Amid all the laboratory science in the world that has been marshaled against the coronavirus, and all the money that is being spent to avoid a global economic depression, wouldn’t it be just amazing if the plateauing of the now-famous COVID-19 curve came from the start of spring, warm air and more sunshine?
For starters, the first day of spring officially arrived last Thursday, March 19, which just so happens to be its earliest start in more than a century. Some commentators have suggested that warmer weather could help weaken the spread of the coronavirus perhaps as early as April, but there is no consensus from either scientists or physicians as to whether a change in the weather will help to weaken the spread of the coronavirus.
What scientists and physicians do know, is that increased sunlight and warmer temperatures have been shown to disrupt the transmission of some viruses. But COVID-19 has only existed for roughly three months, and the scientific research on this pathogen is too early to make any credible conclusion.
Thursday’s vernal equinox marked the beginning of spring in the Northern Hemisphere earlier than any other equinox in the last 124 years. As its arc across the sky gets higher, the amount of ultraviolet light from the sun will increase rapidly. Ultraviolet light and warmth have been shown to disrupt the transmission of some viruses, but whether this pattern will work with the coronavirus is unknown.
From a very insightful article entitled “Spring Euinox: Will the Season’s Longer Days, Stronger Sunlight, Warmer Air Help Kill Coronavirus?” (NorthJersey.com — March 20, 2020), Below, I am going to condense, quote and paraphrase some of the salient points that this article made in order to bring a well-written message of encouragement that we all need right about now.
Andrew Marshall, a molecular virologist at Loyola University Maryland, said that it’s possible that increased sunlight may destroy the COVID-19 virus. The coronavirus is an “enveloped virus,” which makes it more sensitive to UV rays and warmth, Marshall said.
“UV rays either mutate or modify the DNA or RNA of these viruses, which leads to instability and death of the virus,” Marshall said.
“Viruses that cause influenza and the common cold spread more rapidly among humans in winter thanks, in part, to dry air, weaker immune systems and more time spent indoors,” said Anna Yeung-Cheung, a virologist at Manhattanville College. She added that viruses suffer in warmer weather because the immune system receives a boost with increased vitamin D from sunlight.
“In the Southern Hemisphere, which just finished summer, coronavirus has not spread nearly as rapidly as it has in the northern part of the globe,” Yeung-Cheung said.
How much of that is due to weather is not yet known.
“The reason why viral infections go down in spring and summer is that your immunity does a lot better in warmer weather,” Yeung-Cheung said. “People still get sick in warm weather and we’ve seen coronavirus spread in places like Singapore but not nearly as much.”
Warm weather clearly has something to do with it. I hope that’s the case with the coronavirus here. If so, we will see the infection rates decline as the weather warms.
“It is indeed possible that the [coronavirus] will taper off during the warmer months,” Marshall said. “But as of now, a definitive answer remains elusive.”
Anecdotal evidence from my own neighborhood shows a marked increase of residents walking, running and biking outside. I would even say it’s an exponential increase with many people working out in their garages.
According to Dr. Gochfeld, a professor emeritus at Rutgers Robert Wood Johnson Medical School, “The potentially good news is that as people spend more time outdoors, there is less transmission than indoors because of dissipation by air currents not present indoors. Still, social distancing would be an important factor.”
So, what does this discussion have to do with investing for income? Well, after watching the bottom fall out of all fixed income markets, with Treasuries being the exception, a bit of sunshine returned to the investment-grade corporate bond market late last week, even as stocks closed at the lows of the current correction. This was also true for the investment-grade preferred debt market, where some rays of sunshine appeared late last week and junk debt remained a source of funds.
What typically, and historically occurs in the earliest days of a market that is emerging from a steep correction is that investment-grade debt, which is often hammered by 20% or more, starts to rebound — exhibiting the first signs of a shift in sentiment from “doom and gloom” to one of “the financial world isn’t really coming to an end.”
This shift needs to build on itself this week in a meaningful way after the Fed’s Monday announcement. During this statement, the Fed revealed that it would be buying top-grade corporate bonds. Stocks will follow the trend of the debt markets and, if there is new life in the top-tier corporate, mortgage, convertible and preferred asset classes, then and only then, will a sustainable rally materialize. I hope the debt markets will respond favorably to the massive Congressional fiscal stimulus package that may be passed this week in order to create a desperately needed big-money bid.
The fact that the S&P 500 is testing the 2,200 level, which is below its December 2018 low, represents a market drop of close to 34%. Not to belittle the damage that has been done, this is an average-sized drop during economic recessions. As the December 2018 lows are breached, the S&P will become prone to an additional 10%-15% downside.
So, this week is crucial for the debt markets to pivot higher so the sun can shine on the stock market. But it’s nice to know that just maybe, a big dose of Vitamin D might be the best thing we receive for relief from the virus. That implies getting outside, soaking up as much sunlight as possible and keeping a positive mental attitude.