| Asked last month about when fatalities and hospitalizations would meet state thresholds for reopening, Mr. Cuomo responded: “All the early national experts, ‘Here’s my projection model.’ . . . They were all wrong. They were all wrong. . . . There are a lot of variables. I understand that. We didn’t know what the social distancing would actually amount to. I get it, but we were all wrong.” The Wall Street Journal, “What Covid Models Get Wrong” June 18, 2020 The U.S. policy emphasis for the pandemic appears to be shifting from economic shut-down to crisis management. On Monday, Mr. Gavin Newsome, the governor of California, said “We have to recognize you can’t be in a permanent state where people are locked away—for months and months and months and months on end—to see lives and livelihoods completely destroyed, without considering the health impact of those decisions as well.” And while the University of Washington’s Institute for Health Metrics and Evaluation[1] has issued a new forecast that Covid fatalities could increase over the summer and see a resurgence in the fall, Stanford epidemiologist, John Ioannidis explains in a new paper that most models have overshot by making incorrect assumptions on virus reproduction rates and equal susceptibility across populations.[2] For example, a Massachusetts General Hospital model predicted 23,000 deaths in Georgia, the first state to reopen, but Georgia has had only 896. Forecasting errors like this have tended to be in the 10 to 20 times multiple range. For example, early estimates in the U.S. were for 2 million deaths, as compared to current projections, which have ranged recently from 140,000 to 200,000. Even in the face of rising infection rates, policymakers may now shift their attention to hospital utilization and mortality rates. We noted last week, in states where there have been rising rates, lower utilization and mortality rates suggest that the crisis can continue to be managed without another lockdown (see below chart). Hospital utilization has remained relatively flat, even with the uptrend in cases, in states such as California. Continued development in therapies is supporting this trend in declining mortality rates with this week’s announcement of an application of a readily available steroidal drug, dexamethasone, as only the most recent example. In the meantime, a wash of new studies is finding that in addition to the models not accurately forecasting the impacts of the pandemic, the shutdown itself was only marginally beneficial. A recent paper by the University of California at Berkeley found that, while social distancing reduced person-to-person contact by 50%, more stringent shelter-in-place rules only further reduced contact by another 5%.[4] A USAToday analysis found that over 40% of the mortalities have come from nursing homes, suggesting that despite whatever shelter-in-place directives may have accomplished, it failed to protect some of the disease’s most vulnerable populations.[5] Markets Why do we continue to focus on the pandemic each week in our analysis? Because market performance will be driven by the pandemic and how it impacts corporate earnings, at least for the near term. As we await second quarter earnings over the next couple of weeks, we have been encouraged by leading indicators, which in large part have exceeded earlier estimates. One chart from yesterday morning’s update from Baird-Strategas provides additional support to a V-shaped recovery, with the Citi Economic Surprise Index resting at an all-time high. This week’s retail sales number of 17% vastly exceeded the 8% expected by economists and, while yesterday’s first time unemployment claims number was somewhat above estimate, other indicators like airline traffic and restaurant reservations provide a sign that the economy continues to rebound. Both the corporate and municipal bond markets continue to see strong demand backed by Fed support. For example, a recent JFK airport bond backed by American Airlines/British Airways was 10 times oversubscribed, allowing them to increase the size of the deal. We have also seen universities and New York bonds come to market and receive strong interest. While we would not invest in these higher risk issues, it does demonstrate significant support to the overall market. The downside of this positive stabilization in credit is that yields have dropped to all-time lows, and it appears will stay there for quite some time. In light of this low-yield environment, our research team is diligently working to develop investment options for supplementary income in dividend-oriented investments, and we will be reporting on this more in the days to come. |
Sustainable investing is set to surge in the wake of the coronavirus pandemic (CNBC)
KEY POINTS
- The outbreak of Covid-19 could prove to be a major turning point for ESG investing, or strategies that consider a company’s environmental, social and governance ratings alongside traditional financial metrics.
- Sustainable funds attracted record inflows in the first quarter amid the market turmoil, according to data from Morningstar, and many of these funds are outperforming the broader market for the year.
- Critics have said that ESG investing is merely a bull-market phenomenon, while others argue it represents a fundamental shift in investing.
- “Prior to this crisis there was a meaningful and increasing focus on ESG investing and it is likely that this focus will only increase following the coronavirus,” Goldman Sachs said in a recent note to clients.
Covid-19 Crisis: The Path of the Virus and the Path of the Recovery (Chris Merker)
| On Thursday, the market sold off nearly 6 percent in one day, after rallying for several weeks. The sudden drop seemed to follow investors expressing concerns around two issues: 1) What’s the risk of a second wave of the virus? and 2) What about the slow path to recovery? Let’s take each in turn: The Path of the VirusThe news is reporting this week that coronavirus infection rates have been rising in 12 states despite the overall numbers continuing to fall. States like Arizona, Florida and Texas have received a fair amount of attention. Arizona’s daily case rates have increased 125% since reopening on May 6. However, a deeper dive into the numbers being reported by the Arizona Department of Health reveals a mixed picture. What has not been a point of focus in reporting on the case rates in Arizona is that hospitalization and death rates have plummeted from one month ago, down 64% and 73% respectively.[1] Accordingly, these increases have not disrupted hospitalization utilization rates, which have remained relatively stable over the last few weeks in the 73-78% range. Texas, the second most populous state in the U.S. with nearly 30 million people, has seen the level of hospitalizations since the reopening on May 11 increase by 280 cases. These numbers are consistent with Florida’s recent increases. There are other states that were among the first to reopen, like Georgia, which have not seen any real pick up in new rates of infection. Absolute numbers could, of course, increase if the topline infection rates further accelerate, so we will continue to carefully monitor this trend. In the meantime, the overall picture continues to improve for the nation, with both declining daily new infections and deaths since the states began reopening in late April:[2] The Path of the Recovery Last Friday’s positive surprise on the 2.5 million jobs in the month of May capped the market’s recent achievement of the fastest market recovery on record, but volatility re-entered the market this week following Fed Chairman Jerome Powell’s comments from the Federal Open Market Committee (FOMC) meeting on Wednesday. The FOMC announced holding the target rate low in the range of 0% to 0.25% with a unanimous 10 to 0 vote. Overall the statement was fairly uneventful, but there are interesting takeaways from some of the projections and commentary. Almost all of the policy members expect the Fed funds rate to remain near 0% through the end of 2022. Only two members out of the 17 are in favor of raising rates even in 2022. Regarding the timing and size of future adjustments to rates, the Fed reiterated that it will take into account labor market conditions, inflation pressures (which continue to be muted) as well as financial and international developments. For bond investments this means that our emphasis on quality will continue to serve as an important source of liquidity and stability in the portfolio. As rates eventually begin to normalize we will be able to buy into issues at higher rate levels, just as we did following the 2008 crisis. The Fed plans to keep rates low, adjust as needed and continue to support the economy as necessary. Powell cited an “unbalanced nature” of the recession and reiterated a few times that they want the markets to be working. The Fed-provided liquidity has been a powerful mix for stocks, but Powell did make it clear that once the crisis has passed, the Fed “will put these emergency tools back in the tool box.” The Fed’s projection of 9.3% unemployment by year-end was also very much in line with our earlier estimate of 8-10%. Yesterday’s new claims for unemployment (1.54 million) were approximately 23% below the consensus estimate, providing further evidence of an improving labor market. This bodes well for stocks over the long run. The pullback on Thursday was a reminder of the volatile nature of stock investing, but on balance we view the pull back as invoking important discipline in the market. Consolidation at this stage allows for a more stable and consistent pace of growth as corporate earnings recover and eventually catch up to valuations. [1] Comparison of COVID daily statistics from opening (May 6) to most recent (June 4).While these looked at single day comparisons, it’s important to note that the three and seven day moving averages were similar. Arizona Department of Health COVID-19 Dashboard https://azdhs.gov/preparedness/epidemiology-disease-control/infectious-disease-epidemiology/covid-19/dashboards/index.php [2] https://www.worldometers.info/coronavirus/country/us/ |
Covid-19 Crisis: Protests and a Strong Jobs Number (Chris Merker)
| In almost a tale of two cities, protests and looting have emerged in over 100 cities across America over the past week for George Floyd, a man who tragically died in Minneapolis police custody, on May 21. And yet despite the widespread civil unrest, this morning’s job market surprise of 2.5 million jobs created in May has capped a week with markets ticking higher throughout. This 50-day rally on the S&P 500 has outpaced any such prior period for the last 50 years. We are no doubt witnessing strong resilience of the U.S. economy. While this is proving to be a very painful period of adjustment in American history, and may yet drive an extended period of policy reform, Barron’s provided a succinct analysis this week as to why civil unrest has not been a detractor to market performance.[1] That lack of reaction isn’t surprising in one regard: Wall Street filters most news through the lens of share prices. It’s a voting machine on the future of corporate profits…The first thing Wall Street does when something new and unexpected happens is look to history for precedents. In this instance, that exercise sends analysts back to painful periods including President John F. Kennedy’s 1963 assassination, the 1965 civil rights march in Selma, Ala., the large 1967 Vietnam War protests in Washington, D.C., the 1968 assassination of Dr. King and the 1992 L.A. riots which broke out in the aftermath of the acquittal of several police officers put on trial for beating Rodney King. What does the reaction to these events show? Historically, the market looks past most civil unrest. Stocks aren’t significantly more volatile in the months following any of the events listed. What’s more, the S&P rose in each year under study. Annual gains, excluding dividends, ranged from about 4% to 20%. At the same time what started as a rally concentrated in a few technology and health care names, more recently has achieved broad-based participation, with 96.8% of S&P 500 companies now outperforming their 50-day moving average; and the equal weight S&P 500 index, which significantly lagged early on, is now since the beginning of the quarter in-line with the more widely-recognized, market cap weighted S&P 500 index. In addition, we are seeing small cap stocks outperform large cap stocks, with the Russell 2000 index up 26.2% versus the S&P 500, up 21.3% through the quarter. Finally, we are seeing a shift in leadership from growth to value companies, with the large cap value index (Russell 1000 Value) outperforming the large cap growth index (Russell 1000 Growth) nearly 2 to 1 for the month, led by the financial sector. As we noted last week, an earlier shift to small cap companies in client portfolios has added value. Maintaining a neutral weight between value and growth is similarly starting to add value within the portfolio. Fixed Income ReviewThe short end of the yield curve continues to remain fairly range bound set by the Fed Funds rate of about 5 basis points (0.05%), but further out on the curve you are starting to see steepening. There are a few factors that play into this. The curve is steepening as optimism builds as states reopen and public health concerns continue at a rate the health care system can handle. As the yield curve continues to build in future economic growth, it is also building in some additional inflation. Although inflation expectations continue to remain muted, the long end of the curve is starting to price in some drift upwards. Long-dated treasury bonds have also become slightly less desirable as the U.S. continues to borrow to fund the massive economic stimulus. The Federal Reserve recently began to openly discuss the concept of yield curve control, which it last used during World War II. This policy calls for the Fed to set targets for the treasury yields and buy as many bonds as necessary to maintain those levels. From initial Fed comments, it appears they will target the shorter end of the curve but leave the long end to float freely. The Fed has been pulling back as an active buyer of treasuries reducing their net purchases, which is also putting additional pressure on long treasuries. In the end, we believe a steeper yield curve is a healthy sign, if done in a gradual manner. If rates on the long end rise too quickly, it will tighten financial conditions, and we would expect the Fed to step back in. The Fed has various tools and has shown they are not afraid to adjust policy when market conditions warrant. In the meantime, we remain duration neutral to the benchmark, and continue to emphasize quality in the portfolio. |
Population-level COVID-19 mortality risk for non-elderly individuals overall and for non-elderly individuals without underlying diseases in pandemic epicenters (Yale and BMJ)
MAIN OUTCOME MEASURES: In people age <65 absolute COVID-19 death risk expressed as equivalent of death risk from driving a motor vehicle CONCLUSIONS: People <65 years old have very small risks of COVID-19 death even in pandemic epicenters and deaths for people <65 years without underlying predisposing conditions are remarkably uncommon. Strategies focusing specifically on protecting high-risk elderly individuals should be considered in managing the pandemic.
https://www.medrxiv.org/content/10.1101/2020.04.05.20054361v2
Covid-19 Crisis: Negativity Bias and the Markets (Chris Merker)
| Studies show humans have a built-in negativity bias, which means we give bad news a lot more attention than good news. Consider a couple of jarring headlines taken from the recent financial press: “Don’t even think of owning stocks unless you’re willing to buy and hold for at least 10 years”[1] “Global losses could be $10 to $20 trillion from a global economy worth $85 trillion”[2] A 2019 study reported in the Proceedings of the National Academy of the Sciences found that this bias transcends borders and cultures, and is likely rooted in our evolutionary biology:[3] Attention to negativity may have been advantageous for survival. Negative information alerts to potential dangers; it has special value in terms of “diagnosticity”, or the “vigilance” that is required to avoid negative outcomes. This account of the negativity bias is evident in literatures in physiology, neurology, and, particularly, work on the importance of “orienting responses” in evolutionary biology. And this is particularly true during periods of heightened uncertainty such as now, especially in our journalism and news coverage: Societies deal with anxiety about future uncertainties in different ways, and the extent to which members of a culture feel threatened by ambiguous or unknown situations may well affect the tendency to focus on negative information… Another dimension of variability is rooted in the institutionally coded professional practices of journalists. A strong professional requirement that journalists routinely cover politics in conflictual terms may also lead to viewers’ habitual expectation and attention to negativity. Further evidence comes from the Pew Charitable Trusts, which studied news reported over a two decade period, and found that the stories that generated the most interest from people focused on war and terrorism, despite the fact that incident rates for both were in decline to among their lowest levels in human history during the study period.[4] While negativity bias is no doubt helpful when running away from a hungry bear, it is not of particular use to an investor in dispassionately evaluating prospects for long-term portfolio selection. Equities Which brings us to a point regarding a topic we introduced last week: how can equity valuations be what they are with the economic news currently so poor? The economic data, while negative, is starting to improve now that all 50 U.S. states are at different stages of opening their respective economies. The stabilization of oil prices in the $30 dollar range is one such recent example, as supply has come down and demand has moved up. With these improvements, markets begin to price in the recovery in advance. Strategas (a Baird company) pointed out yesterday morning that P/E (price to earnings) ratios of stocks spike during recessions when earnings collapse, typically a very bullish indication, and then decline as earnings catch up. Additionally, P/E ratios tend to run higher during periods of low interest rates and inflation such as this one. Why? Consider the role of the discount rate. When looking at any future stream of cash flows, in order to assess their current value we must discount them to the present in light of risk (risk premia) and alternative options (opportunity costs) for return. If rates are lower, then the value (of the combined flows) will mathematically be higher. That’s the finance textbook explanation; a more intuitive explanation is to consider how much a stock that pays a 2% dividend with the prospect of capital appreciation might be worth to an investor versus a 10 year treasury bond that pays only 0.70% coupon rate of interest, and virtually no prospect of appreciation. While we do not expect corporate profits to recover in the very near term, the market is effectively peering through the current economic wreckage and discounting the eventual recovery in corporate profits. By not focusing on the current negative data and re-orienting to the improving data, the market is generally consistent in pricing a scenario we are projecting of a 5% contraction in U.S. GDP with an unemployment rate of around 8 – 10% by year-end (Baird Strategas), with a recovery in latter 2021. Already we are seeing this dynamic feed into the small cap and emerging market companies. On a quarter to date basis, the Russell 2000 index, a barometer of small company performance, is marginally ahead of the S&P 500, 13.6% versus 13.4%, and emerging market stocks are up 9.3% versus international developed, up a mere 6.7%. A thesis we identified a couple of weeks ago is beginning to manifest, and our tilts into both segments in client portfolios have added value. Fixed Income As the fixed income markets digest the long-term impacts of the coronavirus as well as the effects of monetary and fiscal stimulus, they continue to normalize and function more efficiently with credit spreads and yields continuing to compress since the March volatility. The Federal Reserve’s $500 billion Municipal Liquidity Facility program has opened to state and local governments. The program is designed as a last resort for municipalities, with the Fed encouraging them to find alternative forms of financing before tapping into the program. The Fed also recently adjusted their rules to allow participation in states that have competitive bid requirements such as Illinois. Accordingly, the state of Illinois announced Thursday that it is working on a notice-of-interest requirement that it will be submitting to the Fed as a precursor to applying for a loan from the program. Municipal borrowers continue to find ways to access the markets with traditional lenders but have also increased their use of private placements, bank loans and direct lines of credit as alternative funding vehicles. A number of municipalities with lower credit quality, including states such as Illinois and Connecticut, as well as several university systems, were able to come to the market this week and price bonds with healthy demand. The corporate market has seen new issuance volume increase over 88% compared to a year ago, including participation from some of the hardest hit industries such as travel and leisure. Many corporations have come to the market to issue longer-term debt to pay down the revolving credit they took on during the height of the crisis. Overall, we continue to see the fixed income markets positively react to improving market dynamics and Fed support, and we remain focused on maintaining higher quality in the core fixed income portfolios, with a tactical shift into high yield in Diversified Fixed Income. Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. |
Covid-19 Crisis: Markets and Valuations (Chris Merker)
| COVID-19 Crisis – Week Ending May 15, 2020 How can stocks be trading at current levels when the economic data is so abysmal? That is the theme for this week and it is a fair question when looking at the data: GDP is expected to contract between 4 and 6 percent this year, and near-term unemployment rates may attain a level of 17%, a level not seen since the Great Depression. When you consider how much economic value will be lost from GDP contraction (what we define as a recession), the reality is quite staggering. A 5% contraction would result in an estimated $1.1 trillion in reduced GDP. In order to offset this, the Federal Government has provided about $2.7 trillion in direct support to households and businesses through the CARES Act and other programs. The offset to the loss ratio is 2.45 to 1. This does not include the additional monetary support provided to companies and municipalities by the Fed, which is now in excess of $6 trillion. In total, the combination of fiscal and monetary stimulus represents approximately 40% of GDP, or about $8 of stimulus for every dollar loss of GDP. Even with this offset ratio, the concern remains regarding how much dislocation will occur in the process due to business bankruptcies and unemployment. In other words, what job losses will be made permanent? If we accept that a large portion of the April layoffs were indeed temporary, then we should see those jobs come back relatively quickly. The Bureau of Labor Statistics in a recent survey found that 78% of respondents believe their job loss is temporary.[1] If we find that there is more structural damage from the shutdown, then this could prolong the recovery both in the economy and in corporate profits. It is forecast that 94% of the country will begin to emerge from shut-down by Memorial Day and each day that businesses are able to get back up and running will mitigate this permanent loss. But what about the path of virus and the effect this will have on consumption? Clearly, certain areas of the economy will lag as we come out of this. We don’t anticipate travel and leisure industries to rebound immediately. Restaurants, bars and theaters, for example, will only slowly come back due to social-distancing restrictions. We are watching closely as states such as Georgia, Texas and others re-open to get a gauge of these areas. For other sectors, it will depend on the speed and resumption of consumer activity, and if the housing market is any indication, a recovery is already clearly underway.[2] Finally, and as the Wall Street Journal recently noted, price to earnings measures only get you so far, but they do provide some guidance.[3] Strategas (a Baird company) forecasts that earnings on the S&P 500 could be around $110 by year-end, approximately a 31% decline since year-end 2019. Applying a simple price to earnings (P/E) ratio of 18 would suggest a level on the S&P 500 of just under 2000. The S&P in March bottomed around this level, suggesting that the damage to corporate profits was realized and priced in at the bottom end of the cycle. As markets undergo recoveries they tend to look out six months to a year. [4] Today the S&P is at 2,820. The Street consensus is that earnings will recover by the end of 2021 at around $170, and again, applying an 18 P/E multiple would have the S&P 500 pricing at 3060, still well below where the market peaked in February of this year at 3409.[5] Furthermore, as we noted last week, it’s been a lopsided recovery with a handful of very large tech stocks driving much of the recovery in the S&P 500 index. If we priced the S&P 500 on an equally weighted basis (where every stock in the index receives equal treatment, and not based on how the large the company is), the index would be down below 20%, still in technical bear market territory. This is why having proper positioning in the portfolio will be very important as we lead into the recovery, regardless of the path or speed. |
New assessments of risk and the new world order (Gillian Tett / Ian Bremmer)
This week Gillan Tett (Financial Times) describes how approach to risk is evolving under the crisis, and Ian Bremmer (Eurasia Group) calls what we are living through our first modern Depression. I find his view on how things will evolve on the geopolitical stage more interesting than trying to apply an old name to a new problem.
Is it safe to go to the shops, see a friend or get on a plane?
Gillian Tett on how to assess risk in the age of coronavirus
https://www.ft.com/content/a69afc14-904a-11ea-9b25-c36e3584cda8
Last month, Dayna Polehanki, a Michigan state senator, posted a tweet from the capitol building in Lansing that might have seemed unimaginable only recently. “Directly above me, men with rifles yelling at us,” it read, next to a picture of armed protesters standing in the building, demanding an end to the Covid-19 lockdown in the name of “freedom”. “Some of my colleagues who own bulletproof vests are wearing them.” It might be tempting to see this as just another sign of American political polarisation. But that would be a profound mistake. Over this bizarre and frightening scene hang questions that will affect us all in the coming months, be that in Lansing, London, Lagos or Lisbon: how do we define and measure risk? Who gets to do that? And who deals with the implications?
Ian Bremmer: Silver Linings in the COVID-19 Pandemic
Even though a lot of our institutions are structurally broken or eroded, the orientation and weighting of capital coming out of the COVID-19 crisis will be much more able to address and fix those problems, he said.
Bremmer also described how the crisis will affect the world’s three superpowers: the U.S., China and Europe. In the sense of the crisis, China has an advantage of being a surveillance state that can make huge, strategic investments to help the country recover economically much faster than the U.S. and Europe. But the caveat is that as China’s economy recovers, it is going to be dominant with all of the weak and poor-performing economies of the world while at the same time being decoupled from the U.S. and Europe, he said.
The Bearer of Good Coronavirus News (WSJ)
https://www.wsj.com/articles/the-bearer-of-good-coronavirus-news-11587746176?mod=opinion_lead_pos5
In a March article for Stat News, Dr. Ioannidis argued that Covid-19 is far less deadly than modelers were assuming. He considered the experience of the Diamond Princess cruise ship, which was quarantined Feb. 4 in Japan. Nine of 700 infected passengers and crew died. Based on the demographics of the ship’s population, Dr. Ioannidis estimated that the U.S. fatality rate could be as low as 0.025% to 0.625% and put the upper bound at 0.05% to 1%—comparable to that of seasonal flu.
“War Powers” in a Time of Corona: Learnings for the Climate Crisis (Chris Merker)
In light of significant and rapid changes occuring across the globe, arguably climate change and environmental impacts should be approached with similar urgency. Activists have been saying this for years, and now we have an opportunity to see how humanity reacts during an all-out crisis. In and throughout, the world has become in effect a laboratory for responding to a massive – and entirely global – economic shock, and every government has taken a range of a policy approaches with differing levels of efficacy.
Encouragingly we have seen a “can do” and “nothing will stop us” attitude that has crossed political divides as both the public and private sectors joined hands to resolve the crisis.
However, a major point of difference, is the absence of any similar level of intensity in addressing the climate crisis. This is in marked contrast to how the world addressed ozone depletion a generation ago, which, while not reaching “coronavirus” levels, did rally substantial, coordinated and targeted response globally in resolving that crisis. One commentator suggested that if carbon emissions came with a bad smell or turned the skies purple, we would see a more ready and visceral reaction from everyone. Because we can’t see, taste or feel carbon emissions, while no less damaging, the perception of immediate threat is not present in this instance.
So, after the dust has settled on the corona crisis, how can we apply recent learnings and experience to the climate crisis?
- Understand that collective actions can make an impact – Social distancing doesn’t work without everyone’s participation. What has slowed the spread of the coronavirus was everyone opting in and participating in this radical change in behavior. Similarly, we will need to change our behaviors in a number of ways: what we do and how we do it as we transition to a low carbon economy.
- Governments must overcome political divide to create effective policy solutions – While our leaders argued over some of the details as we worked to construct the largest fiscal stimulus package in history to mitigate the economic impact from COVID-19, no one disagreed over the objectives or need for immediate action. We need similar cohesion in addressing the climate crisis. This is still not present, and will be key.
- Countries must coordinate their actions – The coordinated actions of leaders and central banks has been key in addressing this crisis. Such multi-lateral coordination must take place in a way that we haven’t seen to date, despite attempts through agreements such as the Paris Accords, which has clearly been absent major countries – and the largest carbon contributors – in particular the U.S. and China. Just as important are the coordinated plans and execution of those plans following such agreements.
- Allow the experts and technicians to lead, and recognize that technology and innovation will play a role – Anthony Fauci, director of the National Institute of Allergies and Infectious Diseases, and others, who understand health policy and pandemics have been given license to act and lead in ways that are critically important on setting us on a path to mitigate the effects of the pandemic, and get on a path to recovery. Similarly we must turn to those who understand the climate and impacts to the environment to mitigate further damage, and put us on a transition path to sustainability. We must fund and incentize businesses to continue developing and expanding critical products and technologies to pave the way to the transition, just as we are seeing during this crisis.
- Plan the transition – How do we get from A to B? In this case the strategy was to “flatten the curve” to ensure our health system has the necessary capacity to respond to reduce the human cost, and delay the impacts to allow time to develop a vaccine. What will be our strategy for the climate crisis, and how do we get from A to B, to at the same time minimize disruption and minimize human cost?
In the final analysis, everyone has to agree to do whatever it takes – In this crisis, everyone has come together and responded, together. This collective purpose and global spirit of cooperation must pervade to the same extent to take on the monumental challenge of transitioning from a carbon-heavy to a carbon-neutral economy, an entire shift in the way our civilization operates today.
In recent days I have been encouraged, with commitments by companies that include those from the energy sector, including some major oil and utility companies. I believe we can get there, but it will take all of us working together to help assure a better future for us and the generations that follow.