Rising coronavirus cases here, but falling in Europe; Possible explanations; Tests rising, but positive test rate and deaths falling

By Whitney Tilson

Tuesday, June 23, 2020

Every couple of weeks, I dedicate one of my daily e-mails to the latest developments in the battle against the coronavirus because it’s such a critical factor in the markets. Here’s today’s edition…

By the way, I have a dedicated coronavirus e-mail list to which I send in-depth e-mails roughly every other day. If you’d like to be added to it, simply send a blank e-mail to: [email protected].

1) Every day, there are frightening new headlines about rising cases across the U.S., with record numbers in roughly a dozen states. This chart shows the rising national trend by day, with the line showing the seven-day moving average:

2) The rising cases here are in sharp contrast to Europe, as this chart from the Washington Post shows:

The Post article explores the many possible explanations for this terrible divergence: In countries keeping the coronavirus at bay, experts watch U.S. case numbers with alarm. Ironically, a major reason is that Europeans listened to U.S. experts… while we didn’t! Excerpt:

Some European health experts fear that the rising U.S. caseloads are rooted in a White House response that has at times deviated from the conclusions of leading scientists.

“Many scientists appeared to have reached an adequate assessment of the situation early on [in the United States], but this didn’t translate into a political action plan,” said Thomas Gerlinger, a professor of health sciences at the University of Bielefeld in Germany. For instance, it took a long time for the United States to ramp up testing capacity.

Whereas the U.S. response to the crisis has at times appeared disconnected from American scientists’ publicly available findings, U.S. researchers’ conclusions informed the actions of foreign governments.

“A large portion of [Germany’s] measures that proved effective was based on studies by leading U.S. research institutes,” said Karl Lauterbach, a Harvard-educated epidemiologist who is a member of the German parliament for the Social Democrats, who are part of the coalition government.

3) Our rising numbers also have to do with Americans’ lousy compliance with basic things like social distancing and mask wearing, plus our fractured politics – as this article highlights: The battle over masks in a pandemic: An all-American story. Excerpt:

In this sprawling, heterogeneous country, the pandemic has become yet another thing on which Americans are divided.

Mask-wearing for some people is an identifier of broader beliefs and political leanings. Like so many issues rooted in science and medicine, the pandemic is now fully entangled with ideological tribalism. This has played out before: helmets for motorcyclists, seat belts in cars, smoking bans in restaurants. All of those measures provoked battles over personal liberty.

Now it’s masks and the coronavirus, with face coverings emerging as an emblem for what cleaves the nation. A flurry of recent studies supports wearing cloth face coverings as a means to limit transmission of the novel coronavirus, which causes the illness covid-19. To many people, masks represent adherence to civic duty and a willingness to make individual sacrifices for the greater good of public health. To others, masks symbolize government overreach and a violation of personal liberty.

4) The rising cases here are not solely due to more testing, though this is part of it. The chart below shows the increase in tests over time (blue line), which is something to celebrate (the red line is confirmed cases):

5) The reason the blue line is going up while the red line is roughly flat is because the percentage of people testing positive has fallen to roughly 5%, as you can see in this next chart (again, it’s something to celebrate):

6) But the most important thing to celebrate is our plunging mortality rate.

As you can see in the chart below, the number of daily deaths is trending downward… even as the number of cases is going up:

One of my readers, Simon, e-mailed me about this:

I think something interesting is going on with the virus. Clearly some states are seeing real growth in spread.

But the little discussed story is the drop in deaths. The 7-day trend is consistently downwards even though 7-day US cases have been flat and more recently rising. Why is this?

Are a larger percentage of new cases younger people, who tend not to get hospitalized?

Are nursing homes much better protected and therefore a much smaller proportion of those hospitalized now very old?

Are treatments improving? Obviously the UK claimed a major treatment breakthrough early last week.

Of course it could be some combination.

As you know mainstream media focuses almost exclusively on the bad news, but we rely on your emails to dig deeper!

7) Simon also sent me this tweet by Scott Gottlieb, the former head of the U.S. Food and Drug Administration (“FDA”):

8) Another one of my readers, Joe, commented:

On cases going up while daily death rate declines:

The U.S. confirmed cases really started surging a lot in a few states a few days ago. That will translate into increased numbers of deaths 2-3 weeks later in the states with the really big surges. So I expect the deaths to bottom this week in the U.S. and start climbing (as compared to week ago deaths) the last day or two of June and certainly by early July.

The IHME site (U. Washington) which I hold in such high regard expects death rates to bottom in the 3rd or 4th week of July and then increase – but the last update was June 15. I expect that the next update that takes into account the most recent data will cause their projections to increase a bit and match my own revised expectations based on the recent surge – bottoming late June, increase starting early July.

Back in March, my range of expectations was too low for Covid-19 outcomes in the U.S. for the simple reason that I could not imagine the Federal response turning out to be as truly terrible as has actually occurred. I thought it would be worse than Europe – but not this much worse.

Thank you, Simon and Joe!

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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