Three Reasons Why Morgan Stanley Thinks The Recovery Is Still On TrackTyler DurdenSun, 07/26/2020 - 20:00
One day after Goldman poured cold water on the V- or any other shaped recovery narrative, when its high-frequency, real-time indicators showed that the pace of the recovery was slowing across various consumption metrics...
... but more notably, observed a clear contraction within the US job market and warning that "the labor market recovery is stalling due to the worsening virus situation" as "workplace activity measures have declined in the states hit hardest with virus spread and moved sideways in others since late June"...
... on Sunday, Morgan Stanley, which in the past 4 months has emerged as the biggest cheerleader of the economy (perhaps because it feels the need to justify its bullish market take by being optimistic on the broader economy as if the two are still somehow connected), felt its was its duty to launch another full-throttled defense of the economy - something it has been doing virtually every week - and in the bank's Sunday Start note, Morgan Stanley chief economist Chetan Ahya gives "three reasons why the recovery is still on track", and lists the following:
Unlike in March, there has been a change in calculus between the virus and economy, and policy-makers (at least those who are no part of the #resistance) are now balancing the social and economic costs brought about by lockdown measures versus the adverse implications for public health.
The outlook for vaccines/treatments for COVID looks promising (although there is a risk that elevated levels of COVID-19 cases could coincide with the traditional flu season (which typically leads to hospitalizations beginning to rise from around mid-November onwards and peaking in January), meaning that there will be a greater strain on hospital capacity during that time period.
Policy support remains unprecedented. As a refresher, the G4 central banks are expanding their balance sheets by 28% of GDP by end-2021 and the G4 and China economies are extending fiscal support of 17% of GDP in 2020. The Fed’s balance sheet will rise to 30% of GDP by end-2021 and the fiscal deficit in the US will rise to 24.6% of GDP in 2020, on our forecasts.
And just in case the bulls are starting to get cold feet, below are the details from the rest of Morgan Stanley's traditionally upbeat take on the US economy and global markets.
Three Reasons Why the Recovery Is Still on Track, by Chetan Ahya, chief economist and global head of economics at MOrgan Stanley.
Every new economic cycle begins with considerable uncertainty. Concerns about whether we have seen the worst effects of the shock and whether there will be aftershocks or lingering effects tend to be the key causes of uncertainty during the initial recovery. This time is no different.
But we have steadfastly held on to our forecast that the global economy will regain its pre-COVID-19 levels of output by 4Q20 (and DMs by 4Q21). Our views on the global macro outlook are underpinned by three factors – (1) the evolving COVID-19 situation, (2) the race for effective treatments and vaccines, and (3) the extent of the policy support. As we review each of them in turn, we hope to shed some light on why we think the global recovery is still on the right track.
#1: The equation between the virus and the economy is changing
The virus is still spreading in the US and LatAm, while new clusters of infections have emerged in Asia and Europe. For the latter group, policy-makers have been able to manage these new clusters with selective lockdowns, and aggregates for economic activity have not been affected.
This risk of a renewed aggressive lockdown is the most acute in the US. But the equation between the virus and the economy is now changing – with policy-makers now balancing the social and economic costs brought about by lockdown measures versus the adverse implications for public health.
Moreover, the link between new case counts, hospitalizations, and fatalities is also very different today versus the situation in March/April. Today’s cases include more of the milder or asymptomatic variant, a reflection of ramped-up testing capacity as compared to the earlier days of the outbreak where testing capacity constraints meant that only symptomatic cases were being tested. The median age of new cases is also lower, and the medical community is better prepared to deal with COVID-19 patients. Net new hospitalizations have now eased from the recent peak, easing concerns that policy-makers would have to take up strict lockdown measures.
#2: The outlook for vaccines/treatments for COVID-19 is promising
We have been concerned about a renewed wave of infections in the autumn ever since the beginning of the outbreak (we built this into our base case with a forecast that the pace of growth will slow, but not re-enter into sequential decline, around the turn of the year). The issue is that elevated levels of COVID-19 cases could coincide with the traditional flu season (which typically leads to hospitalizations beginning to rise from around mid-November onwards and peaking in January), meaning that there will be a greater strain on hospital capacity during that time period.
However, we are also watching the potential mitigating factors. The additional precautions such as widespread wearing of masks may help to temper the spread of COVID-19 and the traditional flu season. There is also emerging evidence that the current flu season in the Southern Hemisphere is more subdued as compared to previous seasons.
Moreover, treatment options are available today, with the prospect of more to come. In addition to remdesivir, our US biotechnology analysts have highlighted that there are over 20 antibodies in development, and they believe that Regeneron and Eli Lilly are likely to be first to market. They also view antibody treatments as having a high probability of success and expect details of the clinical trials to be released later this summer.
A number of potential vaccine candidates are also entering into phase III trials. Our US biotechnology analysts expect all three companies (Moderna, Pfizer and AstraZeneca) to have a reasonable probability of success in delivering positive phase III results, with potential details released in the September-November timeframe. Manufacturing of these vaccines is already under way and each of these companies are positioned to provide 100M+ doses of vaccines by year-end. This combination of treatments and vaccines will give us another layer of defense against COVID-19.
#3: Don’t forget about the significant support from policy stimulus
Policy support is crucial during the initial stages and, this time around, the scale of stimulus has been unprecedented. As a refresher, the G4 central banks are expanding their balance sheets by 28% of GDP by end-2021 and the G4 and China economies are extending fiscal support of 17% of GDP in 2020. The Fed’s balance sheet will rise to 30% of GDP by end-2021 and the fiscal deficit in the US will rise to 24.6% of GDP in 2020, on our forecasts.
The fact that this is an exogenous shock (i.e., nobody was at fault for causing the recession) has meant that policy-makers have acted quickly. Just this week, we received a welcome upside surprise with the earlier than expected approval of the European recovery fund. In the US, negotiations are ongoing over CARES II and we expect an additional US$1 trillion fiscal package, with the risks skewed towards a bigger package of over US$1.5 trillion (which will take the deficit over 27% of GDP – a post-1943 high). Moreover, considering the outsized impact that the recession has had on lower-income households, central banks and policy-makers have committed to make the recovery as robust as possible, which in turn means that the overall monetary and fiscal policy stance will remain accommodative for some time.
In sum, our big-picture view is that the global economy will continue to make up lost ground, attaining pre-COVID-19 output levels by 4Q20 (DMs by 4Q21). In fact, the recent run of upside surprises in the data in the US and China makes us believe that this might even pan out a bit faster than we originally envisaged. As these economies have already made up a lot of lost ground, they will naturally see a moderate pace of improvement from here and we would also expect to see some month-to-month gyrations in the data. The baton of growth leadership will be passed on to Europe next as it begins to experience catch-up rates of growth.
In this specific predicament, U.S. officials have to choose a strategy to deliver the aid without the perception of benefiting Hamas, a group the U.S. and Israel both classify as a terrorist organization.
When aiding people in war zones, you can’t just send money, a development strategy called “cash transfers” that has become increasingly popular due to its efficiency. Sending money can boost the supply of locally produced goods and services and help people on the ground pay for what they need most. But injecting cash into an economy so completely cut off from the world would only stoke inflation.
So the aid must consist of goods that have to be brought into Gaza, and services provided by people working as part of an aid mission. Humanitarian aid can include food and water; health, sanitation and hygiene supplies and services; and tents and other materials for shelter and settlement.
Due to the closure of the border with Israel, aid can arrive in Gaza only via the Rafah crossing on the Egyptian border.
The U.S. Agency for International Development, or USAID, will likely turn to its longtime partner on the ground, the United Nations Relief and Works Agency, or UNRWA, to serve as supply depots and distribute goods. That agency, originally founded in 1949 as a temporary measure until a two-state solution could be found, serves in effect as a parallel yet unelected government for Palestinian refugees.
USAID will likely want to tap into UNRWA’s network of 284 schools – many of which are now transformed into humanitarian shelters housing two-thirds of the estimated 1 million people displaced by Israeli airstrikes – and 22 hospitals to expedite distribution.
Since Biden took office, total yearly U.S. assistance for the Palestinian territories has totaled around $150 million, restored from just $8 million in 2020 under the Trump administration. During the Obama administration, however, the U.S. was providing more aid to the territories than it is now, with $1 billion disbursed in the 2013 fiscal year.
The United Nations Relief and Works Agency is a U.N. organization. It’s not run by Hamas, unlike, for instance, the Gaza Ministry of Health. However, Hamas has frequently undermined UNRWA’s efforts and diverted international aid for military purposes.
Humanitarian aid professionals regularly have to contend with these trade-offs when deciding to what extent they can work with governments and local authorities that commit violent acts. They need to do so in exchange for the access required to help civilians under their control.
Similarly, Biden has had to make concessions to Israel while brokering for the freedom to send humanitarian aid to Gaza. For example, he has assured Israel that if any of the aid is diverted by Hamas, the operation will cease.
This promise may have been politically necessary. But if Biden already believes Hamas to be uncaring about civilian welfare, he may not expect the group to refrain from taking what they can.
Security best practices
What can be done to protect the security of humanitarian aid operations that take place in the midst of dangerous conflicts?
Under International Humanitarian Law, local authorities have the primary responsibility for ensuring the delivery of aid – even when they aren’t carrying out that task. To increase the chances that the local authorities will not attack them, aid groups can give “humanitarian notification” and voluntarily alert the local government as to where they will be operating.
Under the current agreement between the U.S., Israel and Egypt, the convoy will raise the U.N. flag. International inspectors will make sure no weapons are on board the vehicles before crossing over from Arish, Egypt, to Rafah, a city located on the Gaza Strip’s border with Egypt.
The aid convoy will likely cross without militarized security. This puts it at some danger of diversion once inside Gaza. But whether the aid convoy is attacked, seized or left alone, the Biden administration will have demonstrated its willingness to attempt a humanitarian relief operation. In this sense, a relatively small first convoy bearing water, medical supplies and food, among other items, serves as a test balloon for a sustained operation to follow soon after.
In that case, the presence of U.S. armed forces might provoke attacks on Gaza-bound aid convoys by Hamas and Islamic jihad fighters that otherwise would not have occurred. Combined with the mobilization of two U.S. Navy carrier groups in the eastern Mediterranean Sea, I’d be concerned that such a move might also stoke regional anger. It would undermine the Biden administration’s attempts to cool the situation.
On U.N.-approved missions, aid delivery may be secured by third-party peacekeepers – meaning, in this case, personnel who are neither Israeli nor Palestinian – with the U.N. Security Council’s blessing. In this case, tragically, it’s unlikely that such a resolution could conceivably pass such a vote, much less quickly enough to make a difference.
Topher L. McDougal does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
“The majority of wound infections often manifest themselves immediately postoperatively, so close followup should take place […]”
Credit: 2023 Barbarewicz et al.
“The majority of wound infections often manifest themselves immediately postoperatively, so close followup should take place […]”
BUFFALO, NY- October 20, 2023 – A new research perspective was published in Oncoscience (Volume 10) on October 4, 2023, entitled, “Diagnosis and management of postoperative wound infections in the head and neck region.”
In everyday clinical practice at a department for oral and maxillofacial surgery, a large number of surgical procedures in the head and neck region take place under both outpatient and inpatient conditions. The basis of every surgical intervention is the patient’s consent to the respective procedure. Particular attention is drawn to the general and operation-specific risks.
Particularly in the case of soft tissue procedures in the facial region, bleeding, secondary bleeding, scarring and infection of the surgical area are among the most common complications/risks, depending on the respective procedure. In their new perspective, researchers Filip Barbarewicz, Kai-Olaf Henkel and Florian Dudde from Army Hospital Hamburg in Germany discuss the diagnosis and management of postoperative infections in the head and neck region.
“In order to minimize the wound infections/surgical site infections, aseptic operating conditions with maximum sterility are required.”
Furthermore, depending on the extent of the surgical procedure and the patient‘s previous illnesses, peri- and/or postoperative antibiotics should be considered in order to avoid postoperative surgical site infection. Abscesses, cellulitis, phlegmone and (depending on the location of the procedure) empyema are among the most common postoperative infections in the respective surgical area. The main pathogens of these infections are staphylococci, although mixed (germ) patterns are also possible.
“Risk factors for the development of a postoperative surgical site infection include, in particular, increased age, smoking, multiple comorbidities and/or systemic diseases (e.g., diabetes mellitus type II) as well as congenital and/ or acquired immune deficiency [10, 11].”
Continue reading the paper: DOI:https://doi.org/10.18632/oncoscience.589
Correspondence to: Florian Dudde
Keywords: surgical site infection, head and neck surgery
Oncoscience is a peer-reviewed, open-access, traditional journal covering the rapidly growing field of cancer research, especially emergent topics not currently covered by other journals. This journal has a special mission: Freeing oncology from publication cost. It is free for the readers and the authors.
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G77 Nations, China, Push Back On U.S. "Loss And Damage" Climate Fund In Days Leading Up To UN Summit
As was the case in primary school with bringing in presents, make sure you bring enough for the rest of the class, otherwise people get ornery...
This age old rule looks like it could be rearing its head in the days leading up to the UN COP 28 climate summit, set to take place in the United Arab Emirates in about six weeks.
At the prior UN COP 27, which took place in Egypt last year, the U.S. pushed an idea for a new World Bank "loss and damage" climate slush fund to help poor countries with climate change. But the G77 nations plus China, including many developing countries, are pushing back on the idea, according to a new report from the Financial Times.
The goal was to arrange how the fund would operate and where the money would come from for the "particularly vulnerable" nations who would have access to it prior to the upcoming summit in UAE.
But as FT notes, Pedro Luis Pedroso Cuesta, the Cuban chair of the G77 plus China group, has said that talks about these details were instead "deadlocked" over issues of - you guessed it - where the money is going and the governance of the fund.
The U.S.'s proposal for the fund to be governed by the World Bank has been rejected by the G77 after "extensive" discussions, the report says. Cuesta has said that the nations seek to have the fund managed elsewhere, but that the U.S. wasn't open to such arrangements.
Cuesta said: “We have been confronted with an elephant in the room, and that elephant is the US. We have been faced with a very closed position that it is [the World Bank] or nothing.”
Christina Chan, a senior adviser to US climate envoy John Kerry, responded: “We have been working diligently at every turn to address concerns, problem-solve, and find landing zones.” She said the U.S. has been "clear and consistent" in their messaging on the need for the fund.
Cuesta contends that the World Bank, known for lending to less affluent nations, lacks a "climate culture" and often delays decision-making, hindering quick responses to climate emergencies like Pakistan's recent severe flooding.
The G77 coalition voiced concerns about the World Bank's legal framework potentially limiting the fund's ability to accept diverse funding sources like philanthropic donations or to access capital markets.
With just days left before the UN COP 28 summit, the World Bank insists that combating climate change is integral to its mission and vows to collaborate on structuring the fund.