Investors are driving up share prices dramatically so far this week because there is light (albeit faint) at the end of the Covid-19 tunnel, signaling that success, and eventual easing, of mitigation measures is coming into focus. The "new case" curves are starting to flatten, generally in sequence, evidencing that the tide is beginning to turn in mitigating transmission and spread.
At this website, scroll down to the "Daily New Cases in Spain" graph. https://www.worldometers.info/coronavir ... try/spain/
You will immediately understand what "flattening the curve" looks like.
Then scroll up until you see the "Countries" button, hit it, then hit Italy, then scroll down to Italy's "Daily New Cases" graph. Same story.
Repeat the process for each country in the top 10 countries . For the most part, the curves are flattening and starting to decline.
The U.S., which is a few weeks behind most Asian and European countries in the course of the contagion, but which in many areas got an earlier start (in relative terms) with aggressive mitigation, may be starting to flatten the new case curve. The earliest locations of outbreak (Washington state, California and NYC area) are finally showing results of their mitigation efforts, though other developing hotspots (Boston, Detroit, New Orleans, Miami) are not as far in flattening their curves, yet.
No country is out of the woods, but at least we know that mitigation efforts have slowed the spread in those countries (generally), which is step one.
What's next? As the Task Force reiterated in yesterday's briefing, we in the U.S. must keep our feet on the mitigation accelerator. Doing so will flatten our curve, and by so doing will prevent overwhelming our health care system, save many lives, and, together with the results of mass testing that is currently ramping, enable policy-makers to identify when, where, and how mitigation measures can be eased.
Easing of those measures will be informed by the scientific data, will likely be local and regional initially, and will likely be gradual, with a close eye on the daily data and the new case curves in states and in large and small areas. It won't be surprising if some hotspots emerge, warranting targeted tightening of mitigation measures.
Two additional metrics to watch will be (1) other countries (especially large countries whose Covid-19 epidemics have been later in starting, especially those in the southern hemisphere who are entering their flu seasons), and (2) second waves in the northern hemisphere starting in Q4 (with its flu season). Until there is an effective vaccine that can be mass produced and applied (2021, according to the experts), only natural or antibody immunity (which are spreading and hopefully will be effective against COVID-19's evolving strains), will otherwise protect people from contracting the disease, absent social distancing.
Restoration of economic activity, and reversal of destroyed crude demand, will be gradual, limited by some continuing mitigation measures, some continued travel restrictions (and reluctance), and the economic burden/capability to rebuild businesses. Policy makers will listen to the experts' interpretation of the evolving scientific data and thus approach the mitigation easing in an informed, intelligent way. Doing so will assure that the distant light grows ever brighter and sharper. Doing otherwise would risk delay in economic recovery.
The markets right now are telling us that they expect policy makers to choose an intelligent, informed approach.