Where is the US 2nd wave heading? There some bad news, but also some better trends to pay attention to.
Hence, this is an attempt at a 'balanced thread' (so it may be offensive to many)
Hence, this is an attempt at a 'balanced thread' (so it may be offensive to many)
Let us start with the bad news. US fatalities are trending higher, as we have been projecting for some weeks. We have been >1000/day for the last three days, and a bottom up state-by-state forecast via by hospitalizations suggests some further increase over the next 1-2 weeks 
Since the proportion of people that are hospitalized and do not make it is relatively stable, it is fairly easy to forecast fatalities 1-2 weeks ahead. You just have to look at the disaggregated data and project forward (some color on this here)
But in a way, the fatalities are a function of bad policy and behavior in the past. Let us look ahead. In a forward looking sense, there are some pieces of better news...
First, case growth is moderating in a number of states, and it is not just because of reduced testing (hit ratios have stabilized to or even edged down), with Arizona one of the better examples, but FL, TX, CA are also showing moderating growth.
Second, some of the behavior that we have been identifying as associated with high Rt (transmission) is changing.
For example, dine-in activity as restaurants in Arizona, Florida and Texas has dropped.
For example, dine-in activity as restaurants in Arizona, Florida and Texas has dropped.
For reference, in May-July, there has been a fairly consistent cross-sectional relationship between case growth (Rt if you will) and restaurant activity (likely because such activity is a proxy for 'relaxed behavior' more generally)
an example here
an example here
Third, there has been a major shift in sentiment around masks. Suddenly, the majority of US states have such mandates in place, including in a number of states where it was very controversial up to recently.
axios.com/states-face-co…
axios.com/states-face-co…
Fourth, the cancellation of the GOP convention in Florida, is a signal that there is now a more bipartisan effort to avoid large gatherings. The convention is just one event, but is does reflect a bigger change in attitude.
politico.com/news/2020/07/2…
politico.com/news/2020/07/2…
Behavior started to change at the end of June, both at the policy level (mandated bar closings etc) and at the personal level (social distancing, mask use etc), and that is having an impact on transmission rates by mid-July (now)
Overall, we have had an accelerating focus on the need to be cautious over the past 2 weeks + policy steps, and that will likely lead to further moderation in case growth in coming weeks (although testing surges can create distortions in the reported figures).
Hence, case growth will likely moderate somewhat further over the next 2-3 weeks. But this will happen from an elevated level of cases (50-70K/day), such that we may have very moderate descent from a very elevated level of cases.
Populations are mostly aware of the situation at this point, and they are self-policing more quickly in July than they were in March (at least in early March), and this means that casse growth / transmission is not uncontrolled for that long.
Most likely, the US will now stay in an odd greyzone, with more stable, but still very elevated case growth into August. And each state will have to worry about importing cases from others states with bigger outbreaks (as domestic travel bans are unrealistic)
Dramatic 2nd round lockdowns will then mostly be avoided, as more targeted, including voluntary, measures can be fairly effective at cutting Rt notably.
But many sectors will still be operating in pandemic mode: Restaurants, entertainment, sport, etc. And schools seem likely to be very local stories.
Relative to many Asian and European countries, the US will be in worse shape, and recover with a more shallow slope (although stimulus power will matter here too, it is not just a function of covid numbers, we will see what Phase IV brings..).
The US 2nd wave is clearly different from the 1st. Fatalities are currently trending higher, but self-policing (and actual policy) has kicked in quicker and case growth looks likely to moderate over the next 1-2 month. Moreover, hospital pressure is not as extreme as NYC's in Apr
Overall, the US is set to be in an odd grey-zone equilibrium over the next 1-2 months. Uncontrolled acceleration will be avoided, but the virus will remain prevalent, and key economic sectors will see continued damage (more due to voluntary behavior, than mandated lockdowns).
Meanwhile, international investors are looking at the US, and they are puzzled what is going on. And markets, including the US dollar even, are starting to reflect this uncertain reality, and that is likely to remain the case in 'the greyzone'. I will leave it at that. END
