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An Investment Bank’s View of the Epidemic’s Trajectory.

By April 14, 2020Commentary

Okay, we just heard about a prominent consulting firm’s puff piece on coronavirus.  How about a perspective from one of the nation’s largest investment banks, Morgan Stanley.  Investment banks make a lot of money and have a lot to spend on research, so what kind of report will we get from them?   (MS Report)  A pretty interesting one, as it turns out.  The firm built their own models of disease progression across each state and forecasts on when states might begin to relax the current shutdowns.  And they also made predictions of how the epidemic reaction would proceed, which aren’t too different from McKinsey’s.  The paper was written a couple of weeks ago, so it is slightly dated.  It predicted that daily deaths would peak about now, with a slower peak in the interior of the country than on the coasts.  They did not see a relaxing of the extreme shutdowns until Governors 1) saw the peaks in mortality, due to the lag between cases and deaths, 2) a state had adequate testing and tracing capability, and 3) antibody testing was widely available.

They also believed that return to work would be staggered, with those who have antibodies and younger workers returning first.  Morgan Stanley believes schools should be reopened, due to the demonstrable non-existent risk to children.  But they also believe there will be successive waves of infection and re-imposition of lockdown measures. They seem more confident about a vaccine than I would be, and about new drugs that will miraculously cure the disease.  They note that Chinese economic activity has rebounded but is still much lower than before the epidemic. Interestingly, similarly to the paper we reported on in a post this morning, they looked at data from the influenza-like illness surveillance network, but seemed to not draw the obvious conclusion from their chart that there were likely coronavirus infections occurring but being treated as flu-like up until early March.

Some of the information seems erroneous at this point, such as suggesting that 5% of cases are critical and requiring ventilation.  First that percent is far too high based on real data at this point, and second, doctors have now decided that ventilation was actually making many patients worse and have stop using it as frequently.  It has become clear that the US had far more capacity to handle these cases than was projected to be, or has turned out to be, needed.   The report accurately notse capacity issues with both infection and antibody testing, which is just maddening, given the need for widespread testing of both categories.  And, a subject for another post, they wrongly suggest that the economic damage from a relaxation of mitigation of spread measures might be as great as that from the lockdowns.  All they need to do is look at the age spread of severe cases and see that the working age population would be scarcely affected.  All in all, a good report to read through.

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