Why are the markets in the USA and UK going up?

BrockStoker

Right now they are going up because of Gilead's anti-viral:

https://finance.yahoo.com/news/gilead-says-remdesivir-hit-primary-124822894.html

Thrugelmir

BrockStoker said:

Right now they are going up because of Gilead's anti-viral:

https://finance.yahoo.com/news/gilead-says-remdesivir-hit-primary-124822894.html

A speedier recovery from the disease takes pressure off the health service. Doesn't answer the more serious fundamental challenges though. Nor that full recovery can take some people many weeks. 

Jim1980

It is also only available in a drip, there is no tablet or inhaler to take it in. Gilead will only have about 140,000 10 day treatments by middle of May. Unfortunately, a vaccine is unlikely to be available this year.

NorthernJoe

We are living through the biggest socioeconomic shock in nearly a century and the response of the markets has been relatively muted considering the gains of recent weeks. 

We are what, 10-15% off recent highs? Plenty of people believed a correction was in order given recent record highs of the major markets. It's almost as if Covid hasn't really been on the investment radar.  

That would lead me to conclude the markets see Covid as a very short term issue and are betting on a relatively rapid recovery.

Maybe they're right.

After all "the market" is the collective "wisdom" of millions like you and I along with much larger institutions with vastly more economic understanding and with significantly better tools to study & "predict" than anyone on here. 

Such a recovery is however, by no means guaranteed & the systemic risks that existed before Covid remain.  

https://www.theguardian.com/business/2020/apr/29/ten-reasons-why-greater-depression-for-the-2020s-is-inevitable-covid?CMP=Share_iOSApp_Other

All that said, there is a still a very long length of road left for some can kicking. . . 

eskbanker

NorthernJoe said:

We are what, 10-15% of recent highs?

85-90% of recent highs, or 10-15% off recent highs!

NorthernJoe

eskbanker said:

NorthernJoe said:

We are what, 10-15% of recent highs?

85-90% of recent highs, or 10-15% off recent highs!

Edited with most sincere thanks. 

kinger101

BrockStoker said:

Right now they are going up because of Gilead's anti-viral:

https://finance.yahoo.com/news/gilead-says-remdesivir-hit-primary-124822894.html

The clinical trial published in the Lancet shows remdesivir was not effective.
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31022-9/fulltext

The article is behind a paywall, but the final paragraph of the abstract is telling;

"In this study of adult patients admitted to hospital for severe COVID-19, remdesivir was not associated with statistically significant clinical benefits. However, the numerical reduction in time to clinical improvement in those treated earlier requires confirmation in larger studies."

That last sentence alludes to the fact the "clinical improvement" was not statistically significant.  I've had a look behind the paywall, and from a first glance, it's a dud.  The latest press release compares a five day treatment against a ten day, and concludes the five day is as good as the 10.  But as the 10 day treatment had no significant benefit over placebo, there's nothing surprising in that.  It's not uncommon for companies to spin negative trial results, or move goalposts.  Which can be dangerous statistical game to play, because the more things you look for, the more likely one will fall below whatever p-value you set.

It is possible they'd find a statistically significant benefit with a larger trail, but IMO, it's questionable both on financial and ethical grounds given the results of the first.

I suspect what's happening here is a bit of tulipmania going on in Covid-based stocks at the moment.  A lot of people will buy based on any press release related to tests or potential treatments at the moment.  Not that Gilead's future depends on this drug given its wide porfolio.  But there's a Covid bubble that will soon pop.

NorthernJoe

kinger101 said:

The clinical trial published in the Lancet shows remdesivir was not effective.

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31022-9/fulltext

The article is behind a paywall, but the final paragraph of the abstract is telling;

"In this study of adult patients admitted to hospital for severe COVID-19, remdesivir was not associated with statistically significant clinical benefits. However, the numerical reduction in time to clinical improvement in those treated earlier requires confirmation in larger studies."

 Which can be dangerous statistical game to play, because the more things you look for, the more likely one will fall below whatever p-value you set.

I have institutional access. Main results table for anyone interested.

Significant number of variables (> 20) & not even one <0.05. That's worse than one would expect even by chance alone. 

BrockStoker

That's an eye opener. The market reaction appears to make no sense in this individual case.

That said, I think markets have bounced at least partly due to the intense focus there has been to find a vaccine/treatments for covid-19. There are around two dozen vaccines being worked on/trialed, plus many anti-virals/treatments that could help treat patients - something like 100+ I think. There is a very good chance that some will work, so there is reason in general for the markets (and us) to be optimistic.

John464

Its not the deaths thats damaging the economy - its the lockdown, and markets are rising on signs of it being lifted