information on the possible recovery shapes and their ramifications)

So far, the U.S. has avoided using the more aggressive techniques that worked to control the virus in other parts of the world (See part 6 for the 3T's of disease control: testing, tracing and treatment).

And some epidemiologists had feared this avoidance might not be a sustainable strategy.

Others have been concerned about an increase in virus deaths this week and next, due to the two to three week lag from increased social activity on Memorial Day. An example is the "Zero Ducks Given" pool-party in Missouri, where hundreds crammed together without masks or social distancing (see part 13).

Also, since last week, hundreds of thousands of people have been gathering in cities across the country on multiple days to protest the conditions that resulted in the death of George Floyd by a law enforcement officer. Since speaking loudly is known to spread the virus, and there's typically a lot of shouting at protests, this also has some epidemiologists concerned.

But if another wave is happening, it takes time to see it show up in the statistics. So what are the numbers looking like this week?

Clearly, the number of new coronavirus cases has skyrocketed from 222 on May 22 to 1642 on June 12.

However, just because there's more new cases, does not necessarily mean the virus is spreading wider. That's because epidemiologists widely agree that many past cases of Covid-19 went undetected because of inadequate supplies of testing to identify them. And virtually all states have increased their testing now, to address this. So, when we see an uptick now, it could simply mean that more testing is being done, catching cases that would previously have been missed (and not that the virus is spreading wider).

Tom Frieden, former director of the Centers for Disease Control and Prevention, said that in some states, this increased testing appears to provide the explanation (like Michigan).

However, in Arizona, positive test rates are outpacing the increase in testing. So this can't entirely explain the huge surge.

Joe Gerald, the public health researcher at the University of Arizona, who provides projections to the state health department, agreed. He pointed out that, after an initial increase in testing, the last two weeks have actually been very stable. And yet infections have skyrocketed.

So this is not a good sign.

Arizona’s largest hospital system, Banner Health, announced last week that coronavirus patients had tripled in just the past three weeks. And this Tuesday, they said that ventilator use has quadrupled since mid-May and they have run out of extracorporeal membrane oxygenation machines (which are used when a ventilator isn't enough). On the plus side, they do have enough ventilator and ICU capacity for now.

Gerald forecasts that “at the current pace of viral spread, we risk reaching or exceeding our hospital capacity sometime in July. The preponderance of evidence indicates community transmission is increasing...Worse times are ahead."

We'll continue to monitor to see what happens.

Unfortunately, Arizona is not the only state experiencing a spike. In the last 10 days, there have been surges across the country, especially in Arkansas, Texas and the Carolinas, where cases have doubled or tripled.

North Carolina looks similar to Arizona: skyrocketing new cases and a death rate that has slowly risen from the past trough.

And unfortunately, as in Arizona, the North Carolina increase can't be dismissed as a statistical aberration due to increased testing. That's because the state is also seeing a large spike in the hospitalization rate.

On Saturday, the North Carolina Department of Health and Human Services reported the state's highest number of coronavirus-related hospitalizations in a single day. This was the fifth time the state had set a record in the past seven days.

“Our metrics have moved in the wrong direction,” said Mandy Cohen, the state’s top health official.

The graph of Texas looks similar to Arizona and North Carolina:

And on Saturday, Dallas County reported the highest level of hospitalizations ever seen in both the county and region.

Meanwhile, on Wednesday, Houston area officials warned that they are "getting close" to reimposing stay-at-home orders. They also said they are preparing to reopen a Covid-19 hospital in a football stadium that was previously established for this purpose, but never yet used.

Lina Hidalgo, the highest-ranking county executive, said “We may be approaching the precipice of a disaster. It’s out of hand right now. The good news is it’s not severely out of hand.”

However, efforts to reinstate local lockdowns may be legally thwarted, since Texas Gov. Greg Abbott issued executive orders that county and municipal officials cannot supersede his reopening orders. His reopening of the state superseded county and municipal directives.

Currently, Abbott says reopening is still going ahead at full speed. On Saturday, the state continued to loosen restrictions, and allowed restaurants and businesses to operate at an increased 75% of capacity.

Meanwhile, South Carolina's situation also looks similar:

Dr. Joan Duwve of the South Carolina Department of Health and Environmental Control (DHEC) confirmed the increase in test cases could not be explained away by any increase in testing.

The "percent positive rate continues to increase, as well, which tells us that we are finding more real cases -- not just cases that were asymptomatic and not otherwise diagnosed.”

The physician consultant for the South Carolina state health department, Dr. Brannon Traxler, said that public behavior was the cause. "We are starting to notice a lot of people across South Carolina are not doing the social distancing or not avoiding group gatherings and wearing masks in public the way, especially, that they were earlier on."

In total, eight states currently show hospitalizations increasing: Arizona, Arkansas, Mississippi, North Carolina, South Carolina, and Tennessee.

Economy Pinned To The Mat By Yet More Massive Unemployment

For the eleventh week in a row, over a million Americans lost their jobs. And this week, the jobless claims report showed there were 1.54 million more (which was down slightly from the 1.9 million last week). Those hoping for a large drop were again disappointed.

"Continuing claims" can be more helpful to look at than the raw jobless numbers, because it tells us not just who became unemployed, but also who's staying that way. And on the plus side, this week's data continued to indicate that we probably did indeed hit rock bottom two weeks ago at 25.1 million. So if that holds up, it's a welcome sign.

On the other hand, the data this week was also disappointing, because we did not see the bounce back of improvement, for which many had hoped. The total barely budged down to 20.9 million from 21.5 million last week (and 21.1 million the week before). So the economy is looking less like a rubber ball that bounces off the floor, and more like a person who's fallen to the floor and can't get back up.

The chief economist at Amherst Pierpont Securities, Stephen Stanley, wrote in a note to clients, “It is astounding to me that we are still seeing over 1.5 million claims in the first week of June."

On Wednesday, Federal Reserve chair Jerome Powell made a grim prediction. “My assumption is that there will be a significant chunk, well, well into the millions of people who don’t get to go back to their old jobs and there may not be a job in that industry for them for some time. It could be some years before we get back to those people finding jobs,” he said.

The Federal Reserve is forecasting a slow recovery for the economy, expecting unemployment still at a brutal 9.3% by the end of 2020 and lingering at an elevated 6.5% at the end of 2021.

The Fed also pledged to keep interest rates at near zero through at least 2022, and to continue its extensive bond-buying programs at the current pace for the foreseeable future.

Meanwhile, on Friday, a U.S. consumer sentiment survey reported that consumer optimism was up 5.5 points from record lows, but still remained at depressed levels. A startling two thirds of respondents said they anticipated unfavorable economic conditions in the year ahead, because of both the resurgence in the coronavirus and lingering weakness in the jobs market.

Also, the results of an NBC news/Wall Street Journal consumer poll showed that many consumers are souring on how long it will take to recover. This poll was conducted between May 28 and June 2, and found that only 22% of respondents thought the U.S. would return to normal in the next few months. This was down significantly from the 45% who believed this only last month. And the number who said the U.S. would not return to normal until next year (2021) or longer soared to 52% (from just 32% previously).

Almost $1.5 Trillion of Crucially Needed Stimulus Funds Are Sitting Idle Due to Bureaucracy

As we've discussed previously, Congress committed to dispense $3 trillion in stimulus over four separate coronavirus-response laws. The idea was to throw a lifeline to people and businesses on the brink, and enable the economy to recover more quickly. And we've also discussed how governmental snafus and bureaucracies have prevented millions of people from getting the aid intended for them.

This week, yet again more news came out indicating further problems. A bipartisan group from Congress complained that the following significant portions of the lifeline are still completely unspent:

• All $100 million dedicated to help nursing homes certify compliance for infection control.

• All $100 million to help give broadband access to rural Americans.

• All $100 million to help FEMA purchase personal protective equipment for firefighters.

• $450 million of the $850 million allocated for food banks.

• $820 million of the $1 billion allocated for U.S. manufacturers to produce personal protective equipment (PPE).

• $8 million of the $16 million allocated to bulking up critical medical supplies in the Strategic National Stockpile.

• $8.75 billion of the $9 billion allocated to fund health facilities, childcare centers and services for seniors and homeless people.

According to calculations by the Committee for a Responsible Federal Budget, about half of the stimulus approved by Congress (a mindblowing $1.5 trillion) is currently sitting idle and unspent.

Agency spokespeople from the Pentagon, the Agriculture Department, the Department of Housing and Urban Development, and the Department of Health and Human Services defended the responses to date and claimed they were moving as quickly as they reasonably could.

OECD Expects U.S. Recovery Will Lag Behind The Top-Performing Countries

The Organization for Economic Co-operation and Development (OECD) is an intergovernmental economic organization, made up of the top 37 high income countries in the world. And on Wednesday, they put out their forecast on how each country will be faring by the end of 2021.

The OECD believes that South Korea will lead the world and also be one of the few economies to actually expand. And they expect Germany (which has implemented an aggressive, low-tech contact tracing program) to be in the second tier. The U.S. is expected to be in the middle, but, performance-wise, relatively closer to the bottom tier (which includes Italy, Canada and Japan).

The OECD also put out its global GDP projections. Laurence Boone, chief economist of the OECD, said they believe that the economic impact of coronavirus on unemployment, corporate bankruptcy and adjustments to normal life forced by social distancing would be large and would prevent a normal economic recovery that one would expect to see from recession. So, in one forecast, they projected a single wave pandemic. And in the other, a double wave. Here were the results:

The shape on both of these scenarios is essentially a combo shape: it starts as a quicker V-shaped recovery that transitions into a slower swoosh. (See part 14 for more information on these possible shapes and their ramifications)

I couldn't help but notice that this is the same combo shape I forecast for the early recovery last weekend (back in part 15). So, if anyone at the OECD wants some help putting out the next forecast a little sooner, I'll make time for you!

The Stock Market's Triumph of Optimism over Experience

In contrast to the OECD, many believe that the stock market has been anticipating a quick V-shaped recovery for several months.

After the S&P 500 hit rock-bottom on March 23 at 2,237, it bounced back and exploded like a rocket. This Wednesday, for instance, it leapt 44% to 3232. And amazingly, the index was within a whisker of its high, established back in January. During the buying frenzy, even the most Covid-19-sensitive investments (like airlines, hotels, energy and rental cars) were snapped up by eager investors apparently anticipating a quick recovery.

But some Wall Street veterans claim there are some unusual things going on in this rally. They've noticed that it's been predominantly driven by individual, retail investors rather than large institutions. And many of them are unsophisticated, first-time investors who trade via apps like RobinHood. Many come up with their investment strategies by comparing notes with other similar investors on investment chatrooms/boards.

Benn Eifert, managing partner of QVR Advisors, said "Retail participation is at levels we haven’t seen in 20 years. In terms of the most dramatic rises in speculative behavior that’s generating many of the strangest outcomes in markets right now. It’s Robinhood-centric."

On Tuesday, more than 15,000 investors on RobinHood added the previously unknown Chinese real estate firm Fangdd Network Group to their investment lists. The company had not announced anything new and had no reason to be valued even a dollar more than the day previously. But overnight, the value of the company multiplied by 13 and took its market capitalization to an astounding $4 billion.

Analysts believe this happened because the name "Fangdd Network Group" sounds alot like the acronym that many people use for the top performing technology stocks (FANG = Facebook, Amazon, Netflix, Google).

Another company that forecast virtually no revenue and had no new news to report, skyrocketed this week to above a $30 million market cap. Analysts believe this happened because it was named after Nikola Tesla (similar to the Tesla company stock):

In this week, other small Chinese firms with no news surged triple digits. And almost no company was in too bad a shape to be bid up. Even companies on life support and in bankruptcy shot up into the stratosphere in an orgy of extreme optimism.

For example, Hertz rental car company has been hammered by the virus recession and had filed for bankruptcy. And analysts' consensus is that investors holding the stock are almost guaranteed to be wiped out. Yet, in a month, the number of Robinhood users holding Hertz has swelled by more than 100,000 (from just 60,000 before). And over three days this week, the price surged 577%.

Even Hertz, itself, noticed the bizarre behavior and decided to take advantage. They got permission from the bankruptcy judge to issue 1 billion new (almost certainly worthless) shares. And the market received it with open arms and couldn't get enough. On Friday, Hertz stock jumped 37%.

Some believe that these kinds of price moves indicate speculation rather than investing based on fundamentals. And they point out that this kind of behavior (typically by unsophisticated investors) has often been associated with market tops. For example, in the dot-com bubble, The Globe was a company that was losing money and yet shot up to the insane level of $40 per share. Today, the stock is worth less than a penny.

The chief market strategist for Miller Tabak, Matt Maley, said "It is definitely a sign of a bubble. That’s another sign of froth -- people deciding, ‘I just need to bet, therefore I’ll bet on anything.’ And even though they don’t know anything about the stock market, they’re betting on it now."

He also warned that "you’ve also seen that pick up in the options market, which is obviously a lot more speculative than the regular market.” In the week ending June 15, retail investors plowed wheelbarrows of cash into 14 million speculative call options. This shattered the previous record by far:

And similar to the dot-com bubble, traders also appear to be hyping their stocks in chatrooms and bragging about their claimed winnings. Stocks that have been positively mentioned on the Reddit forum r/wallstreetbets have routinely gone stratospheric.

Andrew Adams, a strategist at Saut Strategy, says his friends and family who don’t normally follow the stock market have been asking him what to buy. His inbox has emails saying: “I’ve missed this move but now want to buy, what should I do?” Newbies are also cracking jokes about Wall Street legends who've denounced the rally. It seems those new to partying believe the party will never end.

“I even had one stock-market novice friend text me to say that he’s been making a lot of money buying call options since he’s been working from home lately and he’s wondering if he should just quit his job to trade for a living,” said Adams. “I’ve learned from past experience to be very careful when we start seeing stuff like that.”

Back in 1929, Joe Kennedy famously exited the stock market after his shoeshiner gave him a stock tip. According to his biography, "He figured that when the shoeshine boys have tips, the market is too popular for its own good.” Shortly afterwards, on October 29th, the market suffered one of its worst crashes ever ("Black Tuesday"), and the country entered the Great Depression.

We can only hope that history won't repeat itself.

Thousands of "Long Haulers" Claim Debilitating Symptoms of Covid-19 Can Last Months

Many people believe that if they catch Covid-19, then only one of two possible things can happen.

1. If they are elderly or unhealthy than they have a small chance of getting sick and going to the hospital, and possibly dying.
   

2. But if they're not, then they will just get a mild case. If they're lucky, they may have no symptoms at all. And if they're unlucky, then at worst, they'll just put up with "the flu" for two weeks. And after this, their lives will be back to normal.

However, as we discussed previously, U.S. hospitals have found that significant numbers of young people do actually get hammered by the disease. In fact, 38% of patients requiring hospitalization have been between the ages of 20 and 54. And half of the intensive care unit patients have been under 65.

And as we discussed in part 9, the portion of those who need ventilators (and who are lucky enough to survive the high death rates) exit treatment in a severely debilitated condition. Virtually all of these patients are unable to swallow, move or walk, and they sustain severe cognitive impairment. The problems can last for months and some find the changes are permanent and life-altering.

And now, growing numbers of people who have gotten the disease are claiming that the disease holds still other potential pitfalls. Thousands who have had covid-19 since March are claiming that they are still battling debilitating symptoms of the disease months after first catching it. These symptoms include extreme weakness and fatigue after even basic activity, inability to catch their breath, hallucinations, short-term memory loss, inability to concentrate and even strange, vibrating sensations when they touch surfaces. A surprising number are young and claim to be formerly healthy and active.

LeClerc, a Glasgow-based journalist, claims to be on day 80 of the disease. “Before this, I was a fit, healthy 32-year-old. Now I’ve been reduced to not being able to stand up in the shower without feeling fatigued. I’ve tried going to the supermarket and I’m in bed for days afterwards. It’s like nothing I’ve ever experienced before."

Paul Garner is an infectious diseases professor at the Liverpool School of Tropical Medicine. He leads a renowned organization that reviews scientific evidence on preventing and treating infections and he blogs for the British Medical Journal (BMJ). He has previously endured dengue fever and malaria and claims his Covid-19 experience (day 77) has been worse. It “has been like nothing else on Earth. I honestly don’t know [why these symptoms are persisting] and don’t understand what’s happening in my body.” He says the intense fatigue, relapses and foggy mind "plays with your head [...]."

Many "long haulers" have experienced severe relapses after trying to just regain a little bit of normalcy by simply cleaning, taking showers, going to the grocery store, doing yoga or exercising. Garner says he learned that lesson the hard way. After battling the disease for seven weeks, his symptoms finally cleared and he blogged on the BMJ, "My disease has lifted!”. Then he did a high-intensity workout and was bedridden for three days.

Fiona Lowenstein, is a 26-year-old who was previously completely healthy (no pre-existing health conditions) and worked out six times a week. When the pandemic started, she thought she would be helping elderly and immune-compromised people through it. Instead, she herself was hospitalized in March.

After being discharged, she started a support group for people struggling with recovery. This resource, for people whose Covid-19 symptoms have lasted longer than 30 days, now has more than 3,700 members (mostly in the U.S. and the U.K.). Many of these people call themselves "long-termers" or "long-haulers."

The wellness organization Body Politic then designed a research study and surveyed 640 long-haulers. The data is self-reported and has not been peer-reviewed.

Again, most are surprisingly young with three out of five between the ages of 30 and 49. A little more than half lacked symptoms that were severe enough to be hospitalized (56%). Since most of them live in the U.S. or the U.K., where testing was initially rationed, a large number reported that they tried to get tested but were denied access. And ominously, 80% of the "long-haulers" had not recovered by day 50.

An immunologist at Yale, Akiko Iwasaki, gave three possible theories to explain what's happening.

1. It's possible the virus may still be present in their bodies in a reservoir organ that would be missed by tests and nasal swabs.
   

2. Another possibility is that we know that even after people are no longer infectious they tend to have fragments of the virus in their bodies. This could be triggering a violent immune overreaction. Iwasaki compared it to "like reacting to a ghost of a virus".
   

3. A third theory (and the one he believes is most likely) is that once the immune system has been first provoked by the virus and become overactive, it can be difficult to return to a normal state. So this causes debilitating symptoms to continue for a long time.

But, so far there have been no studies done on the concept of the long haulers. So there's no way to know for sure.

Some even doubt that the concept of the long haulers is even real. However, if Covid-19 does indeed cause long-term chronic complications, it would not be a surprise, since it's right in line with what we know about other viruses.

1. Craig Spencer of the Columbia University Medical Center says that "Nearly every single person with Ebola has some long-term chronic complication, from subtle to obviously debilitating." Some of those were noticed early in the outbreak. But most were not accepted as symptoms until the virus had run for years (from 2013 to 2016 and infected 28,600 people).
   

2. Another example is Severe Acute Respiratory Syndrome (SARS) which is caused by a coronavirus that is related to Covid-19. And a study of 233 Hong Kong residents who survived SARS in 2003 found that three years later, 40% had chronic fatigue problems and 27% met the CDC's criteria for myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) which is a complex regional pain syndrome.

Other known long-term effects include chronic lung disease, kidney disease, shortness of breath and coughing.

Meanwhile, the vast majority of long haulers say that on top of the stress of managing the disease they also have to deal with disbelieving family, friends and medical professionals.

“People know how to react to you having it or to you getting better,” LeClerc said. But when symptoms are rolling up and down in waves instead of abating, “people don’t have a response they can reach for.” They ask if she’s improving, in expectation that the answer is yes. When the answer is instead a list of ever-changing symptoms, they stop asking. Others pivot to disbelief. “I’ve had messages saying this is all in your head, or it’s anxiety."

Many long haulers report that medical professionals' attitudes toward them have not been much better.

A neuroscience professor at University College London, Athena Akrami, claims to be on day 79. When she tried to get medical assistance, two different doctors told her she wasn't sick and she was simply stressed out. And a fellow neuroscientist told her to just "calm down and take antidepressants.

She claims, "I’m a very calm person, and something is wrong in my body." She adds, "as a scientist, I understand there are so many unknowns about the virus...[and] as a patient, I need acknowledgment.” She concludes that every day “is like being in a tunnel.”

Type O Blood May Be Protective Against The Virus

The genetic testing company 23andMe found that Type O blood appears to convey special protection against the virus. They found that people with that type of blood are between 9-18% less likely to test positive for the virus. This appeared to match up with the findings of a genetic study of more than 1,610 Covid-19 patients in Italy and Spain. In that one, they compared people with type O blood with type A and found that the people with type-A had a higher chance of developing severe respiratory failure.

Researchers sequenced the genomes of the patients who were hospitalized with severe failure and compared their DNA sequences to 2,205 healthy subjects. They found two regions of the DNA that were tied to how severely ill people got. One of those regions contains the gene code for person's ABO blood.

More Unexpectedly Fast Progress In the Race for a Covid-19 Treatment

Meanwhile, thousands of companies are continuing to race to create a treatment or vaccine for the virus. And several companies announced significant progress this week.

On Wednesday, Johnson & Johnson announced they would begin early trials of their covid-19 vaccine in the second half of July. This was greatly accelerated from the earlier estimate of September.

Meanwhile, Moderna announced that its gotten approval for final (phase 3) human studies (with 30,000 patients) of its radical mRNA vaccine to take place in July. It's currently still in phase 2. Back in part 14 we discussed how Moderna stock soared based on incomplete and unexceptional results from phase 1 trials. They have yet to release data on phase 2 but when they do, many hope it will be more complete and more promising.

Meanwhile, as we discussed in part 11, many veteran immunologists and policymakers believe the first effective treatment we will see will be an antibody-based treatment. A month ago, the company Regeneron believed they could have their antibody cocktail treatment available within the fall months, before winter.

This week, they accelerated that estimate and now claim they'll provide a treatment by the end of summer. They say that testing is going well and the treatment has the potential both to treat the disease and also to prevent at-risk people from becoming ill.

Update on My Investment Strategy

Every week I take a look at the latest developments and data and reevaluate my personal outlook on the possible economic scenarios and my personal investment strategy. This week I've changed my shape forecast to indicate I feel a W-shaped recession is much more likely. But overall, I'm keeping my fundamental views essentially the same as last week.

• Treatment: I believe chances are good we'll have an effective medicine for Covid 19 (i.e. antibody treatment, vaccine, etc.) by fall or winter of this year. And with some luck we could even have more than one. Unfortunately, it's also unlikely it can be manufactured and distributed in large enough quantities to immediately treat everyone who wants and needs it. If that happens then it will not be enough to super-charge the economy right away. And there may be potentially huge quality-of-life difference between the treatment-haves and treatment have-nots. This will be divisive and exacerbate already strong tensions in our society and between rich and poor countries.
  

  • Recession? We've already had one quarter of negative growth in Q1 (-4.8%) and Q2 will be record-breakingly bad. So a technical recession (2 consecutive quarters of negative GDP growth) is inevitable.
    

  • Shape of the recovery: In part 14, we talked about how the shape of the recovery (V-shaped, U-shaped, swoosh-shaped, W-shaped, L-shaped, combo-shaped etc.) will have a huge effect on the ultimate outcome of many different investments. So far, pretty much everything that's happened has been much worse than the consensus expected. Pretty much no one saw the lock-downs coming back in February. More people have been killed than originally projected. Many more than expected have lost jobs. The stimulus and unemployment aid was enormous but has too many unexpected holes and isn't getting to millions who need it the most. States are starting to reopen but most individuals are still choosing to stay at home anyway. So unfortunately, I don't think a quick, V-shaped recovery is going to happen. I would love to be wrong. I'm getting more and more concerned about a very damaging "W", which could come from a second wave of the virus and a second lock-down. Unfortunately this is looking more and more likely. The one slim hope is that for now it has not shown up strongly in the death stats. So I'll continue to monitor the data very closely. Currently, I believe we will have a 3 stage combo-shaped recovery that starts off (1) quick as the first "easy" industries and companies come back online (i.e. v-shaped). But (2) this will peter out as the more difficult ones are unable to and a slow swoosh will become apparent. If we get a second lock down then this step (2) will become W-shaped and more painful Then in fall/winter, (3) I believe we will probably see a treatment and/or vaccine. And if we do, then that would be the trigger for the 3rd stage and an accelerated recovery. But this most likely won't be a straight-V up recovery because it will probably take time to ramp up production and delivery to enough Americans to get herd immunity. (And that will depends on which treatment makes it that far...which we don't know at this point). So it will be a slower boost. But we also could get a little lucky (for example, if the successful vaccine treatment is of a newer type that can be scaled up more quickly). If so the 3rd stage boost would be faster. If I'm wrong, and we don't get a treatment or vaccine this year, then the economic damage caused by long-term job loss and wage cuts will most likely be severe and further exacerbate (and slow down) whatever type of recovery we do get. That would probably be ugly for the majority of all investments. So let's hope we don't have to find out how that scenario would play out.
    

• Investments: If the above is roughly correct then it will unfortunately be painful for many individuals and some investors. And some subsectors of alternative investing (like certain real estate classes) will come under heavy stress. Many may fold in the coming months. At the same time, I think there will also be an opportunity to purchase dislocated and distressed assets at very favorable pricing and significant discounts. And I believe that patient, discerning investors may be able to take advantage of once in a decade or once in a generation opportunities.
  

• Strategy: 1) Invest in assets that are corona-virus resistant (and uncorrelated with the business cycle). That includes: - 1a) Music royalties (which can actually do better in lock-downs due to increased streaming). 1b) Life settlements (which actually perform better when people are dying faster and in any event isn't directly tied to the business cycle) 1c) Litigation finance (which performs based on winning or losing cases and also isn't directly tied to the business cycle). 2) Continue to hold cash and be patient for dislocated and distressed opportunities. The worse the economic damage, the more chance there will be for once-in-a-generation or once-in-a-lifetime opportunities.

My opinions and strategy will change if we get some better or worse news on the science side or some of the other X factors. For example, the stimulus bill being debated in Congress is one that could shift things in a more positive direction. And, as I mentioned above, the virus getting out of control again in large areas and forcing large lock-downs a second time, could easily make things worse.

Next Article:

How will Covid-19/Coronavirus Affect my Alternative Investment Portfolio? Part 17: June 20th

U.S. continues to plateau in a potentially uncomfortable place; How to create a raging pandemic without even really trying; Georgia's economic reopening continues to flop; Ominous signs of a second wave in Florida, California and Arizona; Apple forced to re-close 11 stores in Florida, Arizona, North and South Carolina; China goes into hyper-reaction over tiny infection cluster in Beijing; U.S. can't seem to stop "bleeding out" millions of jobs while those getting rehired has ominously flatlined; Businesses who cater to the richest 25% of Americans have suffered the most; Covid-19 stimulus programs drive global debt to stratospheric World War II levels; The outbreak that wasn't: Could a $5 facemask be the best way to stop a second wave?; Radical at-home antiviral pill could have millions of doses ready to fight Covid-19 as early as the fall Part 17: June 20th weekly update (and latest update on my personal strategy)