Coronavirus and politics

How will Donald Trump’s covid-19 infection affect the election?

America’s president said the end of the pandemic was in sight. Now he is the country’s most prominent case

DONALD AND MELANIA TRUMP have both tested positive for covid-19, just four weeks before the presidential election. This must be frightening for them and their family. It will also have an important effect on the presidential campaign. Political journalists have been speculating about an October surprise for months. Now we have one.

One possibility to consider is that the president is just fine. Some infected people suffer no symptoms, or are only mildly ill. Mr Trump quarantines for ten days, receives any care he requires from Walter Reed Military hospital in Bethesda, Maryland. He emerges in mid-October and says: you see, I told you all along it was no big deal.

Even that benign scenario, though, is not good for the president politically. If he receives a sympathy bump in the polls, it is likely to be small. He is still seven points behind Joe Biden in The Economist’s average of polls, which we calculate gives him just a one-in-ten chance of winning the election. Mr Trump wants to change the subject from covid-19, his administration’s mismanagement of the response to the epidemic and the toll it has taken on the economy. His own illness makes that task impossible for the next ten days. By the time he emerges from quarantine there will not be much time left for him to make up the deficit in his poll numbers.

And while he is recuperating, Americans will be reminded that Mr Trump has spent all year playing down the severity of the virus, at one point claiming it would simply disappear. In the first presidential debate on Tuesday night, he said he wore a mask when he needed to—and then mocked Mr Biden for his insistence on wearing one at all times. “I don’t wear masks like him,” Mr Trump said. “Every time you see him, he’s got a mask. He could be speaking 200 feet away from me and he shows up with the biggest mask I’ve ever seen.” He later claimed the end of the pandemic was in sight.

The White House has long insisted that Mr Trump does not need to wear a mask because both he and the people around him are tested constantly. That may be right, but by taking this stance the president has undermined support for wearing masks at a time when his own director of the Centres for Disease Control (CDC) has been insisting that Americans can slow the spread of the virus if they wear one—above all to protect others. It does not take a campaign mastermind to draw a straight line between the president’s ambiguous messaging and the 200,000 Americans who have been killed by covid-19.

There is, of course, a second scenario: Mr Trump gets seriously ill, as Britain’s prime minister, Boris Johnson, did in April. Treatment for those who are hospitalised with covid-19 has improved over the past months. That partly explains why the case fatality rate in America is falling (another reason is that more testing is taking place). On the other hand, Mr Trump ticks three of the known risk factors: being male, elderly (he is 74) and with a body-mass index (BMI) of over 30 (the president’s medical bulletin from April gives him a BMI of 30.5, according to the National Institutes of Health’s calculator). Tom Frieden, a former head of the CDC, tweeted: “A 74-year-old has approximately 3% chance of death, 10-15% chance of severe illness. Higher in males, obesity.” Many people in their 70s also have other medical conditions that increase the risks. However, the president will be able to avail himself of the best medical care in the world.

If Mr Trump were temporarily incapacitated, then Mike Pence, the vice-president, could assume his duties under the 25th amendment to the constitution, which was ratified after John F. Kennedy’s assassination. Mr Pence’s spokesman has tweeted that the vice-president and his wife have both tested negative.

But the uncertainty does not end there. There is a third scenario which would be even more surprising—and which could really turn this election upside down, in the sense of changing the likely result. Any list of possible scenarios between now and November 3rd should also include one where Mr Trump recovers, and Mr Biden gets sick before election day.

America is drifting into a perfect storm

The existential nature of this presidential election is a bad sign for the country’s exhausted majority

 Edward Luce

The US has had no dress rehearsal for a situation like this © Reuters


On some days it feels like nature is giving America a heads-up.

Migratory birds falling from the skies; smoke from America’s west coast fires reaching Europe; parts of Florida underwater — the atmospherics are Wagnerian. Humans are waiting in the wings for when nature takes a breather.

The coming weeks will show whether the US can manage a fair election amid a likely second wave of coronavirus when most Americans believe a win for the other side could only be because of fraud. America has had no dress rehearsal for a situation like this. 

It is not a good time to be part of the country’s so-called exhausted majority. The base of each party believes the other side is preparing to steal the election. Democrats, with good reason, think Donald Trump wants to make it as difficult as possible for people to vote by mail amid a pandemic. Having said all year that this will be “the most corrupt election in the history of our country”, Mr Trump has primed his supporters to respond to his call if the time comes. Talk of a Democratic coup is becoming routine in Trumpian media outlets. 

Joe Biden, the Democratic nominee, has twice warned that Mr Trump might “try to steal” the election in November. Mr Biden has also, somewhat rashly, predicted that the US military would “escort him from the White House” should he refuse to concede.

In practice, it is hard to believe US soldiers would break more than two centuries of precedent to intervene in civilian affairs. Such a job would fall to the Secret Service or the Capitol Hill police. But Mr Biden was probably right to imply that others, whoever they may be, would need to show Mr Trump the exit.  The most ominous dimension is that both extremes are preparing for a rigged election. This race is fuelled by two forces.

The first is knowing that the other side is readying for violent clashes. Militia extremists have made appearances in dozens of American towns since George Floyd’s killing in May. There are measurably more rightwing armed groups, and they have had much more practice. But leftwing groups associated with Antifa and Black Lives Matter have also begun to flex their second amendment rights.

Should Mr Trump lose the popular vote but win the electoral college, which happened in 2016, the street reaction this time could be far more dramatic. A narrow Trump defeat would likely be worse. Mr Trump has dropped consistent hints that he would bring his people onto the streets. 

Line chart showing how Trump and Biden are doing in the US national polls


The second force is the existential nature of this election. Americans increasingly see this as an all-or-nothing contest. Both sides believe that a victory for the other would tilt the rules of the game against them.

This is reinforced by the fact that it’s a decennial year, which means that down-ballot winners in America’s states will have the power to redraw electoral boundaries in their favour for the next 10 years. It is a measure of how toxic things have become that American scholars are nostalgic for the days of routine gerrymandering. Unfair electoral boundaries are one thing.

The end of America as we know it — or wanted it to be — is quite another.  If nature is feeling kind it will postpone, or cancel, what epidemiologists have dubbed “Covid 2.0”.

Alas, nature exploits whatever opening humanity is offering. America is heading into the autumn with a base infection rate of over 35,000 a day and more than 800 deaths a day. This is nowhere near the flattened curve scientists wanted as the influenza season begins — and Americans retreat back indoors.

America’s leading epidemiologist, and a member of the exhausted majority, says people will have to “hunker down” this winter to avoid a second lockdown.

One of the country’s best forecasters, the Institute for Health Metrics and Evaluation at the University of Washington, predicts another 60,000 American deaths before polling day — assuming no further easing. That is among the lower estimates.

The scene is set for an October surprise. That could be Mr Trump unveiling a Covid-19 vaccine.

Or it could be a war with Iran, or even a clash with China. The particular twist is anybody’s guess.

But it will be something. Elections like this do not end with a whimper. 

 Interview with Bill Gates on COVID-19

"It's Mind-Blowing That We're Not Further Along!"

He has invested vast sums of money in the search for a coronavirus vaccine, but is also a favorite target of conspiracy theorists. In an interview, Bill Gates discusses the progress toward a vaccine and what the U.S. has done wrong in the coronavirus pandemic.
Interview Conducted by Veronika Hackenbroch und Marc Pitzke
Bill Gates, the second-richest man in the world

Bill Gates, the second-richest man in the world


Daniel Berman / REDUX / laif

The search for a solution: a coronavirus vaccine trial in New York

The search for a solution: a coronavirus vaccine trial in New York

 Foto: Hans Pennink / AP / picture alliance
The entire world is suffering: Mask distribution in Ghana

The entire world is suffering: Mask distribution in Ghana

 Foto: Nana Kofi Acquah / Gates Archive
"I wanted to always play it down": U.S. President Donald Trump

"I wanted to always play it down": U.S. President Donald Trump

A target for conspiracy theorists: Gates critics in Berlin

A target for conspiracy theorists: Gates critics in Berlin

 Foto: Andrea Ferro / REDUX / laif

Where there’s a silver tip, there’s a silver tap

Investors shouldn’t over estimate the demand for physical metals while market makers are at play

John Dizard

 Banks’ commodities desks have bought silver in March while others where selling during the Covid-19 panic © Kerem Uzel/Bloomberg


There’s a City of London saying that where there’s a tip, there’s a tap. Or, inside information is usually someone trying to sell you something.

Around May and April, I started hearing more about silver. Nothing indiscreet, just that I should be thinking about it. In my usual contrary way, I wrote a silver-sceptical column in July, pointing out what had happened to silver bulls in the past, notably the Hunt brothers in 1980.

In the meantime, a sad story had been playing out in European bank corridors.

There is vast overstuffing and undercapitalisation, which, this year, means some departments would have to go. The highest ratio of potential embarrassment to revenue would be the departments engaged in commodities trade finance.

Part of this collective decision had to do with the increased intensity of anti money laundering efforts. And, in fact, if you want to launder large amounts of money, entering into a multi-cornered commodities trade transaction is a pretty good way to do it.

After all, one ton of an element, such as niobium, gold, or silver is identical down to the atom to the next ton. And there were always other compliance problems turning up, whether it’s Americans looking for Iranian oil, or overextended Asian traders.

These attract fines that can be a multiple of the business involved.

At BNP Paribas and ABN AMRO Bank, the general downsizing of commodities finance was announced around the end of the second quarter. Other banks trimmed their commodities departments with less fanfare.

It was not as though there was no commodity finance left.

Chinese banks such as ICBC or, sometimes, Russian traders ready to offer silently guaranteed letters of credit, have been stepping in to fill the void. JPMorgan provides some commodities finance, but does not seem too interested in new customers.

However, there was one last time this past year when the Western commodities finance desks had a role. In March, during the dollar liquidity crisis set off by the Covid-19 panic, the commodities desks acted as market makers. That is, they bought when others were selling.

And there was, apparently, a lot of silver to buy.

“London” vaults, which really means featureless warehouses near cargo airports somewhere in England, recorded their largest ever reports of silver on hand in March: 1,175,737,000 ounces (avoirdupois).

There was also a lot of gold on hand, but there were more buyers for that, including respectable ones like central banks.

After all, gold is recognised as a monetary asset by the Bank for International Settlements, right alongside other non-exchange-controlled Article 8 currencies. As always, though, another door opens. Nobody respectable wants to trade commodities in central Africa — but ETFs are a growth business.

And, according to Jeffrey Christian of CPM, a metals advisory group: “It seems much of that silver on hand was converted into ETFs through swaps”.

London holdings of vault silver declined after the market-making wave in mid March. And, as Christian says “a total of 334.3m ounces of silver have been swapped for ETF shares so far this year, 322.4m starting in March through August”.

There was one increase of nearly 20m ounces of silver into ETF shares that happened at the very end of June. The largest apparent mega-swap came from July 21 to 24, when just short of 25m ounces slipped into ETF form.

The great thing about a bank group having an ETF asset on the books, as distinct from metals or commodities contracts, is that there are fewer compliance people worrying about it. And it is easier to gradually unload to retail.

A job made all that easier by silverheads on forums such as Seeking Alpha. As the banks’ position shifting got closer to the end in late July, online commentators obliged with advice such as “silver investment demand is exploding . . . unleashing a powerful virtuous circle for silver with buying fuelling buying”.

The price spiked. The traders on the commodities desks packed their boxes. Coin buyers, late as always, accelerated their “stacking” of American silver in August.

Referring to the ETF swaps, Christian observed that “not being aware of this development could lead market participants to over estimate the demand for physical metals and assume a more bullish opinion”.

Or as a now-retired silver trader reminds us: “Silver has always been subject to manipulation.”

The Stock Market Bubble —and How to Play It

By Ben Levisohn

Colin Anderson Productions pty ltd/Getty Images


Every stock market bubble begins with a story, and make no mistake—this is a stock market bubble.

The story began easily enough, if not with “once upon a time.” A virus forced the country to shut down and accelerated the gains in a select few technology stocks that are uniquely capable of thriving with everyone stuck at home. A central bank took quick action to prevent financial markets from seizing up, pushing interest rates about as low as they could go.

That helped lift the stocks of companies that are growing, including chiefly the aforementioned tech stocks, even if some have no profits. These stocks were among the first to rally once the stock market bottomed in March.

Now, get ready for the plot twist: Good investment ideas can stop being good ideas if the story goes on for too long. The tech trade—including tech companies that aren’t officially labeled as such—went too far before correcting suddenly in the past two weeks.

After gaining 75.7% from its March 23 low through Sept. 2, the tech-led Nasdaq Composite fell 10%, to 10,847.69, over three trading days, its swiftest correction on record.

But one correction doesn’t mean that the story is over, or that the bubble is ready to burst. To the contrary, the forces that drove stocks such as Apple (ticker: AAPL) and (AMZN) to astonishing heights remain firmly in place.

They include the companies’ continued growth, the Federal Reserve’s determination to do whatever it takes to keep the economy afloat, retail investors’ newfound interest in trading, and maybe even a bit of fiscal largess. Stocks will remain volatile, but the tech bubble will continue to inflate.

For an investment bubble to occur, there has to be a widespread belief that a new paradigm has taken hold requiring an adjustment in valuations far beyond what previous fundamentals would imply. This belief needs to engage the imagination of investors beyond Wall Street, and there must be plenty of capital available to chase stock prices higher. The Covid-19 crisis has unlocked all three prerequisites.


Cnsider how the world has changed in the past six months. Social distancing is now the rule, and working from home is encouraged, when possible. Movie theaters are half-empty, and attending school now means opening a laptop at home for many students.

Companies that bring us a taste of our previous lives—such as Zoom Video Communications (ZM) and Peloton Interactive (PTON)—have seen their share prices soar. Shares of tech titans Apple, Microsoft (MSFT), Amazon, Alphabet (GOOGL), and Facebook (FB) have risen because the businesses are growing far more than most, and investors know that bigger is better in today’s world.

At the same time, near-zero interest rates have encouraged investors to pay up for growth, while some retail investors, starved for something to bet on in the absence of professional sports, have turned their attention to stocks, trading through online brokers like it’s 1999.

As a result, Apple, Amazon, Microsoft, Alphabet, and Facebook now account for nearly a quarter of the value of the S&P 500 index, a level of concentration rarely seen in the benchmark. And that might understate the influence of Big Tech. Add Amazon and the S&P Information Technology and Communication Services sectors constitute 45% of the benchmark index, according to J.P. Morgan data, compared with 40% during the dot-com bubble.

Even as the biggest tech names have seen market caps swell, some formerly small companies have graduated to the big leagues. Zoom, for one, jumped 41% in a single day after reporting sales that more than quadrupled the previous year’s, a consequence of the video service’s widespread adoption beyond a business audience. Zoom stock, having zoomed 465% in 2020, is now worth more than $100 billion. Peloton has a market cap of $25 billion after gaining 209% this year, as its stationary bikes replaced gym memberships.

Zoom trades for 50 times 2020 sales, and Peloton, 9.3 times. Both are priced as if future growth is unlimited—a risky bet, especially if the postvirus world looks not all that different from the previrus world. “New-era thinking is everywhere,” says Rosenberg Research’s David Rosenberg. “But there are no ‘new eras.’ ”

That may be, but it still doesn’t mean the bubble is in danger of popping soon—not so long as retail investors keep piling into the market. Retail trading now accounts for 44% of the total, says Jefferies strategist Steven DeSanctis, up from 25% in 2009. Retail investors have been particularly enamored of companies that aren’t covered by Wall Street and have little or no earnings, including Eastman Kodak (KODK), Workhorse Group (WKHS), and (OSTK).

That points to another strange aspect of the current market—the existence of multiple bubbles. The one defined by the Nasdaq 100 gets the most attention, but the run-up in shares of companies that have sought bankruptcy protection, such as Hertz Global Holdings (HTZ) and J.C. Penney (JCPNQ), and electric-vehicle stocks like Nikola (NKLA) and Tesla (TSLA), also merits the bubble label.

Behind the scenes, meanwhile, the Fed is operating the bubble-making machinery. It has pumped trillions of dollars into the economy, expanding its own balance sheet to more than $7 trillion from $4.1 trillion at the start of 2020. This time around, its asset purchases have included not only Treasuries and mortgage-backed securities but also investment-grade and high-yield bonds. All of this demand has served to lower interest rates to near zero.

Getting Rich

Low interest rates have encouraged investors to pay more for fast-growing techcompanies.

The Fed typically has burst past bubbles, including the dot-com bubble of the late 1990s and the housing bubble of the mid-2000s, by raising interest rates. Don’t count on that now, or at least not yet. Fed Chairman Jerome Powell has effectively promised to keep rates low for years, which means there should be plenty of cash sloshing around to keep the bubble growing.

Perhaps the biggest reason to keep betting on tech—and the stock market—is that things aren’t nearly as frothy now as they were during, say, the dot-com bubble. Even in August, the market never reached the sustained frenzy that characterized the late 1990s, when the major indexes went parabolic and stayed that way for months, says Katie Stockton, managing partner of Fairlead Strategies. Stockton thinks the market’s recent pullback will create another buying opportunity, “A bubble would be characterized by prolonged upside momentum,” she says. “The market doesn’t have that.”

There are risks, however. Wolfe Research strategist Chris Senyek cites a possible deterioration in the economy, an increase in Covid-19 cases, and Congress’ failure to pass another fiscal-relief package. The November election, too, could derail stocks. On the other hand, if the economy grows faster than expected, investors could bail on tech to buy more-cyclical issues.

How to handle a bubblicious market depends in part on one’s time frame. A money manager judged quarterly has little choice but to hang on and try to time the top. That could mean buying Apple, habitually underweighted in large-cap growth and core funds, notes Wells Fargo strategist Chris Harvey.

Finding a middle ground between growth and value is another option, says Credit Suisse strategist Jonathan Golub. He highlights companies with growth rates a touch lower—and stocks much cheaper—than Zoom. Aspen Technology (AZPN) is growing sales by nearly 20% a year, but trades for 24.6 times earnings after gaining just 2.2% this year. Qualcomm (QCOM) is growing by nearly 30% a year, but trades for 16.9 times earnings.

Economically sensitive stocks could be a good bet for investors with a longer time horizon, says MKM Partners strategist Michael Darda, who expects them to outperform over one to three years. He predicts that a strong economic recovery will follow the Covid-19 crisis. “If you assume that we beat this virus, and have a multiyear holding timeline, how could you not prefer reopening trades over the lockdown stocks that have led so far this year?” he asks.

But that’s a whole different story.