Rabobank: “There Is Genuine Confusion On How Many People Are Being Tested; How They Are Tested; And How Many Are Actually Dead”

Friday, February 14, 2020
By Paul Martin

by Michael Every of Rabobank
Fri, 02/14/2020

Happy Valentine’s Day as well as Happy Friday. As markets try to focus in on the latest developments on the Coronavirus they see that events of truly global importance once again rely on Chinese state statistics – and thus, like a Valentine’s Day box of chocolates from Forrest Gump, you never know what you are going to get.

What they can also see is that the leap in new cases yesterday was due to a new testing system, which was being put forward as a revised “stock” and not a “flow” argument. Moreover, today the total number of deaths stands at 1,383, which is showing a much smaller increase from yesterday’s 1,369 than the 242 who apparently died the day before. Not so pleasing is that there is genuine confusion on how many people are being tested; how they are being tested; how they are being classified; and how many people are actually dead. This kind of confusion is something markets have learned to live with over a little matter like Chinese GDP; it’s not so easy when it comes to something you live or die with, like a virus. Regardless, under the new methodology being applied in China we now have 64,437 cases, so edging closer to the kind of 75,000 total that The Lancet was warning about recently as likely as of 25 January, and which looked like science fiction to some at the time. We also have 4,920 new cases recorded, which while well down from the 15,407 yesterday is still more than double the trend being shown before that.

Of course, there are some voices out there in The Street literally saying that if only one adjusts the data this way or that, or even ignores the new methodology and looks at the less efficient results being done in limited batches beforehand, then the underlying virus trend is once again bullish: Bloomberg leads with “New Virus Cases Slow”: No, they don’t! What we see is that under revised methodology the stock is higher and the flow of new daily cases are now double what they were before. New cases may have slowed from yesterday’s revision-boosted total, but we don’t know what the trend will be ahead under the new system, and what we *can* see is that Covid-19’s scale is far larger than had been originally portrayed.

The Rest…HERE

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