Cumberland Advisors Market Commentary – Qingdao, Canada, and Florida

Author: David R. Kotok, Post Date: October 22, 2020
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Readers can compare for themselves. In Qingdao, China, just a dozen new cases of COVID-19 triggered the testing of the city’s entire population – that’s nine million tests in just five days. Sickness and death are being held tightly in check and so is damage to economic growth. (“China’s Beer Capital to Test Entire Population for Covid-19 After Local Flare-Up,” Caixin, https://www.caixinglobal.com/2020-10-12/chinas-beer-capital-to-test-entire-population-for-covid-19-after-local-flare-up-101613866.html)

Incidentally, this was China’s first domestic COVID-19 outbreak in several months. A dozen cases! Qingdao International Airport responded by canceling more than half of arriving and departing flights. (“Qingdao Cancels More Than Half of Flights Amid Covid-19 Surge,” Caixin, https://www.caixinglobal.com/2020-10-14/qingdao-cancels-more-than-half-of-flights-amid-covid-19-surge-101614373.html)

Meanwhile in Florida – population about double Qingdao’s – Governor DeSantis remains in denial about pandemic mitigation, and some citizens continue to avoid masking. Little wonder: In a single damaging stroke on Sept. 25, their governor lifted all restrictions on restaurants and other businesses and prohibited local fines against people who refuse to wear masks. (“Florida governor lifts all restaurant restrictions, bans mask fines as COVID-19 spreads,” PBS Newshour, https://www.pbs.org/newshour/health/florida-governor-lifts-all-restaurant-restrictions-bans-mask-fines-as-covid-19-spreads)

Florida confirmed 2883 new COVID infections on Oct. 14. At that point, some 15,788 Floridians had died. A week later, as of the time of this writing on October 21, new cases for the day totaled 3662, and 16,308 Floridians had died. (Florida COVID Action, https://experience.arcgis.com/experience/d2726d6c01c4486181fec2d4373b01fa).

That’s 779 Floridians lost in a week, the equivalent of a couple of 747s going down with no survivors. That figure exceeds the death toll incurred in February of 2010 when both an earthquake (measuring 8.8 on the Richter Scale) and a tsunami hit Chile (https://www.theguardian.com/world/2010/feb/28/chile-earthquake-death-toll).

The economic impact of the pandemic is severe. In Florida, the unemployment rate stood at 7.6% in September (down from nearly 14% in April and May). Total nonfarm wages and salaries were down 5.0% year-over-year, as of September, and the falloff for the Leisure and Hospitality sector was 18.7%. (Bureau of Labor Statistics, https://www.bls.gov/regions/southeast/florida.htm#eag)

The numbers for my home county, Sarasota, are nearly identical: 6.3% unemployment in August (down from 14.1% in April) and nonfarm wages and salaries down 4.9% year-over-year in September. Anecdotally, I look around the city and county, day after day, and see businesses continuing to close.

The closing of the US-Canada border by the pandemic is thwarting the winter migration of Canadian “snowbirds” to warm, southerly parts of the US. Normally, 60% of those folks would flock to Florida. (“Goodbye, Sunny Florida. Hello, Frigid Winter. Covid Strands Canadian Snowbirds,” Wall Street Journal, https://www.wsj.com/articles/covid-strands-canadian-snowbirds-winter-travel-florida-11602691585)

Reports from Florida schools are lacking in completeness, transparency, and timeliness. As of this morning (October 21), as we worked on this commentary, the school data reported on the state’s site was current through October 10. An 11-day reporting lag is far too long to reflect the rise in school-related cases that is happening now in Southern Florida. See “South Florida reports rising COVID-19 infections in schools as state reports 3,662 new cases,”
https://www.clickorlando.com/news/local/2020/10/20/south-florida-reports-rising-covid-19-in-schools-as-state-reports-3662-new-cases/, and “Number of COVID-19 Cases Ticking Up in Miami-Dade Schools,”
https://www.nbcmiami.com/news/local/number-of-covid-19-cases-ticking-up-in-miami-dade-schools/2309297/.

As of early this afternoon (Wednesday, October 21), the site indicates that the data is current as of October 17, so there’s been an update that is four days old upon publication. The print on screen is miniscule. The page looks like the blue-lined continuous computer printer paper widely used in the 1980s, and there are no case totals tallied at the end. But if we zoom in at 250% magnification to see the fine print on page 11 of 19, we find that Fort Walton Beach High School had 30 new cases for the week ending in October 17. And that is the process for discovering information about Florida schools, information that is at best out of date. There is no graphical representation by district or region, and no up-to-date, trustworthy numbers. Just raw, old data.

A check of the news reveals that 177 students were quarantined for possible exposure at Fort Walton Beach High School during the previous week (“Data shows Fort Walton Beach High School sent 177 students into quarantine last week,” https://www.nwfdailynews.com/story/news/2020/10/13/fort-walton-beach-high-school-quarantined-177-students-last-week/5977439002/). A visit to the Okaloosa Schools website nets further information, in the form of a notification that healthy students exposed to COVID-19 may not need to quarantine at all, per Ron DeSantis as of yesterday. Read a concerned superintendent’s note to parents:
“We prepared this letter to send to parents prior to a press conference held by Governor DeSantis yesterday afternoon. During the conference, the Governor stated that healthy students should not be quarantined. Governor DeSantis has been a champion for students throughout this difficult year and provided guidance and resources that have greatly benefitted the students of Okaloosa County. Upon hearing the Governor’s comments, we reached out to the Department of Health, who has the statutory authority to quarantine, to see if it had received updated directives or emergency orders that would change how they contact trace and quarantine students. We also spoke with the Florida Department of Education in hopes of receiving information. We have been told that the Florida Department of Health is meeting to determine next steps, and we will update you as soon as we receive information that changes what is stated below.”
(“Important Quarantine Update from Superintendent of Schools, Marcus Chambers,” https://www.okaloosaschools.com/articles/2020/quarantine-update-10.21.20). This is a big curve ball.

See also “DeSantis: Healthy students should not have to quarantine if classmates test positive for COVID-19,” https://www.wftv.com/news/health/desantis-healthy-students-should-not-have-quarantine-if-classmates-test-positive-covid-19/OX6F7SFWJBE47AORM6C27QQOAM/.

What are parents to think? How safe will families, schools, and communities be if students and teachers exposed to COVID-19 are not asked to quarantine in Florida?

Cumberland has clients from Jacksonville to Key West, from Ft. Lauderdale to St. Petersburg. We get real-time data from our clients. Having no effective statewide leadership for COVID mitigation means having more citizens living in fear and uncertainty. This not how to turn the economy around. Governor DeSantis, you’re in a hole. It’s getting deeper. Stop digging!

Readers, we will follow up with more on Sunday.

David R. Kotok
Chairman of the Board & Chief Investment Officer
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