These Answers Will Turn the Tide on COVID-19

Let’s get right to the biggest short-term Reality Gap facing the market. The News Media and Big Government, especially Federal officials, are happy to reassure us that the Covid-19 coronavirus epidemic will not become a major problem here in the States.

But after several missteps from the Centers for Disease Control and Prevention (CDC) and rapidly expanding outbreaks all over the world, traders are concerned. The global economy looks in danger of slowing down on a massive level if the containment efforts for this epidemic get much larger.

One key indicator for me is the minimal effect that the Fed’s emergency interest-rate cut this past Tuesday had. The short market pop after the 0.5% rate was erased in an hour. In fact, it may have made things worse, by giving the impression that the Fed was more concerned about U.S. economic health than traders had thought.

But the official number of coronavirus cases is far from Reality. With the restriction on testing and lack of working test protocols here in the U.S., we have almost certainly only seen a relatively small percentage of number of cases that actually exist here.

I believe we have yet to see the worst of the COVID-19 news – or the lowest stock market prices, either…

The Still Unanswered Questions About COVID-19

The market is still living in fear. Here’s a chart that shows the S&P 500 and the Volatility Index (or VIX) that shows how much extra premium is being charged for stock options. The VIX is also called the “fear index” and we’ve only seen readings as high as they are today twice in the last 5 years:

You can see that this level of risk premium was not even seen during the big 19.9% market drop into Christmas Eve of 1918.

What is needed to allay these fears from society at large and from traders, and turn the tide against Covid-19? From a science and medical perspective, here’s what we will need:

  • Figure out how long the virus lives on inert surfaces, including and especially currency.
    • The rising number of Covid-19 infections that can’t be traced to previously known cases makes people worry that it can be caught from touching anything that infected patients have touched. Currently it is theorized that Covid-19 might be spread by touching a surface with virus particles on it and then touching your face, but this has not been verified by scientists. If real, it is thought to be a rare way of catching the virus. The CDC recommends wiping surfaces, washing hands carefully, and not touching your face – but we’re operating in the dark here.
  • Figuring out whether warmer and sunnier weather will stop the outbreak.
    • Some viruses, including flu and the common cold (which in about 15% of cases is caused by a different kind of coronavirus from Covid-19) tend to spread much slower in warmer months. If that were the case, then countries in the northern hemisphere at least would only have to last to spring before the outbreak “took care of itself.” But for other viruses, weather makes no difference, and we have no idea right now if Covid-19 is sensitive to heat and light.
  • Definitive understanding of transmission mechanism (so people can have comfort knowing how to protect themselves, how close they can get to others, etc.), and definitive info on how long the incubation period lasts.
    • The CDC makes a point of emphasizing that “we are still learning how [Covid-19] spreads,” so we really are not sure. It is thought that droplets from sneezing and coughing are the main and perhaps only source of infection. However, being infected from touching a handrail someone sneezed on, or maybe even a package or a piece of mail, has not been ruled out. What we do now is that for other coronaviruses, that is very unlikely. And it would require you to then touch your face with the same hand, to transfer the virus particles from the object to your airway.
    • There have been reports of people being re-infected after already having gone through one course of the disease, and reports that people without any symptoms can be infected and infect others. The CDC insists that both are unconfirmed and, if true, not important sources of spread. Official guidance is still that people who may be infected be isolated until all symptoms (sneezing, cough, pain, fever, etc.) disappear and two separate tests for the virus, at least 24 hours apart, show no sign of infection . This isolation includes not sharing the same air as others, which is quite a serious measure.
    • The CDC and other authorities around the world are also recommending a 14-day period of quarantine for people who might have been exposed, but are not showing symptoms yet. This is to make sure that if they do become sick, they do not infect others. However, this 14-day period is based on the longest incubation period (time from infection to visible symptoms) of other coronaviruses, and so it is possible that Covid-19 has a longer period than that.
  • A quick test – one that can accurately determine whether someone is infected or not in minutes, not days
    • MIT and several hospitals are working on faster tests for Covid-19, including cheek swabs that could reveal whether a person is infected within minutes or an hour, rather than days. This would be a huge boon in fighting the outbreak, as while people wait for their test results to come back, they must be treated as if they have Covid-19. And that means being put in special isolation wards, which are expensive and rare.
    • Researchers in Hong Kong have developed a test that can detect Covid-19 in only 40 minutes, and that test is now being used in parts of China. The team is expanding production to try to meet international demand, but no word yet on how accurate the test is, and whether an emergency FDA application has been submitted.
    • Some other tests are listed here , but no timeline on when some of the faster ones might be used in the U.S.
  • Creating a cure for the infection, or at least for the ~20% who get serious symptoms, and/or a vaccine to protect against infections.
    • There is currently no cure for Covid-19 infection, and serious cases are treated with support, meaning that patients are given fluids, pain relievers, fever reducers, lung ventilation, and so on.
    • Some areas are experimenting with antiviral medication otherwise used for the flu, HIV, or Ebola. In very early testing, some of these medicines appear to be working, but the mechanism is unclear (anti-flu medication targets parts of the flu virus that Covid-19 doesn’t have) and further study is needed.
    • The Bill and Melinda Gates Foundation has paid for 15,000 different molecules, all used in current antiviral medication, to rapidly be tested for effectiveness against Covid-19. The cost is much, much lower than developing a completely new drug, and if a good drug candidate is found, trials could be expedited as these molecules are already approved and their side effects are known.
    • Most experts agree that a vaccine is one-and-a-half to two years away at best.
    • A number of companies are currently working on cures or drugs for Covid-19
      • Gilead Sciences is Stage 3 testing Remdesivir, a failed Ebola drug, on a small scale in the U.S. and China, and is recruiting for a large trial. That drug has shown some effectiveness against SARS and MERS, both related to Covid-19, in labs .
      • Moderna Therapeutics identified a candidate for a Covid-19 vaccine just 42 days after the virus’ DNA was sequenced, setting a new record. A Stage 1 trial in cooperation with the National Institutes of Health is starting in April. The company has never gained FDA approval for any of its drugs, however, and most drug candidates in Stage 1 testing never even get to Stage 3.
      • CureVac expects its Covid-19 vaccine to be ready for Stage 1 testing in a few months. Like Moderna Therapeutics, it uses strands of RNA (which is similar to DNA) to “trick” the immune system into attacking the Covid-19 virus.
      • Pharma giant GlaxoSmithKline is one of the world’s largest vaccine-makers, and is giving a private Chinese company access to its collection of compounds that boost the effectiveness of vaccines. No word yet on when a Stage 1 trial could begin.
      • Inovia Pharmaceuticals believes it has the technology to rapidly develop vaccines based on the DNA of a virus or bacteria. It is preparing for Stage 1 trials of INO-4800 later this year with a Chinese partner.
      • Johnson & Johnson is working on a vaccine based on a “deactivated” version of Covid-19. This means that real parts of the virus, treated to be inert, harmless, and unable to cause disease, are used to prime the immune system to fight against the real thing. The company is also working on treatments for already infected people. There are no timelines for either.
      • Regeneron Pharmaceuticals creates human antibodies in genetically engineered mice, and is working on exposing those mice to harmless versions of Covid-19 and then harvesting the resulting antibodies to be given to infected humans as treatment. When the company did this during the 2015 Ebola outbreak, the resulting treatment doubled the survival rate of patients. No timeline.
      • Sanofi, a vaccine maker with several successful vaccines under its belt, is working on creating a hybrid of a harmless virus with some parts of Covid-19’s DNA. This could prime the immune system to attack that DNA without causing disease. Sanofi expects Stage 1 trials in 12-18 months, and approval at least three years away.
      • Vir Biotechnology is working on using antibodies from COvid-19 survivors to see if they can be used as a treatment for infection. No timeline.

As the science and medical professionals tackling these issues make progress, the virus will be contained and the markets will respond with huge upward moves. The quicker the spread of the illness is slowed, the lower the impact of an economic shutdown will be.

For now, we’re still at the stage where governments and private companies are necessarily over-reacting with “work from home” edicts, travel and boarder restrictions, and different levels of quarantines.

Until we answer some of these science questions, trying to pick a bottom is likely to be a very costly endeavor.

Short-term rapid trades are your best move while markets remain volatile and uncertainty measures like the VIX remain at extremes.

I’ll be here to help in the weeks and months to come under the coronavirus threat. Fortunately, my new trading strategy has the ability to profit in any market condition, as evidenced by the 100% profit on Carnival Corporation that my beta testers had the chance to grab in under 24 hours this week.

I’ve already started to reveal important information about me new services as the launch date draws very near. Makes sure you stay up to date on all the latest so you can be the first to start profiting from this wildly successful trading technique.

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Great trading and God bless you,


D.R. Barton, Jr.

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