Cumberland Advisors Market Commentary – The Virus and Cruise Ships

Virus news continues to erupt worldwide and financial markets seem divided, with bonds saying lower interest rates for longer, slower global growth, and a downward inflation outlook. Stock markets, on the other hand, like the low interest rates more than they fear the virus.

Market Commentary - Cumberland Advisors - The Virus and Cruise Ships

The headline stock index changes masks the industry-specific impacts. The stock prices reflect idiosyncratic industry risk profiles. These change rapidly with headlines. Here’s a chronology of virus-related developments in the cruise ship industry, through February 11 news flow and midday February 12 prices.

Let’s do the stock prices first.  We will use the Dow Jones ETF (DIA) as the market metaphor since there are no cruise ship companies in that index.  Cruise ships are part of the broader index (Russell or S&P) but are a small part.  For Cruise industry companies we will use Royal Caribbean Cruises (RCL) and Norwegian Cruise Lines (NCLH).  At the peak and prior to the virus news flow eruption, using the date of January 17, the price of DIA was about $293; RCL was about $135; and NCLH was about $59.  On Feb 12, DIA was about $295.  RCL was about $117; NCLH was about $55.  DIA had sold off and made an interim low of $282 on January 31.  The two cruise lines made interim lows of $109 and $51 respectively on Feb.10.   Let’s get to the news flow triggers.

The Cruise Industry, Pre-2019-nCoV

Before the outbreak, the cruise industry was expected to continue to grow another 6.5% in 2020. See “Global Cruise Liner Markets to 2022: Expected to Grow at a CAGR of 6.53% – ResearchAndMarkets.com,” https://www.businesswire.com/news/home/20181009005637/en/Global-Cruise-Liner-Markets-2022-Expected-Grow.

In 2017 the cruise industry reported
·  26.7 million passengers
·  1,108,676 jobs (full-time equivalents)
·  $45.6 billion in wages and salaries
(“2019 Cruise Trends and Industry Outlook,” https://cruising.org/news-and-research/-/media/CLIA/Research/CLIA-2019-State-of-the-Industry.pdf)

Further, according to the CLIA, “the [cruise] industry makes a positive impact on global communities by … creating a total output of $134bn” (“Exploring Cruises: Key market trends and issues in the cruise industry,” https://www.researchandmarkets.com/reports/4760328/exploring-cruises-key-market-trends-and-issues#rela1-4650751).

January 30 – February 1

After a coronavirus scare played out aboard a Costa Cruises ship off the Italian coast, analysts began to take note of the impact the novel coronavirus might have on the cruise industry:

“According to research conducted by J.P. Morgan, cruise stocks have fallen an average of 16% in the immediate aftermath of similarly big events, including the 2015 Paris attacks; the 2013 Carnival Triumph incident, when a ship lost power for four days following a fire; and the near capsizing of the Concordia in 2012….

“‘Our downside case is the virus continues to spread, operators cancel cruises through March, China revenues are down 15% on an annualized basis, and global demand is impacted moderately,’ [the analyst] wrote.” (“How Coronavirus Could Play Out for Cruise Operators,” https://www.barrons.com/articles/how-coronavirus-could-play-out-for-cruise-operators-51580561100.)

Meanwhile, every voyage that doesn’t sail is estimated to cost the industry three to four million dollars. James Hardiman, the managing director of equity research for Wedbush Securities, points out that the travel industry, cruises included, has a significantly higher exposure to China than it did in 2002–2003, when the SARS outbreak cost the global economy more than $40 billion. (“The Coronavirus Cruise Ship Problem: ‘Every Lost Voyage’ Could Cost 4 Million in Revenue,”
https://finance.yahoo.com/news/coronavirus-hits-cruise-lines-151931325.html)

February 3

The Diamond Princess was quarantined off Japan after a passenger from a previous voyage was found to be infected with the novel coronavirus.
(“Japan to Quarantine Ship on Which Coronavirus Patient Sailed,”
https://www.usnews.com/news/world/articles/2020-02-03/japan-to-quarantine-cruise-ship-on-which-virus-patient-sailed)

February 4

“Royal Caribbean and Norwegian cruises ban travelers holding Chinese passports,”
https://www.axios.com/coronavirus-ship-quarantined-10-infected-japan-2ec35f8c-e340-4c25-8838-32293371da8c.html

While Royal Caribbean expects that canceling eight cruises out of China through March 4 will cost the cruise line about $50 million, US demand remains strong for now. (“Royal Caribbean Expects Coronavirus to Weigh on China Sales,”
https://www.wsj.com/articles/royal-caribbean-expects-coronavirus-to-weigh-on-china-sales-11580830143)

February 7

The cruise industry broadens its precautions: “In response to the coronavirus emergency, cruise ships will deny boarding to passengers of any nationality who have visited, or traveled from or through, China, including Hong Kong and Macao, within 14 days of their sailing date, the world’s largest cruise industry association announced Friday.” (“Citing coronavirus, Royal Caribbean and Norwegian bar travelers with Chinese passports,” https://www.latimes.com/business/story/2020-02-07/coronavirus-scare-royal-caribbean-bars-travelers-with-chinese-passports)

The above article also notes the lengths the cruise industry has gone to in the past few years to encourage potential Chinese cruise-goers to book cruises. Those include menu changes and, for Princess Cruise Lines, an entire ship designed with Chinese passengers in mind.

February 8

The plight of passengers aboard the Diamond Princess, now quarantined off Japan, poses a cruise industry nightmare: 70 are infected (the largest outbreak to date outside of China), including 14 Americans. (“Coronavirus updates: 14 Americans aboard quarantined cruise ship now confirmed to have coronavirus,” https://www.nbcnews.com/news/world/new-coronavirus-updates-number-confirmed-cases-drops-diskease-s-epicenter-n1133141)

Officials now say that the quarantine period of 14 days will begin all over again every time another case is found. Six new cases were reported on February 8. (“On Cruise Ship Quarantined in Japan, New Cases Could Reset the Isolation Clock https://www.npr.org/2020/02/07/803843303/on-cruise-ship-quarantined-in-japan-any-new-cases-would-reset-the-isolation-cloc)

In Bayonne, NJ, four passengers from Royal Caribbean’s cruise ship Anthem of the Seas tested negative for 2019-nCoV. Three of them who were staying in the same cabin have the flu. The ship’s departure has been deferred until Monday. (“Coronavirus Latest: Cruise Ship Delayed Again in Bayonne, Passengers Test Negative for Virus,” https://newyork.cbslocal.com/2020/02/08/coronavirus-latest-bayonne-nyc/)

February 9

Some passengers aboard the Diamond Princess wonder whether measures being taken are enough to prevent spread of the virus aboard the ship. See “As Virus Cases Rise on Quarantined Cruise Ship, Passengers Are on Edge,” https://www.nytimes.com/2020/02/09/world/asia/japan-ship-coronavirus.html and “Coronavirus Cruise Passengers Face Infection Worries, Blown Travel Plans, and Boredom,” https://www.wsj.com/articles/coronavirus-cruise-passengers-face-infection-worries-blown-travel-plans-and-boredom-11580905458.

Passengers aboard a third cruise ship, the World Dream, which had been quarantined off Hong Kong, now have the all-clear to disembark after all 3600 tested negative for the virus. (https://www.nbcnews.com/news/world/new-coronavirus-updates-number-confirmed-cases-drops-diskease-s-epicenter-n1133141)

February 10

As the number of infected aboard the Diamond Princess almost doubled in a day, crew members, passengers, and experts alike feared that the shipboard quarantine was only enabling the virus to spread. (“Cruise ship coronavirus infections double, exceeding the total for any country but China,”
https://www.washingtonpost.com/health/cruise-ship-coronavirus-infections-double-exceeding-the-total-for-any-country-but-china/2020/02/10/20d298ca-4c3a-11ea-b721-9f4cdc90bc1c_story.html)

February 11

Despite offerings for future cruises at bargain basement rates, “Carnival and rivals Royal Caribbean Cruises Ltd. and Norwegian Cruise Lines Holdings Ltd. have sold off by 17%, 17% and 12%, respectively, between mid-January and Tuesday morning.” (“Cruise Lines Will Get Decked by Virus Fears,”
https://www.wsj.com/articles/cruise-lines-will-get-decked-by-virus-fears-11581442558)

On Feb. 11 it was reported that “A coronavirus-free cruise ship rejected by four nations has nowhere to go. The 2,257 passengers and crew onboard the Westerdam luxury liner are in limbo once again after Thailand became the latest country to turn the ship away from its ports, leaving guests desperate to disembark after almost two weeks at sea.” (“Cruise Ship Rejected by Five Ports Runs Out of Options,” https://www.bloomberg.com/news/articles/2020-02-11/cruise-ship-rejected-by-four-nations-runs-out-of-options_). Finally, on Wed., Feb. 12, Holland America Line was able to announce that the Westerdam would be permitted to dock at Sihanoukville, Cambodia, where the passengers would be allowed to disembark “over the next few days” (when they will presumably be tested for coronavirus). Holland America “will arrange and pay for all flights home, in addition to the full cruise refund and 100% future cruise credit already communicated.” (https://www.hollandamerica.com/blog/ships/ms-westerdam/statement-regarding-westerdam-in-japan/)

While passengers aboard the Diamond Princess wait out their quarantine period in their cabins, crew members live and dine together in close quarters. Ten have already been infected, and those ten were dining buffet-style with the rest until they were identified. (“Cruise Ship’s Coronavirus Outbreak Leaves Crew Nowhere to Hide,”
https://www.nytimes.com/2020/02/10/business/coronavirus-japan-cruise-ship.html)

Another 39 Diamond Princess passengers were found to be infected on Feb. 11, bringing the ship’s total to 174. (https://www.smh.com.au/national/melbourne-woman-on-cruise-latest-to-get-coronavirus-family-20200212-p53zz6.html)

In Closing

As the number of countries seeing community spread of 2019-nCoV (now dubbed COVID-19 by the WHO) grows, it seems predictable that passengers from more countries may be barred from boarding cruise ships. And with the world’s pandemic future uncertain, the number of people willing to take a chance on booking a cruise may dwindle, given headlines about quarantined ships.

Please Note that I do not hold any cruise line stocks and that Cumberland holds no cruise line stocks and has only minimal exposure to the industry through the broad ETFs.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Wuhan Coronavirus Series
by David R. Kotok

https://www.cumber.com/wuhan-coronavirus/


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Cumberland Advisors Market Commentary – Wuhan, Hubei, Beijing, Washington: Case Studies in Gov’t Failure under Viral Conditions

Let’s summarize the Wuhan, Hubei, Beijing cover-up and aftermath: October and November – flu-like symptoms, sickness and deaths attributed to flu. December – whistleblower doctor joins other doctors in alerting colleagues of novel coronavirus. Whistle-blower and other doctors punished by China government and silenced.

Market Commentary - Cumberland Advisors - Wuhan, Hubei, Beijing, Washington Case Studies in Government Failure under Viral Conditions

China later attributes source of virus to seafood market (this is now believed to be false). Evolution of revelations intensifies in December. US agencies are alerted to new virus in late December. Trump administration remains silent on the issue between mid-December and mid-January as China trade war negotiations are concluded and documents signed. Post mid-January – number of confirmed cases grows, death toll grows, pandemic risk grows. Today, the virus makes daily headlines worldwide.

Dear readers: This commentary is about governments and their actions. I will offer citations and let each reader draw her/his own conclusions.

Please note that as of this writing there are “almost 400 million people under some form of coercive quarantine” in China. (“Chinese financial shock gathers steam as world holds its breath on coronavirus,” https://www.telegraph.co.uk/business/2020/02/07/china-contract-europe-near-recession-world-holds-breath-coronavirus/). Think about that. That number is roughly equal to the entire population of Canada and the United States living under some form of restriction.

Multiple studies suggest that there are many more infections than are reflected in the numbers that are being released by China, where the number of cases outstrips the capacity to test for the virus. Just today (Feb. 10), Dr. Eric Feigl-Ding (Epidemiologist/Harvard ’07, Hopkins ’04)  Tweeted how the “Chinese govt is now officially cheating the numbers: test positive but no symptoms?  China will no longer count that person as a confirmed case!!! This will also make death% look higher too.  This kind of science corruption can not stand!  Let’s tell @WHO this is not okay!”

Here are two additional sources to consider:

1) Interview with Professor Neil Ferguson, director of J-Idea at Imperial College London, https://www.youtube.com/watch?v=ALQTdCYGISw&feature=youtu.be

2) Lancet study estimating the likely number of cases as of January 25 at 75K and modeling the likely spread. “Nowcasting and forecasting the potential domestic and international spread of the 2019-nCoV outbreak originating in Wuhan, China: a modelling study,” https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30260-9/fulltext

Let’s get to the United States. We have already established the deceptive and suppressive behavior of the Chinese regime and the horrifying results.

We’ve asked, what did the Trump Administration know and when did it know it? Was any information withheld as Trump’s team completed the trade deal? (See “A Wuhan Coverup and the Trade Deal?” https://www.cumber.com/cumberland-advisors-market-commentary-a-wuhan-coverup-and-the-trade-deal/.)

But what about US preparedness and federal budget funding? Does the isolationist and antiglobalist Trump policy raise coronavirus-related risks for Americans? Here is a link to the Centers for Disease Control and Prevention (CDC) budget and a comparison over three years: https://www.cdc.gov/budget/documents/fy2019/fy-2019-detail-table.pdf. Please review the section at top, entitled “Immunization and Respiratory Diseases.” Look at the total. In fiscal year 2017, which was the final year of the Obama administration’s budget, the expenditure totaled $793,274,000. FY 2018 was under a continuing resolution because there was no political agreement on a final budget. The total dropped to $744,766,000. FY 2019 is President Trump’s budget (), and the total had fallen to $700,828,000. Please see “Budget Cuts Have Made the US Less Ready for Coronavirus,” https://inkstickmedia.com/budget-cuts-have-made-the-us-less-ready-for-coronavirus/.

Readers, please note that during this time Trump administration’s spending for all purposes rose to record amounts and that the federal deficit has now trended above $1 trillion annually. Of course, Trump and his budget advisors and economic counselors could not have known about the coronavirus. But they certainly had the recent history of previous epidemic risks like Zika and Ebola and the 2009 flu pandemic.

Trump’s new budget vision was just released. The Wall Street Journal reported (Feb. 9) that “The Centers for Disease Control and Prevention would see its budget decline 9%, but with the coronavirus sparking global panic, $4.3 billion in funding for fighting infectious diseases would be preserved. Separately, the administration has notified Capitol Hill that it might reprogram $136 million in funds from fiscal year 2020 to address the virus, the administration official said, though no decision has been made on whether the money is needed.”

A 9% cut for CDC on top of a three year downward cutting trajectory.  But keep the infectious disease fight money flat? Trump knows he cannot defend a cut on infectious disease during an election campaign.  Query: Will it take an outbreak cluster of sick and dead people within US borders to wake Washington up?

In terms of the current handling of coronavirus surveillance in the US, we note Dr. Scott Gottlieb’s call, “Stop a US Coronavirus Outbreak Before It Starts,” published in the Wall Street Journal, for testing wherever cases of unexplained pneumonia begin to pop up in US states and territories, on the assumption that community spread could already be happening in the US: https://www.aei.org/op-eds/stop-a-u-s-coronavirus-outbreak-before-it-starts/. Gottlieb, a physician, is a resident fellow at the American Enterprise Institute and a former commissioner of the FDA (2017–2019).

Let me be very clear here. Trump is not the only Washington culprit. The Democrats (Schumer-led) in the Senate join the Senate Republicans (McConnell-led) on the continuing resolutions and in the final budget-debate agreements. The same Democrat-Republican joinder plays out in the House. It takes both parties to pass a budget or a continuing resolution. They blame each other easily, but they are shown to be failing when the full picture is revealed. Will voters get angry enough to turn on all incumbents and throw out officeholders in both parties? Maybe, if the pandemic reaches the US in sufficient size.

We have seen this budget dance before. Here is a report about the United States Zika virus spread which was exacerbated by government failure:

“During January 1, 2016–June 30, 2017, among 2,004,630 live births, 3,359 infants and fetuses with a birth defect potentially related to Zika virus infection were delivered to residents of the 22 jurisdictions, including 2,813 (83.7%) with brain abnormalities and/or microcephaly and 546 (16.3%) with eye abnormalities without mention of a brain abnormality (overall prevalence = 1.7 per 1,000 live births; 95% CI = 1.6–1.7) (Table 1). During the reference period, in areas with widespread local Zika transmission, limited local transmission, and without local transmission, prevalences were 1.3, 2.2, and 1.7 per 1,000 live births, respectively (Table 2).” (https://www.cdc.gov/mmwr/volumes/69/wr/mm6903a3.htm)

In my Zika pamphlet, I documented the US government’s failure to fund a Zika bill. Republicans used the proposed legislation to try to hurt Planned Parenthood. Democrats used it to fight over funding for Puerto Rico. In the end, time was lost; hence, the results you see above. President Obama stubbornly refused to back off his view on the Puerto Rico allocations, so a “clean” Zika bill never got to a full vote. All indications are that a clean bill would have passed with overwhelming bipartisanship.

Here is the link to the entire Zika pamphlet to anyone who would like to see it: https://www.cumber.com/zika/

Zika PDF

When I wrote it, I was repeatedly asked: “Why is Zika so important that you write about it often?” I am now getting the same question about coronavirus.

Answer: I believe that health issues and disease threats offer us the chance to assess the functioning of a political system. SARS, Ebola, bird flu, Zika and now coronavirus show whether or not the political system can be proactive. The quality of governance of a country is revealed, and its functionality or lack of same becomes measurable in statistics of suffering, illness, and death. Such is the case now in America as we clearly see that our elected political leaders are failing at a budget proposal offered, at a critical juncture, to grasp the magnitude of this threat. Thus both our elected Democrats and Republicans are at fault. They own the outcomes.  China’s leaders have already failed.

Dear readers who are still with me. Health issues allow for demonstrations of leadership success or leadership failure. Success requires the government and the private sector to engage in a proactive joint effort. Consider the polio vaccine or measles or tuberculosis treatment. Think about pneumonia shots or the shingles vaccine. How did these things happen? How are they funded? Why are they now ubiquitous? Why are we older folks healthier and more protected against illness than we have ever been?

Then ask why we abandoned the Zika-impacted infant yet to be born. Are we facing the same destiny with the coronavirus?

My friend and fishing camp attendee Ben Hunt is the Co-founder & Chief Investment Officer of Second Foundation Partners.  He offered this characterization In his “Epsilon Theory” writings:

“There’s a pose that very sick farm animals sometimes take when they’re near death, where they lie down and twist their head way back into their shoulder in a very unnatural way. It’s an odd sight if you don’t know what it signifies, a horrible sight if you do.

“Both the Republican Party and the Democratic Party are starting to twist their heads back into their shoulders. I don’t know if it’s too late to save them or not, but I’m increasingly thinking that it is. We need to start thinking about the funeral, who’s going to speak, and what they’re going to say.”

I hope there is no cluster coronavirus breakout in the United States.  I fear that is what it will take to change the Washington attitude.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Cumberland Advisors Market Commentary – Coronavirus #1 with updated death toll

At Cumberland, we take time to track viral outbreaks for two reasons: (1) Epidemics and pandemics do have market consequences and raise risk, and (2) they can be deadly. SARS, bird flu, Zika, Ebola, and more make the list of outbreaks we have followed closely. In the case of Zika, we wrote a detailed pamphlet chronicling the failures of governments in response to the mosquito-borne virus.

Market Commentary - Cumberland Advisors - Corona Virus & Markets

External shocks can derail economic trends and abruptly alter market sentiment. Not all risk is economic policy or monetary.  The iconic “Spanish flu” of 1918 is a historical example. So when I see a communicable disease vector spring up, I pay attention. I am a risk manager. And risk is a four-letter word that comes in various forms and with various vectors. In a stock market where the dominant factor is price momentum, the impact of a change occurring in an external risk vector or a natural risk phenomenon is intensified. The novel Chinese coronavirus currently making headlines is now serious enough to have market impact. Here’s the Wall Street Journal at 6:43 AM EST on Tuesday, Jan. 21:

“Global stocks dropped on Tuesday, led by Asian markets, amid concerns about the rapid spread of a potentially deadly pneumonialike virus originating in central China.” (“Global Stocks Drop Amid Outbreak of Deadly Virus in China,” Wall Street Journal, Jan. 21, https://www.wsj.com/articles/global-stocks-drop-amid-outbreak-of-deadly-virus-in-china-11579601534?mod=hp_lead_pos2)

Confirmation of the first confirmed case in the US impacted markets immediately yesterday, with airline and travel stocks taking a hit. See “Dow’s five-day win streak comes to an end after report of first coronavirus in the US,” https://www.marketwatch.com/story/dow-futures-pull-back-as-stock-market-stages-pause-from-record-setting-rise-2020-01-21.

Writing in Bloomberg’s “Points of Return” on Jan. 22, John Authers goes into greater depth on how significant the effects of a new epidemic scare can be on markets: “…nobody can answer how severe the problem could become, and nobody beyond a few experts in epidemiology and public health has much ability even to try.”

While pointing out that we cannot yet size up the public health challenges the new virus will pose, Authers examines how the Ebola scare in 2014 affected markets, concluding, with some compelling charts and data, that 2019-nCoV “could create quite a lot of damage.” (Bloomberg “Points of Return” is a daily newsletter available by subscription only.)

Most of us know coronaviruses in the form of the “common cold” that occasionally afflicts us with a stuffy nose, clogged sinuses, and a sore throat. Our colds are inconvenient and mildly miserable to endure, but hardly ever serious. It’s important to remember that the deadly six-month SARS outbreak of 2003 was also caused by a coronavirus. The new coronavirus originated in the city of Wuhan and seems to have as its epicenter a now-closed seafood market where live exotic animals were also sold for human consumption. CNN obtained a video of that market taken before the outbreak resulted in its closure. CNN correspondent Kristi Lu Stout tweeted that video here: https://twitter.com/klustout/status/1219078782549725184?s=21, demonstrating the close contact shoppers and workers had with wild animals, one of which perhaps carried the novel virus.

The South China Morning Post summarized the world’s list of known coronaviruses:

“The strain of coronavirus found in Wuhan – named 2019-nCoV by the WHO – is the seventh of its kind to be identified.

“Of the six others, four cause only minor respiratory symptoms similar to those of a cold and two, while SARS and MERS (Middle East respiratory syndrome) are deadly, with the latter accounting for more than 850 deaths around the world since 2012.”

(“China coronavirus: at least three suspected cases found in Shenzhen, Shanghai, sources say,” South China Morning Post, Jan. 18, https://www.scmp.com/news/china/society/article/3046681/china-coronavirus-least-three-suspected-cases-found-shenzhen)

The new virus, dubbed 2019-nCoV, is now spreading beyond China. It does not appear to be as deadly as SARS was, but it is associated with fever, cough, shortness of breath and pneumonia, and, as of January 22, 17 deaths (“As New Virus Spreads from China, Scientists See Grim Reminders,” https://www.nytimes.com/2020/01/22/health/corona-virus-china.html). “Much remains to be understood about the new coronavirus, which was first identified in China earlier this month. Not enough is known about 2019-nCoV to draw definitive conclusions about how it is transmitted, clinical features of disease, or the extent to which it has spread. The source also remains unknown,” the World Health Organization said Friday. (“China’s coronavirus cases likely grossly underestimated, study says,” CNN, Jan. 18, https://www.cnn.com/2020/01/18/asia/china-coronavirus-study-intl/index.html)

As Chinese epidemiologists work to assess and stem the virus’s spread and better gauge its severity, the US CDC is monitoring the outbreak (https://www.cdc.gov/coronavirus/2019-ncov/index.html) and offering guidance to travelers (https://wwwnc.cdc.gov/travel/notices/watch/novel-coronavirus-china). Five US airports will now screen passengers arriving from Wuhan for the virus: JFK, San Francisco International, Los Angeles International, Chicago’s O’Hare, and Atlanta’s Hartsfield-Jackson. (https://www.washingtonpost.com/nation/2020/01/21/us-screenings-coronavirus-expanded-airports-atlanta-chicago/). However, screenings may well broaden as the virus spreads geographically.

A rapid test for the virus has been developed by researchers from the German Center for Infection Research and virologists at Charite Hospital in Berlin. (http://www.cidrap.umn.edu/news-perspective/2020/01/japan-has-1st-novel-coronavirus-case-china-reports-another-death)

Case counts quadrupled between January 11, when 41 cases had been identified (https://www.wsj.com/articles/china-says-person-infected-with-new-coronavirus-has-died-11578709453?mod=article_inline), and January 20, when the number of confirmed cases reached 218. By January 22 the number more than doubled again, to 481. New cases emerged in Beijing (5), Shanghai (1), Shenzhen (3), and Guangdong Province (14). Nine cases have been confirmed in Asian countries outside Mainland China: Macau (1), Hong Kong (1), Taiwan (1), Thailand (4), Japan (1), and South Korea (1), all of them involving people who are either from Wuhan or have visited the city (https://www.bbc.com/news/world-asia-china-51171035). Health officials in Australia and the Philippines are also investigating suspected cases of the virus.

The first US case was reported on January 21, in the State of Washington. The patient had recently returned from Wuhan (https://www.cdc.gov/media/releases/2020/p0121-novel-coronavirus-travel-case.html).

The World Health Organization (WHO) is meeting today, January 22, in Geneva to decide whether to declare the outbreak an “international public health emergency” – a rare move that has only been used a handful of times, for the swine flu, Ebola, and Zika outbreak (“WHO Could Declare Wuhan Coronavirus a Global Emergency,” https://foreignpolicy.com/2020/01/21/wuhan-coronavirus-china-global-emergency-pneumonia-world-health-organization-who/).

At least fourteen healthcare workers have fallen ill (as of January 20), confirming, as has other evidence, that the virus is capable of human-to-human transmission. Infectious disease experts at Hong Kong University estimate that the Wuhan virus had likely already spread to 20 other cities in the interval between January 1 and January 17, suggesting that those cases will continue to be detected in the coming days (https://www.scmp.com/news/hong-kong/health-environment/article/3047022/wuhan-coronavirus-20-other-cities-china-affected).

Containment of the virus at this point, despite detection efforts that are always thwarted by the delay between infection and the onset of symptoms that screening efforts might catch, will be difficult, though detecting and slowing transmission remains key to both heath and economic outcomes. Complicating matters, China is about to undertake its annual Spring Festival. Anna Fifield of the Washington Post reports, “Under the best of circumstances, the Spring Festival in China is a logistical exercise of mind-blowing proportions: hundreds of millions of people traveling via planes, trains, buses, and taxis to return to their hometowns to ring in the new lunar year with their families.” (https://www.washingtonpost.com/world/asia_pacific/china-virus-surge-in-new-cases-raises-concerns-about-human-transmission-ahead-of-holiday-travel-season/2020/01/20/06d077fc-3b6a-11ea-971f-4ce4f94494b4_story.html)

All that travel will accelerate the spread of the virus.

On October 18, 2019, the Johns Hopkins Bloomberg School of Public Health and Center for Health Security, the World Economic Forum, and the Bill and Melinda Gates Foundation conducted a pandemic exercise based on the scenario of a deadly novel coronavirus. The exercise identified significant gaps in the world’s pandemic preparedness and led to a number of recommendations, which can be accessed here: http://www.centerforhealthsecurity.org/event201/event201-resources/200117-PublicPrivatePandemicCalltoAction.pdf. The document is useful as readers seek to enumerate the economic risks that a deadly pandemic can entail.

The less prepared that nations, international organizations, businesses, and NGOs are for a pandemic, the greater the economic risk that communicable disease threats pose. Preparedness or lack thereof is also a key part of risk calculation.

We continue to monitor the news flow and market risk attached to the 2019-nCoV virus vector. We have made no changes yet in portfolios in our US ETF or quantitative strategies.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Judith Monroe, MD of CDC Foundation, to speak during the “Health, Hunger, and Philanthropy” Panel

USF Sarasota-Manatee, Cumberland Advisors, and the Global Interdependence Center invite you to our third annual Financial Literacy Day, to be held April 11, 2019, from 8:30 AM to 4 PM in the Selby Auditorium of the USFSM campus.

FINANCIAL MARKETS & THE ECONOMY Financial Literacy Day III Judith Monroe, MD - President & CEO CDC Foundation

The theme this year is “Financial Markets and the Economy,” and the event will feature a number of panel discussions and special presentations, including the Session II panel, “Health, Hunger, and Philanthropy” bringing together Judith Monroe MD, President and CEO, CDC Foundation, Erin McLeod, CEO, Friendship Centers, Sarasota, Lisa Marsh Ryerson, President, AARP Foundation, and Gabriel Hament of Cumberland Advisors. The moderator will be Lisa Shaw, CFP, CIMA, managing partner, Cygnus Asset Management, LLC.

The CDC Foundation Judith Monroe leads has a mission to help the Centers for Disease Control and Prevention (CDC) do more, faster by forging effective partnerships between CDC and philanthropic and private sector organizations and individuals to build public health programs that make our world healthier and safer. The Foundation has over 300 active programs across the U.S. and 85 countries.

Prior to joining the CDC Foundation, Monroe worked for six years as a CDC deputy director and served as director of the Office for State, Tribal, Local and Territorial Support (OSTLTS). At CDC, Monroe oversaw key activities and technical assistance supporting the nation’s health departments and the public health system.

Feel free to ask questions of our panelists and connect with Dr. Monroe during “Financial Markets and the Economy.” Watch this video from the summer of 2018 where she talks with David Kotok about The CDC Foundation and the Zika virus.

Financial Literacy Day welcomes the participation of the general public. The cost is only $50 to register, and coffee, pastries, and lunch are included. Please reserve your spot soon – we expect to have a full auditorium. You can make your reservation online and learn more at http://USFSM.edu/FinancialLiteracy.




Venezuela Poses Health Risk in the Americas

The economic and political dimensions of Venezuela’s collapse have dominated headlines, but the country is also being undermined by a healthcare crisis that could spread to all of Latin America. The situation in Venezuela demonstrates how failed government and economic collapse can lead to the unchecked spread of infectious disease, creating headaches across a region and beyond.

Bandera_de_Venezuela_en_el_Waraira_Repano by Jonathan Alvarez C

In a report published in the journal Lancet Infectious Diseases, lead author Dr. Martin Llewellyn of the University of Glasgow and colleagues size up the problem:

“The re-emergence of diseases such as malaria in Venezuela has set in place an epidemic of unprecedented proportions, not only in the country but across the whole region….

“Based on the data we have collected we would urge national, regional and global authorities to take immediate action to address these worsening epidemics and prevent their expansion beyond Venezuelan borders….

“These diseases have already extended into neighboring Brazil and Colombia, and with increasing air travel and human migration, most of the Latin American and Caribbean region (as well as some US cities hosting the Venezuelan diaspora, including Miami and Houston) is at heightened risk for disease re-emergence.”

Malaria is the leading disease threat, but cases of Chagas disease and dengue fever have also risen drastically in Venezuela and the surrounding region in recent years. There is also the potential for epidemics of Chikungunya and Zika, the report’s authors say. In 2014 there were an estimated 2 million suspected cases of chikungunya in Venezuela, more than 12 times the official estimate.

Chagas disease is a leading cause of heart failure in regions where it occurs, and malaria and dengue can lead to death if left untreated. Zika can cause health complications such as nerve damage and spinal cord inflammation. During pregnancy, it can cause congenital abnormalities in the developing fetus. The most recent study estimated that there now over 2,000 cases of Zika virus per 100,000 people in Venezuela (2% of the population). (Source: “Life-threatening, insect-borne diseases spike in Venezuela, report says,” ABC News, Feb. 21, 2019,” https://www.nbcnews.com/news/latino/life-threatening-insect-borne-diseases-spike-venezuela-report-says-n974216)

(For the recommendations of the Centers for Disease Control and Prevention (CDC) on travel to Venezuela, see “Health Infrastructure Breakdown in Venezuela, https://wwwnc.cdc.gov/travel/notices/warning/health-infrastructure-breakdown-venezuela.)

The Llewellyn report also conveys a sense of the desperate lengths to which the failed Maduro government will go to stifle efforts to right the situation in the country:

“Venezuelan clinicians involved in this study have also been threatened with jail, while laboratories have been robbed by militias, hard drives removed from computers, microscopes and other medical equipment smashed.”

Venezuela used to be one of the wealthiest nations in Latin America and was a leader in the public-health arena – so much so that in 1961 the World Health Organization certified it as the first country to eradicate malaria.

However, from 2010 to 2015, cases of malaria rose by 359%, from 29,736 to 136,402. By the close of 2017 they had grown to 411,586, as mosquito control efforts went by the wayside, a shortage of antimalarial drugs became chronic, and there was a mass exodus of healthcare workers from the country. (Source: “Venezuela crisis threatens disease epidemic across continent – experts,” The Guardian, Feb. 21, 2019, https://www.theguardian.com/global-development/2019/feb/21/venezuela-crisis-threatens-disease-epidemic-across-continent-experts)

The malaria outbreak is a sobering example of how political and economic dislocation can trigger a public-health crisis. As the Venezuelan economy collapsed, people flocked to the region near the southern border with Brazil, in order to dig for gold in wildcat mines. Unfortunately, pockets of malaria had survived in the jungle there, despite its official elimination nationwide.

The mining camps, with their pits of stagnant water, were an ideal breeding ground for mosquitos, and malaria soon ran rampant at many of the mines. And because work in the mines was transitory, workers returned home with malaria, and wide areas of the country were reinfected with malaria.

If you’d like to read my personal accounts investigating the spread and threat of the Zika virus which includes visits to Cuba and Argentina’s three-country border region of Argentina, Brazil, and Paraguay, please download the the free monograph pamphlet, “Zika,” here: https://www.cumber.com/zika/

The Llewellyn report concludes with this call to action:

“We call on the members of the Organisation of American States and other international political bodies to apply more pressure to the Venezuelan government to accept the humanitarian assistance offered by the international community in order to strengthen the buckling health system. Without such efforts, the public health gains achieved over the past 18 years could soon be reversed.”

We still don’t know whether the Maduro government, with its military and bureaucratic backing, will continue to cling to power and take the country deeper into chaos, or whether Juan Guaidó, leader of the democratically elected National Assembly and “interim president,” will prevail. For a good backgrounder on the crisis in Venezuela and the options available to the international community to address it, read or view the testimony of Marcela Escobari, senior fellow of the Brookings Institute Center for Universal Education, before the US House of Representatives Committee on Foreign Affairs on Feb. 26, 2018, available here: https://www.brookings.edu/testimonies/made-by-maduro-the-humanitarian-crisis-in-venezuela-and-us-policy-responses/.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Zika, Climate Change & January 25

On December 30, as 2018 drew to an end, NBC’s Meet the Press aired an entire program on the climate change crisis, well worth watching (https://www.nbc.com/meet-the-press/video/meet-the-press-1230/3850857). Host Chuck Todd gave no air time to climate change denialism. Instead, the episode plunged into analyzing the crisis at hand, what might be done, what impediments slow our time-critical response, and how to overcome those impediments. Florida Republican Representative Carlos Curbelo, among other program guests, called for constructive action. “We need to stop covering the debate and start covering the story, so that people see that this is real, and so that politicians take a more-pragmatic approach and find solutions that are actually achievable,” Curbelo said. The day after Thanksgiving, despite Mr. Trump’s personal dismissal of climate change, the Trump administration released Volume II of the Fourth National Climate Assessment (https://www.globalchange.gov/nca4), and we’ve been digesting its deeply concerning contents in the week since.

The impacts of climate change are myriad, affecting our world, our communities, our health, our food supply, and our investments. We will be taking a look at a number of climate-change-related issues impacting Florida and beyond, from sea level rise to red tide to hurricanes to fruitful adaptive strategies and the economic opportunities they present, when we convene on Friday, January 25, at the University of South Florida Sarasota-Manatee for our one-day event, “Adapting to a Changing Climate: Challenges & Opportunities.” See the full roster of speakers, including our own Patricia Healy, here: http://sar.usfsm.edu/event/adapting-to-a-changing-climate/. We hope to see you there.

In today’s commentary, however, I would like to zero in on the impact of climate change on vector-borne diseases, including Zika. Chapter 14 of the Fourth National Climate Assessment (https://www.globalchange.gov/nca4) addresses the adverse effects of climate change on human health, noting that “Climate change affects human health by altering exposures to heat waves, floods, droughts, and other extreme events; vector-, food- and waterborne infectious diseases; changes in the quality and safety of air, food, and water; and stresses to mental health and well-being” (p. 545 in the full report PDF). We have no trouble grasping the threats posed by heat waves, fires, floods, and storms that claim lives as well as property, along with droughts that parch crops and threaten water supplies, but we should not miss the implications of climate change for increased vector-borne disease risks. As the report points out, “Climate change is expected to alter the geographic range, seasonal distribution, and abundance of disease vectors, exposing more people in North America to ticks that carry Lyme disease or other bacterial and viral agents, and to mosquitoes that transmit West Nile, chikungunya, dengue, and Zika viruses” (p. 545).

The range of the Aedes aegypti mosquito, for example, a primary vector for dengue, chikungunya, Zika, and yellow fever, is expected to expand considerably worldwide, exposing far larger populations, particularly in Australia, Europe, and North America, to those viruses. According to one recent study, well before the end of the 21st century, 68%–80% of human populations may share their environments with Aedes aegypti and thus be vulnerable to the diseases that mosquito can carry, with the percentages depending on the climate change scenario that actually unfolds, (https://link.springer.com/article/10.1007%2Fs10584-016-1679-0). In general, lower greenhouse gas emissions translate to less risk for human health.

Risk of mosquito-borne diseases in general is to be understood not just in terms of the range of a particular mosquito species but also in terms of mosquito “disease danger days.” As an August 2018 report published at Climate Central points out, “there’s an elevated risk of disease transmission [assuming disease is present] when temperatures are between 61 degrees and 93 degrees Fahrenheit.” The report notes the circumstances required for disease transmission: “In addition to needing the proper climatological factors for the mosquito to survive and transmit disease, there needs to be the establishment of the disease in the first place — having the proper climatic conditions, a critical density of mosquitoes, and the conditions for the sustained cycle of disease transmission itself. And, in order to transmit disease, a mosquito must bite twice — once to acquire the disease [itself], and a second time to pass it on. The largest number of these twice-biting mosquitoes were produced at 75 degrees Fahrenheit.” (http://www.climatecentral.org/news/us-faces-a-rise-in-mosquito-disease-danger-days-21903)

Climate Central analyzed weather data for 244 US cities to determine the number of disease danger days each city faces now as the climate warms. They found that 94%, or 229, of the cities they studied are already seeing an increase in the number of days when average temperatures fall within the optimal range for mosquito-borne disease transmission. Some areas, however, may become too hot for the mosquitoes themselves. Phoenix, for example, actually has fewer disease transmission danger days than it did previously because of the number of extremely hot days the city must contend with. All in all, only 12 cities are experiencing a decrease in disease danger days. As the climate warms, the report concludes, Americans face heightened risks for dengue, Zika, chikungunya, and West Nile (http://www.climatecentral.org/news/us-faces-a-rise-in-mosquito-disease-danger-days-21903).

The 2015–2016 Zika outbreak drove home the hazards of mosquito-borne diseases, as Zika took a terrible toll on the development of one in seven unborn children whose mothers were exposed to the otherwise generally mild virus (https://www.contagionlive.com/publications/contagion/2018/october/zika-where-are-we-now). Babies were born with microcephaly and/or other birth defects such as vision problems, deafness, and epilepsy. Their lives and their family’s lives were forever changed from what might have been.

In 2018, Zika has not made many headlines in the US, and the case count is down. As of December 4, 2018, the provisional case count for US States is 58 for the year, all travelers returning from affected areas. US territories have reported 116 Zika cases, with the virus presumably transmitted through local populations of infected mosquitoes (https://www.cdc.gov/zika/reporting/2018-case-counts.html). Case counts aside, the virus remains a threat – nothing has changed about its intrinsic potential to wreak havoc. It is still active throughout the South and Southeast Asia region, and some districts in India saw worrisome outbreaks in 2018 (https://www.hindustantimes.com/health/healthwise-new-outbreaks-need-better-disease-surveillance/story-2bSekn9rGCIbWADtk9p2TK.html).

While some experts hypothesize that “herd immunity” has been achieved in areas hardest hit in 2016, Carmen Zorilla, professor of obstetrics and gynecology at the University of Puerto Rico School of Medicine in San Juan, disagrees. She estimates that about 10.5% of pregnant women in Puerto Rico tested positive for Zika during the outbreak – an infection rate not nearly high enough to confer herd immunity. She observes that such viral outbreaks tend to happen in 3–5-year cycles. (https://www.contagionlive.com/publications/contagion/2018/october/zika-where-are-we-now).

Problematically, some 60–80% of Zika cases are asymptomatic, so Zika can readily go undetected and gain a foothold before it is identified in a particular area. Fewer than half of those infected actually seek medical care (https://www.contagionlive.com/publications/contagion/2018/october/zika-where-are-we-now). Most of the time, symptoms, when people do have them, are relatively mild and somewhat flu-like: fever, rash, headache, achy joints and muscles, and conjunctivitis, though in rare instances a Zika infection can lead to Guillain-Barré syndrome. Currently, the CDC recommends Zika testing for pregnant women with possible Zika exposure and for those who experience Zika symptoms after traveling to areas where they might have been exposed to the virus (https://www.cdc.gov/zika/hc-providers/testing-guidance.html).

Is there room in that surveillance net for a Zika outbreak to fire up before it is detected? Definitely so. In 2016, a research team led by Northeastern University professor Alessandro Vespignani and overseen by the Center for Inference and Dynamics of Infectious Diseases, projected the discrepancy between the number of reported Zika cases and the likely number of actual cases. The team’s models projected that the actual number of infections in July 2016 was likely 25 times the number of confirmed cases (https://www.sciencedaily.com/releases/2016/08/160802133703.htm).

Dr. Vespignani notes that major outbreaks are associated not only with the right air temperature but also with areas of standing water. In many instances, people educated to understand the risks can manage those, emptying the birdbath or flower pot saucers and the like at least once a week; but after major precipitation events magnified by climate change, when there is standing water everywhere, mosquito populations can spike. The sopping US Southeast, where rainfall records were handily broken in 2018, can testify that there is sometimes “water, water everywhere,” to borrow a phrase from Samuel Taylor Coleridge (https://www.accuweather.com/en/weather-news/2018-leaves-its-mark-in-the-rainfall-record-books-across-eastern-southern-us/70007024).

Furthermore, densely populated areas face elevated risk. Juanita Constible, a climate expert at the Natural Resources Defense Council, explains that, for mosquitoes, “extension of habitat is a combination of climate change and human behavior. Urbanization can expand habitats for some species of mosquito that prefer cities [Aedes egypti among them], so as people expand into natural areas, those species will go with them. Not only do urban settings have plenty of habitat and food, but in cities, mosquitoes lack natural predators.” (https://www.citylab.com/environment/2018/10/hurricane-florence-mosquitoes-north-carolina/571912/)

Kate Fowlie, spokesperson for the US CDC, warns, “Mosquito-borne disease outbreaks are difficult to predict. There will be future outbreaks, including large ones, as well as years with reduced transmission, but it is impossible to know when or where these transmission patterns will occur” (https://www.contagionlive.com/publications/contagion/2018/october/zika-where-are-we-now).

It seems obvious that surveillance is key to preventing outbreaks both in the present and in a warming future, but the CDC’s funding for expanded infectious disease surveillance is due to run out in 2019. The CDC is already planning to scale back its participation in the Global Health Security Agenda (GHSA), an early-warning system for infectious disease outbreaks, in 39 of 49 countries (http://www.ghtcoalition.org/blog/global-health-and-medical-research-saved-from-the-chopping-block-in-2018-spending-bill).

While the US will be assisting with infectious disease surveillance in 10 countries, the map of Zika-affected areas around the globe, courtesy of the CDC, is expansive (https://wwwnc.cdc.gov/travel/files/zika-areas-of-risk.pdf).

There is a lot of purple on this map, but these are not all the places Zika can go; they are merely places where infection is already a risk. Infected travelers can fly all over the world, and disease-bearing mosquitoes know no borders other than inhospitable habitats. Climate change, as we have seen, will widen the range of vector-borne diseases, sharply increasing the percentage of the global population at risk. Viruses themselves, of course, are moving targets, as they mutate regularly – Zika posed no known risk to the unborn until this century, when a mutation changed what had been a mild pathogen (https://www.washingtonpost.com/news/speaking-of-science/wp/2017/09/28/zika-was-a-mild-bug-a-new-discovery-shows-how-it-turned-monstrous/?utm_term=.af60fd526a41). Scientists also warn us that we may soon be contending with disease-causing bacteria and viruses that have lain dormant for centuries or even millennia, frozen in permafrost that is now melting as the Arctic warms (www.bbc.com/earth/story/20170504-there-are-diseases-hidden-in-ice-and-they-are-waking-up).

As we look ahead, addressing climate change will clearly entail grappling with expanded threats to human health, and one of those threats will be elevated vector-borne disease risks, perhaps coupled with diseases modern medicine has yet to encounter. Climate change mitigation and adaptation, combined with vigilant surveillance, vaccine development, and mosquito population control strategies will all be keys to managing vector-borne disease risks posed by certain species of mosquitoes and ticks.

This commentary has been a deepish dive into just one of the secondary challenges climate change will pose to nations, states, cities, municipalities, and the well-being of Americans. In the instance of Zika, we know that the lifetime cost of caring for one child whose life is profoundly impacted by prenatal exposure to the Zika virus, beyond heartbreak, is likely to reach one to ten million dollars (https://wwwnc.cdc.gov/eid/article/23/1/16-1322_article). Human health is just one area in which proactively addressing climate change and adaptation makes both imminent sense and dollars and cents. Again, if you are in the Sarasota area on January 25, we hope you will join us at the University of South Florida Sarasota-Manatee for “Adapting to a Changing Climate: Challenges & Opportunities.” Find more information about this one-day event and register here: http://sar.usfsm.edu/event/adapting-to-a-changing-climate/.




CDC Foundation President Dr. Judy Monroe

“Is there a vaccine now for Zika?” I asked Dr. Judy Monroe, president-CEO of the CDC Foundation. “Not yet, but we’re working on it,” she answered. For a YouTube of my interview with Judy when she visited Camp Kotok, see https://youtu.be/rge2tC74kSc.

CDC Foundation Dr Judy Monroe & David Kotok

Judy was a special guest this year when we gathered in Maine. She told the assembled 50 folks about the CDC Foundation, a congressionally authorized 501c3 that operates in close cooperation with the Centers for Disease Control. The foundation’s efforts are entirely supported by philanthropy, while the CDC is, of course, a federal organization funded by taxpayers.

Judy explained that the foundation has a well-defined global healthcare role and can be reactive in crisis. The foundation has programs in 130 countries. The Ebola effort was an example of rapid foundation response. Early this month, the foundation was honored by the Puerto Rico Department of Health for emergency response support in the wake of Hurricane Maria.

We discussed Zika and the Caribbean and specifically Puerto Rico. Our group at Camp Kotok probably has over a billion dollars invested in PR debt, property, hotels, etc. Judy shared her findings and the foundation’s and CDC’s ongoing efforts for Zika prevention, treatment, and research.

Judy’s presentation was enlightening, as many in our group did not know about this philanthropic ally of the CDC. Now they better appreciate how many lives are saved globally and how 300 million Americans gain health safety through the work of the CDC and CDC Foundation. We thank Judy for making the trip to Maine to share her information with us.

Another attendee at Camp Kotok, Katie Darden, also spoke one-on-one with Dr. Monroe and you can find the link to her interview here:


Katie Darden interviews Dr Judy Monroe

For CDC Foundation Zika updates and current status, see their blog which gives a closer look at how the CDC Foundation brings together resources, people and ideas to advance the CDC’s work, https://www.cdcfoundation.org/blog

For Dr. Judy Monroe’s bio, see https://buff.ly/2Mn0AZR

For our previous commentaries on Zika, see the following links:
“Zika Update” July 13, 2018 (http://www.cumber.com/zika-update-july-13-2018/)
“Zika Update: Brace for a Resurgence,” Nov 1, 2017 (http://www.cumber.com/zika-update-brace-for-resurgence/)
“Zika Update,” July 1, 2017 (http://www.cumber.com/zika-update-3/)
“Zika Update,” March 8, 2017 (http://www.cumber.com/zika-update-2/)
“Cuba & Zika,” October 16, 2016 (http://www.cumber.com/cuba-zika)
“Zika, Cuba, and American Politics,” October 4, 2016 (http://www.cumber.com/zika-cuba-american-politics/)
“Answering a FAQ on Zika Vote,” September 7, 2016 (http://www.cumber.com/answering-a-faq-on-zika-vote/)
“Zika, Congress, and Damaged Lives,” September 7, 2016 (http://www.cumber.com/zika-congress-and-damaged-lives/)
“Zika 4,” September 6, 2016 (http://www.cumber.com/zika-4/)
“More of the Costs of Political Failure on Zika,” Aug 12, 2016 (http://www.cumber.com/more-on-the-costs-of-political-failure-on-zika/)
“Zika Politics: Democrats & Republicans,” August 2, 2016 (http://www.cumber.com/zika-politics-democrats-republicans/)
“Zika Update,” July 19, 2016 (http://www.cumber.com/zika-update/)
“The Zika Virus and the US Congress,” May 23, 2016 (http://www.cumber.com/the-zika-virus-and-the-us-congress/)

David R. Kotok
Chairman & Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Zika Update

With the summer mosquito season underway, Zika wings its way back into the news.

Cumberland Advisors Market Commentary - Zika

For the children of Zika and their parents, Zika’s impact will never abate. Journalist Mauricio Savarese reports for the AP from Brazil: “Today, some of the children born during the outbreak are trying school for the first time — in very limited capacities — while others have died or are struggling to survive, hindered by health and developmental problems.” He details some of their stories. Joaquim, who has microcephaly, can scribble with a pencil but cannot speak. He is fed through a tube, and his mother has to attend school with him to meet his nursing needs. In Brazil and elsewhere, including here in the US, schools face a steep learning curve as they begin to serve the special needs children whose lives have been forever altered by Zika. (http://www.santafenewmexican.com/news/some-of-brazil-s-zika-kids-try-school/article_14efc3b3-4afe-5fc4-b9e8-b3e2ca00de2c.html)

New research on nonhuman primates indicates that fully 26% of monkeys exposed to Zika early in their pregnancies miscarried. The findings suggest that human pregnancy losses resulting from Zika may in fact be higher than the data suggests. After all, Zika infections in adults may produce only mild symptoms or no symptoms at all and go undetected. (https://www.nih.gov/news-events/news-releases/pregnancy-loss-occurs-26-percent-zika-infected-monkeys)

But there is good news, too, on the Zika front. The number of Zika cases has fallen off dramatically in the past year. In areas hardest hit by Zika early on, the drop-off in cases seems to indicate that affected populations are developing “herd immunity.” A recent piece from PBS News Hour summarizes the numbers:

“Last summer, the virus declined sharply in its hotspots and all but disappeared in the U.S. In 2016, Puerto Rico, the U.S. Virgin Islands and American Samoa saw more than 36,000 cases of locally transmitted Zika virus. By 2017, the number had dropped to 665. In 2017, the continental U.S. saw only seven cases of local mosquito-borne Zika, down from 224 the previous year” (https://www.pbs.org/newshour/science/what-happened-to-zika).

The CDC’s pregnancy outcomes page reports totals that have grown more slowly in the past year, though there is always a lag time before updated numbers appear. Totals listed below are for December 1, 2015, to March 31, 2018.

(https://www.cdc.gov/pregnancy/zika/data/pregnancy-outcomes.html)

At this point, there are no reports of local Zika transmission in the continental US, though surveillance will continue to be key because travel-related cases crop up now and then – most recently, in Williamson County, Texas (https://www.kvue.com/article/news/local/two-zika-cases-confirmed-in-williamson-county-how-to-avoid-the-virus/269-571672784). Any travel-related case can, of course, lead to local transmission if a local mosquito bites the infected traveler and then bites someone else. The CDC maintains its Zika Risk Map for Travelers (https://wwwnc.cdc.gov/travel/page/zika-information), detailing precautions that help reduce the chance of infection.

In the meantime, researchers have gotten a clearer, closer look at the virus itself, indeed the best image we have of any virus. Zika’s structure is intriguing (and rather beautiful), but getting a mugshot of the virus has practical utility. Michael Rossmann, a structural biologist at Purdue University, explains, “With the higher resolution, it is now possible to efficiently design vaccines and engineer anti-viral compounds that inhibit the virus.” (https://cosmosmagazine.com/biology/zooming-in-on-zika). That’s good news indeed.

Work on a Zika vaccine continues, of course (http://www.wfmz.com/health/health-beat/health-beat-vaccine-for-zika-virus/750067921), and other control measures are being explored. A new study finds that flea and tick meds some of us use on our pets (think NexGard and Bravecto) might protect populations from outbreaks of a number of mosquito-borne diseases, including Zika (https://www.sciencedaily.com/releases/2018/07/180702154731.htm). The effects that those drugs have had on some small percentage of pets, however, may raise safety concerns about their use on human beings.

More promising, perhaps, than dosing humans with flea meds is fighting nature with nature. In Australia, scientists have successfully deployed a bacteria called Wolbachia to dramatically reduce Aedes aegypti mosquito populations. CSIRO research director Paul De Barro explains, “What we were doing is releasing only males that had this wolbachia, and they would cross with mosquitoes in the field, the wild mosquitoes that didn’t have that same strain of wolbachia; and as a result the wild females would only lay sterile eggs, and so the population would crash.” Mosquito populations were reduced by 80% during the course of the experiment, sharply reducing risks of chikungunya, yellow fever, and, of course, Zika, all diseases carried by the Aedes aegypti mosquito. (http://www.abc.net.au/news/2018-07-10/zika-and-dengue-spreading-mosquito-largely-wiped-out-in-trial/9962294)

The good news about falling case counts aside, Zika still poses a threat and remains a concern as mosquito season enters full swing. Nothing about the virus has changed to make an outbreak less potentially disastrous for infants whose mothers are infected early in their pregnancies. Nothing has changed to reduce the financial and personal costs of dealing with Zika-related disabilities for a lifetime.
Vigilance is still the order of the day. Surveillance is still critical. Remarkably, smartphones may be deployed to get the job done (https://mhealthintelligence.com/news/mhealth-researchers-eye-the-smartphone-as-a-zika-detection-device).

Screening blood donations has turned out to be extraordinarily expensive, some $5.3 million per instance of Zika-infected blood found (https://www.statnews.com/2018/05/09/zika-testing-blood-donors/), so the FDA’s screening policy has recently changed so that pooled donations are tested rather than each individual donation. Given the small number of infected samples found, the idea is to continue ensuring that Zika will not be passed on in blood transfusions, while easing the testing burden and associated costs. (https://www.fda.gov/NewsEvents/Newsroom/FDAInBrief/ucm612702.htm)

Despite the good news about case counts and other progress, lifetime costs for Zika-impacted children and their education still loom. Zika has reinforced invaluable lessons about the crucial importance of both global and local disease surveillance and reporting. And it has made its own rock solid case for timely and adequate funding for effective prevention and research, particularly when the costs, in both human and monetary terms, of inaction are so high. Where infectious disease outbreaks are concerned, we can celebrate incremental victories and larger ones, but we can never let our guard down or be slow to detect and respond.

Our previous Zika updates are linked below:
“Zika Update: Brace for a Resurgence,” November 1, 2017 (http://www.cumber.com/zika-update-brace-for-resurgence/)
“Zika Update,” July 1, 2017 (http://www.cumber.com/zika-update-3/)
“Zika Update,” March 8, 2017 (http://www.cumber.com/zika-update-2/)
“Cuba & Zika,” October 16, 2016 (http://www.cumber.com/cuba-zika)
“Zika, Cuba, and American Politics,” October 4, 2016 (http://www.cumber.com/zika-cuba-american-politics/)
“Answering a FAQ on Zika Vote,” September 7, 2016 (http://www.cumber.com/answering-a-faq-on-zika-vote/)
“Zika, Congress, and Damaged Lives,” September 7, 2016
(http://www.cumber.com/zika-congress-and-damaged-lives/)
“Zika 4,” September 6, 2016 (http://www.cumber.com/zika-4/)
“More of the Costs of Political Failure on Zika,” August 12, 2016 (http://www.cumber.com/more-on-the-costs-of-political-failure-on-zika/)
“Zika Politics: Democrats & Republicans,” August 2, 2016 (http://www.cumber.com/zika-politics-democrats-republicans/)
“Zika Update,” July 19, 2016 (http://www.cumber.com/zika-update/)
“The Zika Virus and the US Congress,” May 23, 2016 (http://www.cumber.com/the-zika-virus-and-the-us-congress/)

David R. Kotok
Chairman & Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Zika Update: Brace for Resurgence

Back in 2013 a mild virus nobody paid much attention to underwent one small mutation: A single amino acid (serine) was replaced by another (asparagine), according to Chinese scientists who recently published their research in the journal Science (https://www.washingtonpost.com/news/speaking-of-science/wp/2017/09/28/zika-was-a-mild-bug-a-new-discovery-shows-how-it-turned-monstrous). With that one change, Zika began to deal horrific damage to developing human brains. Zika became the public health threat we know today, one that lurks everywhere that infected mosquitoes range.

Through the summer of 2017, we had gained an edge in the fight against Zika. As of October 11, US states have counted only 291 cases in 2017. Florida saw a 71% drop in the number of cases for the first half of the year; New York saw a 56% drop. Other states likewise saw a reduction. (https://www.usatoday.com/story/news/nation-now/2017/07/13/why-zika-virus-infections-way-down-u-s-summer/474312001/)

But the Zika threat hasn’t disappeared; in fact, it is now poised to make a comeback, along with other mosquito-borne diseases such as dengue and chikungunya. While a single recent case of mosquito-borne transmission in Florida is cause for concern (https://www.usnews.com/news/health-care-news/articles/2017-10-13/florida-confirms-its-first-locally-transmitted-zika-case-of-2017), a greater concern is the ultimate impact of devastating hurricanes Harvey in Texas and Maria in Puerto Rico and Florida.

When a powerful hurricane wreaks devastation, it very nearly wipes out mosquito populations. That’s good news that lasts for about a week – until mosquito eggs hatch and survive in much higher numbers than usual in areas impacted by flooding. In Texas, for example, surveillance teams are finding thousands of mosquitoes in traps where they’d normally see only 10 or 20 (http://www.contagionlive.com/news/zika-virus-news-update-three-new-things-you-should-know).

The situation is similar and worse in Puerto Rico: Reports indicate uncontrolled spikes in mosquito populations on an island that has endured the hardest Zika hit among any US state or territory, with 34,963 confirmed cases of Zika last year and 486 so far this year – until Maria (CDC). We can be sure that no accurate counting is possible now, given dire living conditions on the island and a healthcare system in shambles. Food, water, and shelter are more urgent concerns. It’s inevitable, then, that Puerto Rico will see a surge in mosquito-borne diseases, including Zika, just as areas impacted by Katrina in 2008 saw a doubling in the number of cases of West Nile virus (https://fivethirtyeight.com/features/one-more-thing-for-puerto-rico-to-worry-about-disease-ridden-mosquitoes).

Puerto Rico’s mosquito-borne disease surveillance system used to be one of the world’s best, according to network science professor Samuel Scarpino of Northeastern University. Now, however, the island is in survival mode. Mosquitoes breed unchecked in pools and storm debris; people live and sleep exposed to open air where they will be often bitten; and Puerto Rico’s model programs for mosquito control and capture, disease testing, and reporting have fallen apart with the infrastructure that supported them, destroyed by the storm (https://fivethirtyeight.com/features/one-more-thing-for-puerto-rico-to-worry-about-disease-ridden-mosquitoes).

We know, then, that cases of Zika (along with chikungunya and dengue) in Puerto Rico are destined to spike unchecked and uncounted for a time, and with them the number of Zika’s smallest victims, infants whose lifetime care will cost millions. Worse yet, Puerto Rico’s looming Zika woes are not Puerto Rico’s alone.

Zika is now much more likely to gain a significant foothold in the US mainland as tens of thousand of Puerto Rican–American citizens flee for the continental US (http://www.latimes.com/nation/la-na-puerto-rico-orlando-20171010-story.html). Life was hard in Puerto Rico before Maria swept through – the island faced dire financial straits. The population had already dropped from 3.8 million to 3.4 million over the last decade as some 400,000 Puerto Rican Americans sought a better life in the US mainland. Now, given the lack of power, adequate shelter, food, and clean water, leaving seems the only rational option in the minds of many (https://www.newyorker.com/news/news-desk/how-many-puerto-ricans-will-leave-home-after-hurricane-maria).

And so they come. NPR reports, “Thousands of Puerto Ricans have poured into Florida after Hurricane Maria. More than 27,000 have arrived through Port Everglades and the Miami and Orlando airports alone since Oct. 3, according to the governor’s office. Some will stay temporarily, until power and water are largely restored across the island; but many … are coming to the sunshine state to rebuild their lives” (http://www.npr.org/2017/10/13/557108484/-get-us-out-of-here-amid-broken-infrastructure-puerto-ricans-flee-to-florida).

The influx of people will bring with it an influx of Zika, upping the chances that the virus will make it into local mosquito populations in the continental US, and incidents of mosquito-borne transmission will rise. In short, this is no time to be complacent about Zika; instead, it is time to double down on surveillance, mosquito control, and prevention, and to budget for that challenge. There is no room for congressional incompetence and political gridlock on the funding front, where Zika and other matters are concerned. There is no time for the nonsense of voting no, as some have unwisely done in the past. Timely action against Zika in hurricane-impacted areas and beyond is critical to save children’s futures, billions of dollars in healthcare costs, and productivity hits later on.

Funding to address the Zika emergency – at last approved by Congress in early 2016 after lengthy delays – ended on September 29, 2017, and the CDC consequently had to deactivate its Zika Emergeny Operations Center (https://www.cdc.gov/media/releases/2017/p0929-eoc-deactivation-zika.html). The 2018 budget proposed by Donald Trump includes a 17% decrease in funding for the CDC overall, while the CDC has requested an additional $12.5 million to address vector-borne diseases. The CDC explains that request: “In FY 2018, the U.S. will remain vulnerable to existing and new vector-borne disease threats, like Zika. With increased funding, CDC will provide enhanced support to up to 9 states at the greatest risk for vector-borne disease outbreaks. These resources would allow for enhanced capacity in laboratory, case and outbreak investigation, and vector control.

“Funds will also support the development of cutting edge diagnostic tools and new vector control technologies.” (https://www.cdc.gov/budget/documents/fy2018/fy-2018-cdc-budget-overview.pdf)

With congressional budget battles for fiscal year 2018 looming, it’s critical to note how vital the functions of government are when it comes to time-sensitive threats like Zika. We cannot afford dysfunction in Washington. Also key is an aid package designed to help areas impacted by this year’s hurricanes and devastating wildfires. Rebuilding infrastructure in Puerto Rico and elsewhere is a vital component in the fight against Zika, too, as surveillance and control measures depend on functional infrastructure. The House overwhelmingly approved – minus the support of 69 Republicans – a sorely needed $36.5 billion aid package on October 12. If the Senate and the president approve the bill, that aid package will follow $15.3 billion relief measure passed in September (https://www.nytimes.com/2017/10/12/us/politics/house-congress-disaster-relief-hurricanes-wildfires.html). It will not ultimately be enough, but it will help immensely.

Despite the heightened threat Zika poses in the months ahead, however, there is good news in the fight against the virus; and that news says that this health crisis will ultimately be more manageable if we play our aces now. Some bullets follow:

  • Scientists are releasing male mosquitoes infected with the bacterium Wolbachia in order to interfere with reproduction in mosquito populations that carry Zika. Their goal is to reduce populations by 90%: http://www.cnbc.com/2017/07/22/scientists-breed-a-mosquito-vs-mosquito-war-to-eradicate-zika.html.
  • A team from the University of Miami’s Miller School of Medicine used antibodies cloned from the blood of a person infected with Zika to innoculate a group of macaque monkeys against Zika: http://www.miamiherald.com/news/health-care/article176976391.html.
  • The FDA has approved a test designed to detect the presence of Zika in donated blood: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm579313.htm.
  • Researchers in the field of nanobiotechnology are experimenting with engineered molecules that “act like microscopic Venus flytraps,” according to biotech writer Patrick Cox . “They trap viruses in polymer nanovesicles that pass harmlessly from the body.” (Patrick Cox’s Tech Digest, September 25, 2017).
  • In an interesting twist, it turns out that the Zika virus, which targets the brain’s stem cells with disastrous results in developing brains, can be used to shrink aggressive glioblastoma tumors by targeting glioblastoma stem cells: http://www.bbc.com/news/health-41146628. The adult human brain doesn’t have many stem cells otherwise, so the rest of the brain is unaffected. Hat tip to Patrick Watson, Mauldin Economics.

As is the case with most battles, timing, strategy, effective weapons, and the will to win will prove decisive. The battle with Zika is no exception. If we ignore the threat, if the enemy moves unchecked, we embrace disaster. Thus we cannot fail to fund, develop, and deploy measures and weapons that work.

David R. Kotok 
Chairman and Chief Investment Officer
Email | Bio

Our previous Zika updates are linked below:

“Zika Update,” July 1, 2017 (http://www.cumber.com/zika-update-3/)
“Zika Update,” March 8, 2017 (http://www.cumber.com/zika-update-2/)
“Cuba & Zika,” October 16, 2016 (http://www.cumber.com/cuba-zika)
“Zika, Cuba, and American Politics,” October 4, 2016 (http://www.cumber.com/zika-cuba-american-politics/)
“Answering a FAQ on Zika Vote,” September 7, 2016 (http://www.cumber.com/answering-a-faq-on-zika-vote/)
“Zika, Congress, and Damaged Lives,” September 7, 2016
(http://www.cumber.com/zika-congress-and-damaged-lives/)
“Zika 4,” September 6, 2016 (http://www.cumber.com/zika-4/)
“More of the Costs of Political Failure on Zika,” August 12, 2016 (http://www.cumber.com/more-on-the-costs-of-political-failure-on-zika/)
“Zika Politics: Democrats & Republicans,” August 2, 2016 (http://www.cumber.com/zika-politics-democrats-republicans/)
“Zika Update,” July 19, 2016 (http://www.cumber.com/zika-update/)
“The Zika Virus and the US Congress,” May 23, 2016 (http://www.cumber.com/the-zika-virus-and-the-us-congress/)


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Zika Update

For two years, we have been following the Zika virus outbreak and the failure of the US government to protect its own citizens, let alone demonstrate world leadership. In total, by the time Congress managed to pass a stopgap spending bill for the fight against Zika in September 2016, more than 23,000 individuals in the US and its territories had been infected with the virus. That stopgap funding ends on June 30.

In the 50 states and DC, from January 2016 through June 13, 2017, we have had 80 infants with birth defects born to Zika-infected mothers (cdc.gov/zika/reporting/pregnancy-outcomes.html). In roughly the same time frame, Puerto Rico and other US territories have seen thousands of new Zika infections and 122 infants born with birth defects.

Remember that a lifetime cost of care for each victim of Zika-caused birth defects is estimated to be about $10 million. The total lifetime cost of Zika to Americans is now estimated to be in the billions and growing.

Remember, too, that Zika is nearly always transmitted by mosquitoes (though it can also be sexually transmitted) and is mostly preventable. Mosquito control and health education and prevention are partially funded by states and local governments but mostly by the federal government.

We have watched both political parties derail Zika funding by tying it to other issues, holding up funding for the fight against the virus for some eight months while health agencies shuffled funds to do what they could until there were no more dollars to be found. No clean Zika prevention bill has been permitted to get to a floor vote. Instead, Zika funding has always been tied to other agendas and other money.

Guilty are Trump and Republicans, who now can alter their previously scandalous behavior and pass a clean bill. Guilty were Obama and Democratic legislators who can now alter their previous behavior and join a bipartisan bill that Trump will likely sign if presented with it. The stopgap Zika funding bill signed into law in September of 2016 is now history; another funding battle must now be fought in the halls of Congress in order for the war against Zika to be waged effectively on the ground.

The Trump administration’s own proposed budget calls for a new federal emergency fund that can be deployed to address infectious disease threats. (No dollar amount has been attached to that proposed line item.) That’s smart policy and a step the public health community has long advocated; however, other, less-wise legislation can easily sabotage the effort. For example, if the ACA were to be repealed, funding for the Epidemiology and Laboratory Capacity (ELC) program will be halved unless that funding is replaced in new healthcare legislation. The ELC program provides flexible funding for equipment and training for staff at the public health laboratories that conduct critical surveillance services nationwide. Effective Zika surveillance to date could not have been accomplished without those dollars. After all, we have to know where the enemy is before we can engage it, even if the enemy is so tiny that it travels on mosquitoes’ wings (theatlantic.com/science/archive/2017/03/the-quiet-cut-that-will-harm-americas-ability-to-deal-with-the-next-zika/519978/).

Public health experts worry about the impact drastic cuts will have on the nation’s healthcare infrastructure as a whole and by extension on our ability to fight Zika and other emerging infectious diseases. If Congress ultimately cuts funding to the National Institutes of Health by $5.8 billion, as proposed in Trump’s budget, what will have they done to undermine vaccine research and development funded by the NIH? The NIH is, after all, the chief funding source for Zika and Ebola vaccine research. Dr. David Freedman, professor of medicine and epidemiology at the University of Alabama at Birmingham, points out, “If you defund the scientific infrastructure in general, all aspects are going to have to suffer, and that includes preparedness for new diseases as well as research and therapy for existing diseases” (modernhealthcare.com/article/20170413/NEWS/170419937).

With Zika’s highest-risk season at hand, we are served today by a CDC short nearly 700 employees as a result of the Trump administration’s hiring freeze (washingtonpost.com/news/to-your-health/wp/2017/05/19/nearly-700-vacancies-at-cdc-because-of-trump-administration-hiring-freeze/). Further, the CDC faces possible budget cuts of 17%, as outlined in the Trump administration’s proposed budget (businessinsider.com/trumps-2018-budget-health-2017-5). Former CDC Director Tom Frieden recently catalogued the far-reaching and varied impacts that the proposed $1.2 billion in budget cuts would have on public health, foreseeing that the cuts “would increase illness, death, risks to Americans, and health care costs” (businessinsider.com/trumps-2018-budget-health-2017-5). A slashed CDC budget further impairs the CDC’s ability to protect Americans against Zika.

And now the Senate’s controversial health bill proposes to cut the critically important Prevention and Public Health Fund entirely, effective 2019. According to the CDC, “Losing this funding would cripple CDC’s ability to detect, prevent, and respond to vaccine-preventable respiratory and related infectious disease threats.” That fund accounts for 12% of the CDC’s budget (about $9 billion), and includes its vaccine program (latimes.com/business/hiltzik/la-fi-hiltzik-gop-healthcare-20170314-story.html).

Will political leaders connect all these dots between policies and consequences and make wise decisions that protect lives and control costs, including costs incurred through lost productivity? Or will they just sling mud at each other or pass legislation without fully considering its impacts while Zika spreads during the summer mosquito season? Will the CDC get the funding it needs, and will the Zika-prone Southern United States and Puerto Rico get federally coordinated help?

Or will our politics again fail us as they did when the threat of Zika first emerged? The US government’s stumbling response to Zika to date is a well-defined litmus test of how poorly our government serves us. I write here about Zika, but Zika is hardly our only infectious disease concern. In an era when infectious diseases spread at the speed of air travel, our failure to maintain a resilient and responsive public health and to equip ourselves to respond effectively to Zika or Ebola or the next flu pandemic comes down not to the limitations of science, but to government. As journalist Ezra Klein observes, “Diseases move much faster than governments” (vox.com/2015/5/27/8660249/gates-flu-pandemic). We can do better than this.

Zika-infected mosquitoes have now been detected in Brownsville, TX, as well as Miami, FL. Models indicate that the entire Gulf Coast is a prime breeding ground for Zika. As the number of cases mounts and infants are born to infected mothers, we learn more about the toll Zika exacts on its youngest victims, increasing the risk of birth defects by twenty-fold. According to the CDC,

“Among the women with confirmed Zika infection during the first trimester, 8 percent or nearly one in 12 had a baby or fetus with Zika virus-associated birth defects.

“Another 5 percent infected in the second trimester of pregnancy had a baby with a birth defect and 4 percent of women who tested positive in the third trimester of pregnancy.” (nbcnews.com/storyline/zika-virus-outbreak/birth-defects-seen-5-percent-zika-affected-pregnancies-u-s-n770001)

When government fails to serve and protect, suffering compounds, along with frustration and disillusionment. Zika spreads; children are damaged for a lifetime; families must shoulder heavy care burdens and heartache; and productivity losses and care-related costs soar. (See a recent study published in PLOS, “The potential economic burden of Zika in the continental United States,” for detailed set of estimates as to what Zika’s economic costs might turn out to be: (journals.plos.org/plosntds/article?id=10.1371/journal.pntd.0005531 – pntd-0005531-t002.)

Dear readers, let me add a personal note. Precautions and good luck kept a recent grandchild from exposure to Zika, so I’m very grateful and very motivated to help others who may be less fortunate. I’ve personally visited Zika-stricken areas in South and North America and in Africa, and now cases have shown up in Asia as well. Ignoring this threat is dangerous. Dealing with it is possible, and many lives may be saved.

I live in Florida, where Zika is known to be a risk. As a Floridian and as an American I invite readers to freely forward this commentary or redistribute it as each of you sees fit.

Below are some previous pieces we’ve written about Zika.

“Zika Update,” March 8, 2017 (http://www.cumber.com/zika-update-2/)
“Cuba & Zika,” October 16, 2016 (http://www.cumber.com/cuba-zika)
“Cuba, Zika, and American Politics,” October 4, 2016 (http://www.cumber.com/zika-cuba-american-politics/)
“Answering a FAQ on Zika Vote,” September 7, 2016 (http://www.cumber.com/answering-a-faq-on-zika-vote/)
“Zika, Congress, and Damaged Lives,” September 7, 2016
(http://www.cumber.com/zika-congress-and-damaged-lives/)
“Zika 4,” September 6, 2016 (http://www.cumber.com/zika-4/)
“More of the Costs of Political Failure on Zika,” August 12, 2016 (http://www.cumber.com/more-on-the-costs-of-political-failure-on-zika/)
“Zika Politics: Democrats & Republicans,” August 2, 2016 (http://www.cumber.com/zika-politics-democrats-republicans/)
“Zika Update,” July 19, 2016 (http://www.cumber.com/zika-update/)
“The Zika Virus and the US Congress,” May 23, 2016 (http://www.cumber.com/the-zika-virus-and-the-us-congress/)

We will soon be celebrating the birthday of our great country, which permits us the freedom to make choices and encourages us to participate in our governance. That participation includes health and disease defense. In that spirit, we thank you for your activism.


Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.