March 31, 2020
April: Reports citing progress in Seattle and New Rochelle helped sentiment yesterday. More reports today discuss relative success from early social distancing measures in California. NYC is still the main area of concern with higher infection rates, crowded hospitals, lack of adequate supplies and higher mortality rates. Some recent deceleration in Italy has consensus looking for NYC infection rates to improve toward the end of April. The curve in Italy is used because they, like the US and other countries in Europe didn’t implement ultra-aggressive China/South Korea-like testing and tracking measures. Investors will watch Italy and NYC very closely in the days ahead. Also note that fast-tracked clinical trial data on GILD’s remdesivir and REGN’s kevzara as potential Covid-19 treatments should be ready by late April. The current CDC guidelines are in place until the end of April, but this will ultimately come down to infection rates.
Economy: Weekly jobless claims data (released Thursday) is now the most-watched report to inform economic estimates. Monthly PMI data will be the most accurate forward-looking data once containment efforts ease in the Eurozone and US. China’s first-in/first out status makes today’s release of March PMI more informative with manufacturing coming in at 52 vs consensus for 44.8 and 35.7 last month, while non-manufacturing came in at 52.3 vs consensus for 42 and up from 29.6 in February. Both measures crossed into expansion territory, but China’s NBS said the bounce merely reflects the resumption of work after more than a month of lockdown, citing concern for operational pressures and funding shortages based on lower demand. That all makes sense, but it’s hard to not to be encouraged by the data. It will be several months before we can accurately assess the global economic fallout, but the policy response seems adequate to keep the pilot light of aggregate demand lit.