With coronavirus cases beginning to plateau in New York, can the city begin to reopen?
The U.S. stock market continued its blistering recovery on Tuesday. The Dow Jones Industrial Average (DJIA) has already surged more than 2,000 points since the week began.
Yesterday’s surge was triggered by hints of a plateau in New York coronavirus cases. And today’s rise comes amid growing pressure to re-open the financial capital of the world. President Trump brought hope last night, declaring the nation would open “sooner than you think.”
We will rise from this crisis with more strength, unity and resolve… We’re going to have a rough week, but there’s tremendous light at the end of the tunnel. It’s going to be sooner than people think.
A growing number of outspoken voices, including legendary ‘Big Short’ trader Michael Burry are calling for lockdowns to be rolled back.
The shut down is not good for anyone – only 30% of whites and Asians can work from home, but it’s far worse for blacks and Latinos. Hard-earned job and wage gains are evaporating fastest for the already-underprivileged. At what cost prevention?
The Dow Jones exploded more than 1,600 points higher on Monday, and it shows no signs of slowing down on Tuesday.
As of 9:40 am ET, the Dow had raced 659.87 points or 2.91% higher to 23,339.86.
The S&P 500 and Nasdaq were up 2.49% and 2.00%, respectively.
With coronavirus cases and hospital load beginning to stabilize, talks are turning to how to reopen the city. A new paper entitled National Coronavirus Response: A Road to Reopening outlines a potential recovery plan. Its authors suggest a move from phase 1 (social distancing) to phase 2 (relaxed rules) when cases decline for two weeks straight.
The trigger for issuing a recommendation to step down from a stay-at-home-advisory back to “slow the spread” is when the number of new cases reported in a state has declined steadily for 14 days (i.e., one incubation period) and the jurisdiction is able to test everyone seeking care for COVID-19 symptoms.
The paper outlines four specific criteria that should be met before relaxing the current lockdowns. They include:
1. Hospitals must be able to handle the load (i.e. enough ICU beds and resources).
2. Widespread testing available to everyone (about 750,000 per week nationwide).
3. Ability to monitor confirmed cases and track close contacts.
4. Sustained reduction in cases for 14 days.
The roadmap outlines above estimates a long, slow shift to reopening. But pressure from the city’s residents may force a faster response. New York Post writer Karol Markowicz called for the government to consider reopening parts of the city’s economy as soon as possible.
What about all the people who don’t have any money coming in for their families? We need to figure out the path back for them.
The U.S. stock markets are rallying on light at the end of the tunnel, but a full recovery is unlikely until lockdowns are lifted. Even then, some restrictions will stay in place. The longer it goes on, the more damage to the economy. Karl Smith, VP for federal policy at the Tax Foundation in Washington explains:
The possibility of an unofficial quarantine for weeks or months after the official one is lifted is real … After that, my guess is that the economy is in major trouble.
Deutsche Bank also weighed in, explaining that significant behavioral shifts will hamper growth in the coming months. Households will spend less money, companies will pivot to survival mode, and governments will go overboard on regulations.