January 23, 2022

Investment advisers worried about late U.S. response to coronavirus

Tracking President Trump’s Response To COVID-19

Investment advisers worried about late U.S. response to coronavirus

Investment advisers worried about late U.S. response to coronavirus

Investment advisers are increasingly concerned that U.S. authorities are not making enough efforts to prevent widespread coronavirus outbreak in the country, which could further negatively impact already affected markets..

Critics point to the low number of citizens tested for the virus by the US Centers for Disease Control and Prevention (CDC), as well as possible difficulties in quarantining US cities and fears that the White House may make insufficient efforts to contain the spread of the epidemic..

U.S. Department of Health and Human Services Secretary Alex Azar said the CDC tested 3,625 samples Thursday morning for the rapidly spreading virus..

To some investors and analysts, these guarantees seem empty.

«Much of what we have learned about this virus has shaken government confidence», – said James Bianco, head of Chicago-based consultancy firm Bianco Research.

His list includes doubts about the accuracy of the Chinese case count, criticism of Japan’s handling of a cruise ship quarantine in one of its ports, and the comparatively small number of people who have so far been screened by US authorities..

Concern about the growing number of cases outside of China sent S&P 500 into intraday correction territory on Thursday morning. Stocks fell Wednesday after health officials in Nassau County, New York, said they were monitoring 83 people who had visited China and may have come into contact with those infected with the coronavirus. Gov. Andrew Cuomo says there are no confirmed cases in the state yet.

On Wednesday evening, US President Donald Trump told Americans that the risk of coronavirus remains «very low», and appointed Vice President Mike Pence to lead the US response to the looming global health crisis.

Bianco said he fears that many investors remain concerned about how quickly the number of cases could increase in the United States, as is the case in countries such as Iran, Italy and South Korea..

He advises his clients to proceed with caution until the scale of the outbreak is known..

«I’d rather risk a missed opportunity by getting out of the market… what to invest and worry about things getting worse», – said Bianco.

Others are worried about the implications if the United States is forced to impose a lockdown on settlements similar to the one imposed by the Chinese authorities in Hubei province, the epicenter of the coronavirus outbreak..

Wuhan, the capital of Hubei province, has established strict controls on the movement of residents. Such measures may be more complex to apply in the United States.

«For those of us sitting here in Hong Kong looking at the financial markets, there is a huge risk in the system.», – said Simon Powell, Hong Kong Equity Strategist for Jefferies.

Powell is particularly concerned that the virus could spread to people from countries outside China that are not subject to travel restrictions in the United States. He is particularly concerned about the outbreak in Iran.

Iran said Thursday that the death toll from the coronavirus rose to 26, the highest outside China. The mortality rate among confirmed cases of the virus in Iran is around 10% and in other countries around 3%..

Powell also believes the Trump government is unlikely to opt for a decline in economic activity, writing in a recent research note that «our basic hypothesis is that the Trump government is unlikely to opt for reduced economic activity and supply chain disruption, so the spread of the virus if it emerged in the US is most likely».

Other experts have pointed out what they see as flaws in the CDC approach.

«The initial U.S. response was focused on creating a response to confirmed infections or high risks, rather than a broader public health containment», – said Wouter Jongbloed, head of policy and risk analysis at New York-based Exante.

Given that coronavirus is widespread outside of China, CDC testing «probably not effective enough to prevent a potential US outbreak», – said Jongbloed.