Debate about whether a second coronavirus wave should trigger more lockdowns continues, but one firm says the lockdowns didn’t even do anything during the first wave. Meanwhile, the World Health Organization says that the recent increase in coronavirus cases is due to the easing of lockdown restrictions during the first wave, not because a second wave is getting underway.
Lockdowns won't help a second wave
In a recent letter, David Capital management said they don't believe the end of lockdowns will result in a second coronavirus wave. They noted that countries which have exited lockdown have not seen a second wave of the coronavirus.
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They also quoted Denmark Chief Epidemiologist Kare Molbak, who recently said no country has seen a second wave of COVID-19 yet, although some countries have seen the spread go up and down. He believes it is very unlikely that there will be a second wave.
David Capital management believes the lockdowns didn't even do anything the first time around. They cited research from the World Health Organization which claimed that large-scale quarantines are not advisable.
The WHO Writing Group found that "forced isolation and quarantine are ineffective and impractical." Despite that, the organization has countries around the world imposing lockdowns on people. David Capital also found further research that demonstrated the same view.
They cited a 2007 study by the RAND Center for Domestic and International Health Security, which found that mandatory social distancing measures are "not recommended" and that there is "limited scientific evidence supporting such restrictions."
Further, they found no statistical differences in the severity of the COVID-19 pandemic in countries that imposed lockdowns versus country that did not. They cited the examples of Spain and the Netherlands. Spain did a hard lockdown, while the Netherlands did a softer lockdown. However, fatality data shows they had almost the same outcome with peak deaths on March 31 and a steady decline afterward.
Argument against lockdowns and return of COVID-19
When considering the second wave that has been reported in news headlines, the David Capital team said they believe it's misleading to focus on the total number of positive tests in the areas where some have proclaimed that a second wave is occurring.
They note that in March and April, positive tests were a strong indicator for future ICU admissions and deaths, but the correlation failed in May as positive tests when down modestly while ICU visits and fatalities plunged. They said the news headlines are confusing positive tests with infection spread, but they aren't the same.
The hedge fund argues that in California, Texas and Arizona, most of the increase in positive tests is related to an increase in tests performed.
So will states reimpose lockdowns if or when a second coronavirus wave hits? CNBC reported last month that Credit Suisse analysts don't expect widespread shutdowns in the event of a second wave. They told the news outlet that the March selloff occurred because the economy was shut down, not because of the surge in new coronavirus cases. As a result, they don't think investors have to worry about a second wave because they don't expect another lockdown if or when it happens.