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Coronavirus – Weekly update – 27 May 2020

Coronavirus – Weekly update – 27 May 2020



Exits from lockdown proceed with no major upsets / Stock markets remain cautiously positive / For now the ‘wall of money’ from central banks has quashed volatility.

As of 27 May, the global COVID-19 caseload has climbed to over 5.5 million and the death toll is now above 350 000.

Exhibit 1:

Exit strategies – fastest where progress has been made on testing, other factors

The focus is firmly on the exit from lockdown. It is unclear how far and how fast the authorities can relax their containment measures without prompting a resurgence in the caseload, or for that matter, what the tolerance is for rising cases and fatalities before the authorities are forced to reverse course.

The speed limit will vary across countries and through time. Countries where the test and trace capacity is higher, where the level of acquired immunity is higher and where the compliance of the general public with the public health response is higher are better placed to exit lockdown at a faster pace than their peers.

Greater tolerance for fatalities, economic necessity or the electoral timetable may also influence the exit strategy, but the public may take matters into their own hands if they conclude that the measures are being relaxed too far, too fast. That is, the public may refuse to show up at the workplace or on the high street even when they are allowed to do so.

US – relaxing the lockdown too soon?

The US economy is gradually exiting lockdown, but scientists at Imperial College warned this week that the epidemic is still not under control in much of the country. The reproduction number (R0), which measures the average number of people that each infected person transmits the virus to, is currently above one in 20 to 30 states, typically in the south and mid-west. Here, the epidemic is still developing.

The conclusions of the paper underline how the exit strategy and the return to normality is likely to be a drawn-out and painful process.

China – tough measures to stay on top of the spread

Meanwhile, the Chinese authorities are going to extraordinary lengths to keep control of the virus. Quarantine measures were introduced in Jilin province, home to over 100 million people, to contain an upsurge in cases.

President Xi Jinping reportedly made it clear to party officials in Hubei province than they must not ‘ruin the hard-won achievement’ and allow a second wave in Wuhan.  The authorities have reportedly tested almost seven million people in less than two weeks in Wuhan in response to the emergence of new cases.

According to press reports, companies in Wuhan have been testing all their employees before they return to work because they fear that their entire operation will be shut down if there is even one positive result at the workplace.

Economic indicators – reading the PMI

In terms of economic news, the data was deeply disappointing this week if taken at face value. The purchasing managers’ index (PMI) remains the market’s favourite indicator of global activity, being published on a consistent basis for many countries and far in advance of official data on GDP.

Indeed, some investors take the PMI as a reasonable summary number on the global business cycle.  This indicator appears to suggest that the global economy was sinking deeper, into a depression, in May. We are quite sceptical.

Looking at preliminary PMI data for May, the absolute value of the indicator rose on the month, but the net balance remains far below the 50 mark. This implies that there was a severe contraction in activity between April and May.

Indeed, the composite PMI for the eurozone in May remained below the trough seen during the Global Financial Crisis. That seems almost impossible to square with what we know was happening to the economy over this period.

It would seem companies are not answering the question that is posed to them. Rather than describing how output has changed on the month, it appears likely that many companies are reporting how output compares to some normal level of production. A reading worse than the trough of the GFC would make sense on that basis.

China – limited support and fresh tensions

Turning to developments on the policy front, the main news came from the National People’s Congress (NPC) in China, or to be precise, it was the absence of an announcement of a stimulus package for the economy on a scale that some analysts had been expecting.

The authorities broke with tradition and did not use the NPC to post a target for GDP growth in 2020 and instead put the priority on stabilising employment, aiming for an unemployment rate of 6%.

The fiscal stance is shifting, with the headline deficit rising to above 3.6% of GDP (breaching the 3% convention) supplemented by RMB 1 trillion of issuance of central government debt. The ‘prudent’ monetary stance is also set to shift to encourage growth in deposits and total social financing.

Still, if one of the key signposts that the market was monitoring was the announcement of ‘mega stimulus’ at the NPC, then it will have been disappointed.

Meanwhile, the Chinese proposal for a new national security law for Hong Kong has triggered fresh tensions. It challenges the ‘one country, two systems’ equilibrium since Hong Kong has been responsible under its Basic Law for drafting national security legislation.

The Trump administration is weighing its response, which could well include sanctions. China has already signalled that it would respond with ‘all necessary countermeasures’ to what it considers an interference in Chinese internal affairs.

Market outlook – taking an optimistic view

  • Markets generally continue to view the glass as half-full with slightly lower volatility and stock markets drifting sideways. This cautiously positive tone is supported by the ‘wall of money’ from central banks. As previously, the lack of implementation of fiscal support remains a risk and a source of volatility. The possibility of a further escalation in US-Sino tensions constitutes a further risk.
  • What’s unique about this economic downturn is the extent to which policymakers are targeting the corporate debt markets. Policy is specifically aimed at maintaining high credit availability and low default rates through.

Why such a focus on corporate debt markets?

Because this is a crisis where everyone is an innocent victim of an exogenous shock (the virus). The downturn itself is government-made: locking down the economy to protect it from a health crisis. This is important to understand because it means there are few moral hazard arguments to restrain spending and keep support safety nets wide.

For corporate debt markets, this implies that only moderate deterioration may quickly be met by more policy support. The policy easing since March has been successful in reducing volatility and stabilising the credit cycle.

The next several quarters should see subdued company risk appetite with specifically few mergers and acquisitions or share buyback activity. The cost of credit has increased vis-à-vis the cost of equity and this historically points to active deleveraging. Instead, companies are saving, like everyone else, hoarding cash.

Over time, central bank QE is the ultimate ‘wall of money’. Leading central bank programmes already total USD 4 trillion and they are not finished yet. This excess liquidity may find its way into financial assets, particularly when the liquidity hoarding ends.

Any views expressed here are those of the speakers as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

Writen by Investors' Corner Team. The post Coronavirus – Weekly update – 27 May 2020 appeared first on Investors' Corner - The official blog of BNP Paribas Asset Management.

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Watch Yield Curve For When Stocks Begin To Price Recession Risk

Watch Yield Curve For When Stocks Begin To Price Recession Risk

Authored by Simon White, Bloomberg macro strategist,

US large-cap indices…



Watch Yield Curve For When Stocks Begin To Price Recession Risk

Authored by Simon White, Bloomberg macro strategist,

US large-cap indices are currently diverging from recessionary leading economic data. However, a decisive steepening in the yield curve leaves growth stocks and therefore the overall index facing lower prices.

Leading economic data has been signalling a recession for several months. Typically stocks closely follow the ratio between leading and coincident economic data.

As the chart below shows, equities have recently emphatically diverged from the ratio, indicating they are supremely indifferent to very high US recession risk.

What gives? Much of the recent outperformance of the S&P has been driven by a tiny number of tech stocks. The top five S&P stocks’ mean return this year is over 60% versus 0% for the average return of the remaining 498 stocks.

The belief that generative AI is imminently about to radically change the economy and that Nvidia especially is positioned to benefit from this has been behind much of this narrow leadership.

Regardless on your views whether this is overdone or not, it has re-established growth’s dominance over value. Energy had been spearheading the value trade up until around March, but since then tech –- the vessel for many of the largest growth stocks –- has been leading the S&P higher.

The yield curve’s behaviour will be key to watch for a reversion of this trend, and therefore a heightened risk of S&P 500 underperformance. Growth stocks tend to outperform value stocks when the curve flattens. This is because growth companies often have a relative advantage over typically smaller value firms by being able to borrow for longer terms. And vice-versa when the curve steepens, growth firms lose this relative advantage and tend to underperform.

The chart below shows the relationship, which was disrupted through the pandemic. Nonetheless, if it re-establishes itself then the curve beginning to durably re-steepen would be a sign growth stocks will start to underperform again, taking the index lower in the process.

Equivalently, a re-acceleration in US inflation (whose timing depends on China’s halting recovery) is more likely to put steepening pressure on the curve as the Fed has to balance economic growth more with inflation risks. Given the growth segment’s outperformance is an indication of the market’s intensely relaxed attitude to inflation, its resurgence would be a high risk for sending growth stocks lower.

Tyler Durden Wed, 05/31/2023 - 13:20

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COVID-19 lockdowns linked to less accurate recollection of event timing

Participants in a survey study made a relatively high number of errors when asked to recollect the timing of major events that took place in 2021, providing…



Participants in a survey study made a relatively high number of errors when asked to recollect the timing of major events that took place in 2021, providing new insights into how COVID-19 lockdowns impacted perception of time. Daria Pawlak and Arash Sahraie of the University of Aberdeen, UK, present these findings in the open-access journal PLOS ONE on May 31, 2023.

Credit: Arianna Sahraie Photography, CC-BY 4.0 (

Participants in a survey study made a relatively high number of errors when asked to recollect the timing of major events that took place in 2021, providing new insights into how COVID-19 lockdowns impacted perception of time. Daria Pawlak and Arash Sahraie of the University of Aberdeen, UK, present these findings in the open-access journal PLOS ONE on May 31, 2023.

Remembering when past events occurred becomes more difficult as more time passes. In addition, people’s activities and emotions can influence their perception of the passage of time. The social isolation resulting from COVID-19 lockdowns significantly impacted people’s activities and emotions, and prior research has shown that the pandemic triggered distortions in people’s perception of time.

Inspired by that earlier research and clinical reports that patients have become less able to report accurate timelines of their medical conditions, Pawlak and Sahraie set out to deepen understanding of the pandemic’s impact on time perception.

In May 2022, the researchers conducted an online survey in which they asked 277 participants to give the year in which several notable recent events occurred, such as when Brexit was finalized or when Meghan Markle joined the British royal family. Participants also completed standard evaluations for factors related to mental health, including levels of boredom, depression, and resilience.

As expected, participants’ recollection of events that occurred further in the past was less accurate. However, their perception of the timing of events that occurred in 2021—one year prior to the survey—was just an inaccurate as for events that occurred three to four years earlier. In other words, many participants had difficulty recalling the timing of events coinciding with COVID-19 lockdowns.

Additionally, participants who made more errors in event timing were also more likely to show greater levels of depression, anxiety, and physical mental demands during the pandemic, but had less resilience. Boredom was not significantly associated with timeline accuracy.

These findings are similar to those previously reported for prison inmates. The authors suggest that accurate recollection of event timing requires “anchoring” life events, such as birthday celebrations and vacations, which were lacking during COVID-19 lockdowns.

The authors add: “Our paper reports on altered timescapes during the pandemic. In a landscape, if features are not clearly discernible, it is harder to place objects/yourself in relation to other features. Restrictions imposed during the pandemic have impoverished our timescape, affecting the perception of event timelines. We can recall that events happened, we just don’t remember when.


In your coverage please use this URL to provide access to the freely available article in PLOS ONE:

Citation: Pawlak DA, Sahraie A (2023) Lost time: Perception of events timeline affected by the COVID pandemic. PLoS ONE 18(5): e0278250.

Author Countries: UK

Funding: The authors received no specific funding for this work.

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Hyro secures $20M for its AI-powered, healthcare-focused conversational platform

Israel Krush and Rom Cohen first met in an AI course at Cornell Tech, where they bonded over a shared desire to apply AI voice technologies to the healthcare…



Israel Krush and Rom Cohen first met in an AI course at Cornell Tech, where they bonded over a shared desire to apply AI voice technologies to the healthcare sector. Specifically, they sought to automate the routine messages and calls that often lead to administrative burnout, like calls about scheduling, prescription refills and searching through physician directories.

Several years after graduating, Krush and Cohen productized their ideas with Hyro, which uses AI to facilitate text and voice conversations across the web, call centers and apps between healthcare organizations and their clients. Hyro today announced that it raised $20 million in a Series B round led by Liberty Mutual, Macquarie Capital and Black Opal, bringing the startup’s total raised to $35 million.

Krush says that the new cash will be put toward expanding Hyro’s go-to-market teams and R&D.

“When we searched for a domain that would benefit from transforming these technologies most, we discovered and validated that healthcare, with staffing shortages and antiquated processes, had the greatest need and pain points, and have continued to focus on this particular vertical,” Krush told TechCrunch in an email interview.

To Krush’s point, the healthcare industry faces a major staffing shortfall, exacerbated by the logistical complications that arose during the pandemic. In a recent interview with Keona Health, Halee Fischer-Wright, CEO of Medical Group Management Association (MGMA), said that MGMA’s heard that 88% of medical practices have had difficulties recruiting front-of-office staff over the last year. By another estimates, the healthcare field has lost 20% of its workforce.

Hyro doesn’t attempt to replace staffers. But it does inject automation into the equation. The platform is essentially a drop-in replacement for traditional IVR systems, handling calls and texts automatically using conversational AI.

Hyro can answer common questions and handle tasks like booking or rescheduling an appointment, providing engagement and conversion metrics on the backend as it does so.

Plenty of platforms do — or at least claim to. See RedRoute, a voice-based conversational AI startup that delivers an “Alexa-like” customer service experience over the phone. Elsewhere, there’s Omilia, which provides a conversational solution that works on all platforms (e.g. phone, web chat, social networks, SMS and more) and integrates with existing customer support systems.

But Krush claims that Hyro is differentiated. For one, he says, it offers an AI-powered search feature that scrapes up-to-date information from a customer’s website — ostensibly preventing wrong answers to questions (a notorious problem with text-generating AI). Hyro also boasts “smart routing,” which enables it to “intelligently” decide whether to complete a task automatically, send a link to self-serve via SMS or route a request to the right department.

A bot created using Hyro’s development tools. Image Credits: Hyro

“Our AI assistants have been used by tens of millions of patients, automating conversations on various channels,” Krush said. “Hyro creates a feedback loop by identifying missing knowledge gaps, basically mimicking the operations of a call center agent. It also shows within a conversation exactly how the AI assistant deduced the correct response to a patient or customer query, meaning that if incorrect answers were given, an enterprise can understand exactly which piece of content or dataset is labeled incorrectly and fix accordingly.”

Of course, no technology’s perfect, and Hyro’s likely isn’t an exception to the rule. But the startup’s sales pitch was enough to win over dozens of healthcare networks, providers and hospitals as clients, including Weill Cornell Medicine. Annual recurring revenue has doubled since Hyro went to market in 2019, Krush claims.

Hyro’s future plans entail expanding to industries adjacent to healthcare, including real estate and the public sector, as well as rounding out the platform with more customization options, business optimization recommendations and “variety” in the AI skills that Hyro supports.

“The pandemic expedited digital transformation for healthcare and made the problems we’re solving very clear and obvious (e.g. the spike in calls surrounding information, access to testing, etc.),” Krush said. “We were one of the first to offer a COVID-19 virtual assistant that deployed in under 48 hours based on trusted information from the health system and trusted resources such as the CDC and World Health Organization …. Hyro is well funded, with good growth and momentum, and we’ve always managed a responsible budget, so we’re actually looking to expand and gather more market share while competitors are slowing down.”

Hyro secures $20M for its AI-powered, healthcare-focused conversational platform by Kyle Wiggers originally published on TechCrunch

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