June 8, 2020
Remember, the Fed, Treasury and Congress have flooded the economy with stimulus that amounts to more than a quarter's worth of GDP.
With that, consider this: Despite the "stay-at-home" orders, the economy has still been running at better than 60% of capacity in the second quarter.
Okay, so where are we on the health care crisis timeline?
Remember, the first and most important marker we watched over the past two months was the daily intubations in New York hospitals. When that number peaked and began to fall, it was clear that some treatment or therapy was working — preventing hospitalized patients from getting to the severe stage.
The peak in that NY daily intubations number (the first week of April) was a big indicator that the health crisis had peaked.
A few weeks later, we had the opening of economies (which started in Georgia). We had no significant spikes in cases or deaths. To the contrary, the data continued to decline from peak levels.
Then we had new updated projections from the CDC as we headed into Memorial Day weekend. They published new, lower estimates on the severity of the disease. The best-case scenario, they said, would be a case fatality rate of just 0.2% – a small fraction of what was originally projected. And overall, the study showed dramatically more optimistic projections than we saw early in the crisis.
Finally, the WHO said this today: It's "rare, that an asymptomatic person transmits" the virus. In fact, it's "very rare."
So, importantly, while the health crisis ran about three months, we did not lose a full quarter of economic activity (which would amount to about $5 trillion worth). If we look at all of the economic data, at the depths of the lock-down, activity did not go to zero (far from it).
With that, the S&P 500 went positive for the year today.
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