Coronavirus update; Trump administration embraces Sweden model; New Thinking on COVID Lockdowns; Tracking America's recovery; A Virus Progress Report; U.K. deaths are down even as cases are up; A 'casedemic' in Spain; Brazil – Not the Disaster We've Been Led to Believe

By Whitney Tilson

Thursday, September 3, 2020

I continue to closely follow the pandemic, sending lengthy e-mails to my coronavirus e-mail list roughly twice a week (if you’d like to receive these, simply send a blank e-mail to: [email protected]). Below are excerpts from the e-mail I sent yesterday…

If you don’t have time to read to the end, here’s my conclusion:

Pretty much no matter where you look – in the U.S. or around the world – the evidence is clear: humanity is winning the battle against the coronavirus – even before we have any vaccines. This doesn’t mean we should be complacent – but it does mean we should largely ignore the never-ending drumbeat of grim headlines…

1) Wow, this is big news…

The Trump administration has effectively embraced Sweden’s model of dealing with the pandemic – what Adam Patinkin of David Capital Partners and my colleagues Enrique Abeyta and Alex Griese have been calling for: New Trump pandemic adviser pushes controversial ‘herd immunity’ strategy, worrying public health officials. Excerpt:

One of President Trump’s top medical advisers is urging the White House to embrace a controversial “herd immunity” strategy to combat the pandemic, which would entail allowing the coronavirus to spread through most of the population to quickly build resistance to the virus, while taking steps to protect those in nursing homes and other vulnerable populations, according to five people familiar with the discussions.

The administration has already begun to implement some policies along these lines, according to current and former officials as well as experts, particularly with regard to testing.

The approach’s chief proponent is Scott Atlas, a neuroradiologist and fellow at Stanford’s conservative Hoover Institution, who joined the White House in August as a pandemic adviser. He has advocated that the United States adopt the model Sweden has used to respond to the virus outbreak, according to these officials, which relies on lifting restrictions so healthy people can build immunity to the disease rather than limiting social and business interactions to prevent the virus from spreading.

(The administration officially denies embracing Sweden’s strategy, but if, after reading the article, you believe these denials, please contact me, as I have a bridge in Brooklyn to sell you…)

I have mixed feelings about this. Atlas is not an epidemiologist, and I question whether this administration has the ability to effectively communicate and implement any policy (which was a key element of Sweden’s success – and, contrary to what the article above says, it’s increasingly clear that Sweden’s approach has been successful – for more on this, see here and here).

That said, every week that goes by provides further evidence that the “disease break point” theory, which Sweden adopted and which Adam, Enrique, and Alex have argued for in previous e-mails is correct.

2) This Wall Street Journal series, “The COVID Storm,” has many insightful articles… especially this one: New Thinking on COVID Lockdowns: They’re Overly Blunt and Costly. Excerpt:

In response to the novel and deadly coronavirus, many governments deployed draconian tactics never used in modern times: severe and broad restrictions on daily activity that helped send the world into its deepest peacetime slump since the Great Depression.

The equivalent of 400 million jobs have been lost world-wide, 13 million in the U.S. alone. Global output is on track to fall 5% this year, far worse than during the financial crisis, according to the International Monetary Fund.

Despite this steep price, few policy makers felt they had a choice, seeing the economic crisis as a side effect of the health crisis. They ordered nonessential businesses closed and told people to stay home, all without the extensive analysis of benefits and risks that usually precedes a new medical treatment.

There wasn’t time to gather that sort of evidence: Faced with a poorly understood and rapidly spreading pathogen, they prioritized saving lives.

Five months later, the evidence suggests lockdowns were an overly blunt and economically costly tool. They are politically difficult to keep in place for long enough to stamp out the virus. The evidence also points to alternative strategies that could slow the spread of the epidemic at much less cost. As cases flare up throughout the U.S., some experts are urging policy makers to pursue these more targeted restrictions and interventions rather than another crippling round of lockdowns.

“We’re on the cusp of an economic catastrophe,” said James Stock, a Harvard University economist who, with Harvard epidemiologist Michael Mina and others, is modeling how to avoid a surge in deaths without a deeply damaging lockdown. “We can avoid the worst of that catastrophe by being disciplined,” Mr. Stock said.

3) This CNN website has lots of cool data: Tracking America’s recovery. I especially like the “Back-to-Normal Index”, which shows that the U.S. economy is operating at 79% of where it was in early March. You can track this by state: it shows Maine is No. 1, at 95% back to normal… while Hawaii is No. 50 at only 62%.

4) The second wave continues to be in steep decline, as these next charts show (the solid lines are seven-day averages) (see the WSJ editorial below for comments on why the decline in daily deaths is not as steep):

The positivity rate is down to 5.7%:

Finally, the charts below show that new cases per capita have fallen sharply in the South and West, remain low in the Northeast, while the Midwest is still rising – but is only at half the level reached in other parts of the country:

5) This editorial in the WSJ has further data on the good news: A Virus Progress Report. Excerpt:

We hate to be the bearer of good news, but here goes: The so-called second virus wave is receding and has been far less deadly than the first in the spring thanks to better therapies and government preparation. Nobody is suggesting we should now let it rip, but the progress should give Americans more confidence that schools and businesses can reopen safely…

The U.S. seven-day rolling average of new cases has fallen by about 40% from its peak on July 25. Hospitalizations and deaths in hot spots peaked at about the same time in apparent contradiction to epidemiological models that have predicted two- to three-week lags between cases, hospitalizations and deaths.

Hospitalizations are down by 62% in Texas, 60% in Florida, 48% in Utah, 45% in California, and 44% in Louisiana from their peaks, which all occurred between July 21 and 24. Arizona’s hospitalizations began increasing in late May, a week or two earlier than in most states, and have fallen 78% since topping out July 12.

While daily cases and hospitalizations are in steep decline, daily deaths are falling more slowly. Here’s the WSJ editorial on this:

Deaths appear to be falling more slowly, but state reports are often delayed. Many fatalities now being reported occurred over multiple days a week or two ago. Florida and Texas recently began reporting fatalities by the date that they occurred, and their data show that deaths peaked around July 24 and had fallen about 60% by Aug. 15.

The best news is that the virus is killing fewer Americans than it did during the spring. Arizona, Florida, and New York City have all recorded about the same number of cases per capita. New York City’s per capita death rate is about 5.6 times higher than Florida’s and four times higher than Arizona’s.

COVID-19 patients in the South and West have been somewhat younger than in the Northeast this spring, but death rates have been lower across all age groups. States report data using different age bands, which can make direct comparisons difficult. But we calculate that the case fatality rate among adults under age 44 is about 75% lower in Arizona than in New York City. Among those over 75, the case fatality rate is about 16% in Florida, 19% in California, and 36% in New York City.

More testing is probably identifying less severe cases, but in-hospital death rates have also improved. One reason is better (and earlier) treatment including less intensive ventilation and therapies like remdesivir. Doctors in Texas and Arizona have said they prepared for their states’ surge by seeking advice from doctors in New York City.

States also are doing a better job protecting their elderly and vulnerable populations, so there have been relatively fewer deaths in nursing homes. Florida with 21.5 million people has reported 4,759 nursing-home deaths, and California with 39.5 million has recorded 4,078 compared to New Jersey’s 6,752 (8.9 million) and Massachusetts’s 5,903 (6.9 million).

6) Much lower death rates aren’t just a U.S. phenomena – it’s true in the U.K. and across Europe, as this Financial Times article highlights (and explores the possible reasons why): Why U.K. coronavirus deaths are falling even as cases are rising. Excerpt:

In Britain, as across Europe, coronavirus infections have been increasing for several weeks – but the resurgence has so far proven notably less deadly than the original pandemic.

Since the beginning of July, when the decline in newly confirmed cases from their April peak stalled, infections have increased gradually back to levels last recorded in mid-June.

Although hospitalizations and deaths lag infections, neither indicator has shown a corresponding increase even six weeks after the number of cases began to rise.

Rather, hospital admissions and deaths attributed to COVID-19 are at record lows in Britain and several other European countries.

In addition to more testing, more young people getting the virus, and improved care, the FT article has some interesting speculation as to other possible reasons for the lower death rates:

Experts are also discussing more speculative ideas about declining fatality and hospitalization rates.

One factor may be that people are becoming infected with lower “viral loads” now that transmission is taking place mainly in the community rather than in care homes and hospitals. Exposure to lower doses of coronavirus may reduce the chance of serious illness.

Seasonality is another possibility. In the northern hemisphere summer, people are generally healthier. At the same time coronavirus survives better outside the body in colder and drier winter conditions.

The final – and most controversial idea – is that genetic change is making the virus less virulent as it passes through human populations. “Viruses are prone to mutate as they move into a new host: human beings,” said Prof Openshaw. “Mutations could produce more or less severe variants but theory suggests that on the whole they are likely to be less severe.”

7) In contrast to the FT article, with good news from the U.K., this New York Times article from a couple of days ago would lead you to believe that Spain is getting hammered: A Coronavirus Second Wave Grips Spain. Excerpt:

“Here we go again,” she added.

If Italy was the harbinger of the first wave of Europe’s coronavirus pandemic in February, Spain is the portent of its second.

France is also surging, as are parts of Eastern Europe, and cases are ticking up in Germany, Greece, Italy and Belgium, too, but in the past week, Spain has recorded the most new cases on the continent by far – more than 53,000. With 114 new infections per 100,000 people in that time, the virus is spreading faster in Spain than in the United States, more than twice as fast as in France, about eight times the rate in Italy and Britain, and 10 times the pace in Germany.

Spain was already one of the hardest-hit countries in Europe, and now has about 440,000 cases and more than 29,000 deaths. But after one of the world’s most stringent lockdowns, which did check the virus’s spread, it then enjoyed one of the most rapid reopenings. The return of nightlife and group activities – far faster than most of its European neighbors – has contributed to the epidemic’s resurgence….

As beds continued to fill up in Málaga’s hospitals this weekend, residents were still cramming into bars along certain beach fronts until well past midnight.

Does this article present an accurate picture? My analyst Alex did some digging and has concluded that it does not. While cases have indeed surged, deaths remain extremely low – this is what Alex calls a “casedemic” – as this chart shows:

Looking at Madrid, Alex found evidence that supports the disease break point theory, writing:

It is the only city that was hit hard in March that I have found has seen a second wave.

But it looks like we have some pretty strong support for HIT [herd immunity threshold] in Madrid given the “second case wave” without a new death wave. As you can see from the charts below (source), cases started to rise in mid-July and rising hospitalizations followed a couple of weeks later, but deaths have yet to budge. This is despite the typical 20- to 23-day lag between report of case to report of death. This may be due to better treatments and early testing leading to longer times from initial case report to hospitalization to subsequent death. So, it still might be premature to declare that Madrid has HIT with 100% certainty but I think it is highly likely (>90%). The next month or so will be interesting to watch…


Hospitalizations (Total and ICU)


Alex adds:

Deaths for those under 40 are almost nonzero, minor between 40 to 60, and much more pronounced above 70. Notice how men dominate deaths in nearly every age bracket except for 80s and especially 90-plus. This is because women tend to live longer than men so there are more old women than men. The disease disproportionately impacts men over women.

Ah, but what about the southern coast of Spain that the NYT article focuses on, where reckless Spaniards are partying and spreading the disease? Again, Alex found lots of cases and few deaths.

This website has data for nine provinces in southern Spain. For each province, the website shows charts like this – they all look pretty much the same. Here’s the one for Málaga, which the NYT article mentions as being particularly hard-hit (the blue line shows cases per day, yellow is hospitalizations, and red is deaths):

8) Lastly, let’s look at Brazil…

With its authoritarian leader, the country is often cited in the media as the poster child for how not to handle the pandemic (for example, this was the headline of a CNN article on July 3: ‘Sending the population to the slaughterhouse’: Restaurants and bars open in Rio, as experts warn worst is yet to come).

Both cases and deaths in Brazil are starting to decline, as these charts show:

For an in-depth look at Brazil, and a comparison with its South American neighbors, see: Brazil – Not the Disaster We’ve Been Led to Believe. Excerpt:

After writing my “Postcard from Brazil”, I realized it would be very difficult for most of my fellow lockdown skeptics to check my numbers about the progress of COVID-19 in Brazil, as this information is generally only available in local Portuguese language media. The western press corps of propagandists are completely obsessed with Brazil being a bubbling cauldron of death and despair, and actually doing any investigation on the issue would result in stepping outside the official narrative. Can’t have that!

I wanted to do my part to bring some alternative information on South America to a Western audience. I’ll link to the local articles for proof, but they are in Portuguese and most are paywalled. See what you can do. The fact is, the story of Brazil and COVID is a fascinating one. I think it leads to some interesting conclusions about immunity, lockdowns, and individual freedoms. CliffsNotes: immunity is important, lockdowns don’t work, and freedoms are worth dying for – but we already knew that…

While social distancing measures were put in place in all these states, they were barely adhered to. Uber rich São Paulo probably did the best at keeping people inside, but the northeastern and Amazonian states are among Brazil’s poorest. People needed to keep working to survive. And Rio: Hah, forget it. Anyone who has spent any time there knows that you simply can’t tell the cariocas what to do. Distancing there made Sweden look like North Korea. By the time Bolsonaro started demanding the economies re-open, most people had already decided to go back to work.

An interesting aside: Brazil, for all the talk of irresponsibility, followed the ‘flatten the curve’ strategy as it was originally stated, and did so well. The laser focus was on hospital beds. Every night, what was reported on was the occupation level of ERs, not deaths and cases. When states felt they had enough beds, ventilators, stocks of drugs, etc… they started to reopen. Flatten the curve never morphed into the ridiculous “zero COVID,” like elsewhere in the world. And Brazilian hospitals (with the exception of Manaus) never collapsed or even came close. Most were pressured in the early days, but never were more than 80% occupied. So, they started re-opening…

OK, so… what happened then after the reopening in these states? Millions of dead? Rotting corpses piled on gurneys outside overflowing hospitals? Shopping malls stacked up with bodies? The only follow up is, strangely enough, in Portuguese, from local sources. Team Apocalypse never checked back in to see if its predictions came true.

Surprise! After some time, and some death, granted, numbers started falling in all the states that re-opened. First emergency beds, then hospitalizations, then deaths, then cases. And they didn’t just fall, they plummeted. And, months later, they stayed down. Interestingly enough, when the virus was allowed to run its course, these states saw cases and deaths fall off a cliff right around the 20% to 25% infected mark, just like Milan, New York, Stockholm, etc.

In conclusion, pretty much no matter where you look – in the U.S. or around the world – the evidence is clear: humanity is winning the battle against the coronavirus – even before we have any vaccines. This doesn’t mean we should be complacent – but it does mean we should largely ignore the never-ending drumbeat of grim headlines…

Best regards,


Whitney Tilson

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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to nearly $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor’s degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

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