»The Honest Truth by Ajit Dayal

A war with no winners, a plane with no compass.

While stock markets and businesses may have seen winners as people hunkered home and were locked down into a digital world, the war with COVID has no winners.

The relentless rise of COVID since its early spread from "Chaina" as it permeated the length and breadth of open societies has bruised all economies and maimed the reputation of many governments. It is not, as some believe, a cry of victory for closed / dictatorial societies over open societies. "Chaina" may be a relative winner, but much of the Middle East and Russia - closed societies - are not winners by any stretch of the imagination.

COVID did, however, display the grit and determination of medical staff and doctors as they fended off an unknown virus. The first one million cases worldwide saw a higher percentage of deaths as medical teams (poorly equipped with basic precautionary masks and clothing) were overwhelmed by a flood of patients. The necessary lockdowns to limit the spread of the virus and the production of masks, clothing, ventilators and the identification of protocols (including medication) saw fatality rates fall dramatically from the 8% per 1 million levels to below 3% levels in July. This was around the time the first wave of lockdown was lifted in many countries.

By September the death per 1 million cases worldwide, has consistently stayed below 2% and now seems to be hovering around the 1.5% level: so 15,000 deaths per 1 million new cases.

Table 1: How COVID was pushed back - but not yet beaten

Date No of cases No of incremental deaths,
per million
Total deaths,
% Deaths per incremental
1 million
Apr-02 1,000,000 52,403 52,403 5.2%
Apr-14 2,000,000 86,269 138,672 8.6%
Apr-27 3,000,000 81,987 220,659 8.2%
May-09 4,000,000 61,692 282,351 6.2%
May-20 5,000,000 51,048 333,399 5.1%
May-29 6,000,000 35,545 368,944 3.6%
Jun-07 7,000,000 37,322 406,266 3.7%
Jun-14 8,000,000 26,993 439,018 2.7%
Jun-21 9,000,000 33,337 472,355 3.3%
Jun-27 10,000,000 28,932 501,287 2.9%
Jul-02 11,000,000 21,952 523,239 2.2%
Jul-08 12,000,000 32,370 555,609 3.2%
Jul-12 13,000,000 20,398 576,007 2.0%
Jul-16 14,000,000 21,214 597,221 2.1%
Jul-21 15,000,000 25,035 622,256 2.5%
Jul-25 16,000,000 35,226 657,482 3.5%
Jul-29 17,000,000 21,434 678,916 2.1%
Aug-01 18,000,000 19,030 697,946 1.9%
Aug-06 19,000,000 29,060 727,006 2.9%
Aug-09 20,000,000 17,283 744,289 1.7%
Aug-13 21,000,000 24,661 768,950 2.5%
Aug-18 22,000,000 27,226 796,176 2.7%
Aug-21 23,000,000 19,330 815,506 1.9%
Aug-25 24,000,000 20,653 836,159 2.1%
Aug-28 25,000,000 18,511 854,670 1.9%
Sep-02 26,000,000 26,604 881,274 2.7%
Sep-05 27,000,000 16,842 898,116 1.7%
Sep-08 28,000,000 12,539 910,655 1.3%
Sep-12 29,000,000 23,136 933,791 2.3%
Sep-16 30,000,000 20,249 954,040 2.0%
Sep-20 31,000,000 20,022 974,062 2.0%
Sep-23 32,000,000 15,202 989,264 1.5%
Sep-26 33,000,000 16,104 1,005,368 1.6%
Sep-30 34,000,000 18,641 1,024,009 1.9%
Oct-03 35,000,000 16,092 1,040,101 1.6%
Oct-06 36,000,000 13,937 1,054,038 1.4%
Oct-09 37,000,000 18,214 1,072,252 1.8%
Oct-13 38,000,000 17,998 1,090,250 1.8%
Oct-15 39,000,000 12,206 1,102,456 1.2%
Oct-17 40,000,000 11,892 1,114,348 1.2%
Oct-20 41,000,000 14,696 1,129,044 1.5%
Oct-22 42,000,000 13,346 1,142,390 1.3%
Oct-25 43,000,000 16,903 1,159,293 1.7%
Oct-27 44,000,000 12,157 1,171,450 1.2%
Oct-29 45,000,000 14,277 1,185,727 1.4%
Source: Raw data from Worldometer

Down - but not out.

Admittedly, the death rate per million may be skewed by bad statistics. In the initial months it is likely that more people were infected by the virus than was reported - testing kits were in short supply and hospitals were full. So the denominator may be suppressed as those who had COVID may not have known it or were ill at home since the hospitals had no place for them. This suggests that the death rate may have been far lower than 8%.

It is also likely that deaths due to COVID were exaggerated. A person dying from a heart attack may have been counted as a COVID fatality, thereby inflating the numerator. COVID was the believable reason for everything.

However, despite the many ways you slice the past and more recent data, the good news is that the number of people dying (per 1 million cases) is declining and - adjusting for the past errors in reporting - is certainly not increasing! Worryingly, COVID remains 7x more deadly than the seasonal winter flu.

We need to accept that COVID is here to stay: the number of cases continues to rise as the removal of restrictions on the movement of people is eased. Though the virologists now understand the behaviour and the characteristics of COVID so they can treat it better, the vaccine is some way off: maybe 3 months; maybe 6 months. And it will be years before every person on Planet Earth will be vaccinated. The virus needs a human to jump from and a human to jump too. India has a lot of humans, as does the world.

In many countries a second lockdown has been announced as a surge in cases results in renewed strain on hospital beds and medical staff. The young are tired of being locked in and wish to be unleashed and party out. The older remain wary and cannot seem to understand why the young refuse to stay at home and "party". Most households need incomes.

It is a sad state of affairs when migrant labour, having left the urban cities in India in inhuman conditions in March and April, now yearn to leave their villages to return to those cruel cities in search of incomes. The desperation of the migrant workers from UP and Bihar must be equivalent to that of refugees from sub-Saharan Africa and Syria leaving a wasteland for a better future - even if it means facing death as they cross the unforgiving Mediterranean Sea.

The government has to face many challenges ahead. Diwali will be a dull affair. The international tourist season will probably be muted. Much of this slack will be picked up by domestic tourists, nervous about making trips to foreign countries for short holidays. But any movement within India will lead to a surge in COVID. The revelation by Thyrocare that "some districts" across many states were trying to control the amount of test samples that Thyrocare was collecting suggests that governments are trying to suppress the facts and instil confidence in their efforts to kick-start movement and consumption. This is dangerous.

Table 2: India blunts COVID - or the data?

Date Number of cases No of incremental deaths Total,
cumulative deaths
Deaths per incremental
1 million cases
Jul-18 1,000,000 26,828 26,828 2.7%
Aug-06 2,000,000 14,810 41,638 1.5%
Aug-22 3,000,000 15,208 56,846 1.5%
Sep-04 4,000,000 12,789 69,635 1.3%
Sep-15 5,000,000 13,595 83,230 1.4%
Sep-27 6,000,000 12,344 95,574 1.2%
Oct-10 7,000,000 12,797 108,371 1.3%
Oct-28 8,000,000 12,192 120,563 1.2%
Source: Raw data from Worldometer

For the past 5 years, the central government has already spun a false narrative on the benefits of demonetisation, GST, and now claims there is no data on how many migrants died during the COVID lockdown. The state and district levels are now adding to the fogginess of the true economic and medical condition of India. As any doctor treating a patient will tell you, if you don't have the data you cannot assess the condition of the patient.

Market may be forward looking and willing to fly to new heights, but markets need the basic instruments of a compass, an altimeter, and a speedometer to figure out which direction is north or south: or the ending will not be pretty.

Covid will be around for a long time and the better data we have on its spread and behaviour, the easier to will be to win the war.

Investors need to stay invested but remain diversified across asset classes. Keep your hands on the wheel.