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Germany has limited its coronavirus death toll but faces criticism

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Doctors in Berlin, Germany.

Sean Gallup | Getty Images News | Getty Images

Germany has been praised for its tackling of the coronavirus pandemic, having managed to keep deaths under 10,000 while its European neighbors have seen much higher fatalities. 

But the chief executive of German health-care group Fresenius has warned that the country may have been overly focused on the pandemic, ignoring other areas of business and society that have suffered.

“Even though a lot has been done in the right way, my criticism is that we have focused too exclusively on the coronavirus and we have ignored all the collateral damage that has been going on and continues to go on,” Fresenius CEO Stephan Sturm told CNBC on Wednesday.

The damage was evident in the health sector, he said, “with all the cancer, heart attack and stroke cases not being treated the way they should be. But also in society, we’re seeing lost school years and many many children in precarious situations and suffering from what is going on with us focusing exclusively on Covid,” he said.

As the coronavirus crisis surged in Europe, companies like Fresenius, which has a hospital-operating unit Helios, were forced to delay and cancel elective surgeries. The German government offered fixed compensation to hospitals for procedures they have been forced to cancel. 

Sturm said compensation had helped. He also insisted his concerns surrounding the focus on the coronavirus was not due to commercial interests, but from being a “responsible citizen.”

“The German government has been good enough to make available a compensation package that makes us half-way home for the fixed-cost charge that is ongoing. But yes, the fixed-cost charge is hurting us, given that we were basically prohibited from treating elective-surgery patients. There, from the trough in March-April, we’re seeing a steady, gradual recovery.”

Germany has recorded 278,515 infections, according to data compiled by Johns Hopkins University. It’s current death toll of 9,421 is far lower than its European counterparts.

Nonetheless, data from the Robert Koch Institute shows that cases are rising, particularly in the cities of Munich and Hamburg. On Wednesday, a further 1,769 cases were reported after 1,821 new infections were registered Tuesday. German Chancellor Angela Merkel has called for a crisis summit next week with regional governors, German media reported Monday.

Despite the “better” data, Fresenius published a study on the pandemic’s impact on Germany in August in which it said the clinical course of the virus in the country was as bad as in other countries. 

“Two of every three Covid-19 patents in intensive care in Germany require mechanical ventilation. One-third of ventilated intensive care patients die, compared with one-quarter of non-ventilated intensive care patients,” according to the study, which had collected and analyzed data on Covid-19 patents treated in 86 German hospitals run by Helios since the start of the pandemic in February.

“This shows that the clinical course of Covid-19 patients in Germany is as poor as in countries hit harder by the pandemic such as Italy, France, the United Kingdom and Belgium,” the study said.

Fresenius’ CEO told CNBC that he believes Germany had seen a lower death toll for several reasons. “A) We had a good hospital infrastructure to start with and B) we were relatively late [to see cases] and we could take some good lessons from other countries. and C) I think social distancing is a good part of the German culture and therefore we had much better prerequisites to deal with this.” 

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Rising rates seem to signal a recovery is near, but investors wonder whether they can be believed

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A worker uses a nail gun while installing trim in a home under construction at a Romanelli and Hughes Building Co. subdivision in Dublin, Ohio, July 9, 2020.

Ty Wright | Bloomberg | Getty Images

Bonds, it would seem, are speaking the bulls’ language.

Treasury yields rolled to a four-month high last week, the 10-year note reaching 0.84%, as U.S. economic data continue to arrive generally better than expected and the markets anticipate further fiscal-support worth trillions either sooner or later, under this administration or the next.

Bonds racked up the style points, too, in ways that Wall Street tends to read as signs of better economic growth to come. The spread between five- and 30-year Treasurys hit nearly a four-year high, and corporate debt has traded firm against the rising government rates.

The gust of selling in the Treasury market cleared the way for more cyclical, financial and value stocks to improve relative to the big growth stocks that have been largely in pullback mode since before Labor Day. Bank shares in the S&P 500 last week gained more than 6%, while the small-cap Russell 2000 managed a gain versus about a 2% decline for big momentum stocks as a group.

All this is encouraging as far as it goes, implying investors are gaining comfort with a solid growth trajectory into 2021, perhaps boosted by another fiscal infusion, without new Covid-related restrictions undercutting the recovery.

The ‘reflation’ trade

Still, it’s worth considering other drivers of the backup in yields and related equity reactions.

Fidelity’s head of macro strategy Jurrien Timmer last week notes that Treasury yields have simply been catching up to other indicators of a “reflation” trade that have been working for a while.

The idea here is, assets geared to a global economic quickening have been climbing off their post-Covid lows for months, making the yield rise a belated and grudging follower and not a harbinger of fresh insight about the economy.

Bond folks are also pointing out the yield move coincided with commentary by Federal Reserve officials casting some doubt on any plans for the Fed to shift its buying to longer-dated Treasurys to suppress their yields as the government prepares to ramp up its debt issuance to fund the deficit. And hedging by mortgage-securities holders could have accelerated the bump in yields.

Some technical factors, too, might restrain further lift in yields. The 10-year Treasury yield has just levitated enough to meet its steeply down-sloping 200-day average, a potential friction area for the yield rally on a first approach.

Bank of America noted Friday that the spread between U.S. and German 10-year government yields has grown to multi-month highs. At a time when currency hedges are inexpensive and the dollar weak, this should draw overseas buyers to Treasurys to capture richer yields – and ultimately to cap them

Yields trigger value stock move

Whether the start of a long-running expansion in yields or not, the action in bonds is enabling another attempt by value stocks to narrow their yawning performance gap against growth-company shares.

The Russell 1000 Value index relative to the Russell 1000 Growth measure has gained some traction, and to some eyes, is building a foundation for further comeback.

Still, the prominent spike in this relationship back in June also generated enthusiastic calls that the long-awaited renaissance for value strategies was at hand. The peak of Treasury yields and value relative performance was June 8, days after a surprisingly strong jobs report and at a peak of “reopening the economy” enthusiasm. What followed was a reversal in value, a pullback in the S&P 500 as the Sunbelt Covid-case surge unfolded, a strong bond rally and three months of furious Big Tech growth-stock outperformance.

There is no handy way to determine if this display of reflationary energy in financial markets is another head fake. But it makes sense to stay alert to the possibility.

Meantime, the broad stock market has pulled itself into a neutral, somewhat indecisive condition.

‘Mixed, muddled and inconclusive’

On one hand, the S&P sagged a couple of times last week toward the 3400 area, which traders consider the border between its recent breakout range and the former correction zone. The index finished off half a percent for the week, some 3.5% below its early-September peak.

The broadening out of the tape allowed the index to withstand diminishing hopes of a quick stimulus deal and absorb further pressure from mega-cap Nasdaq stocks without breaking its uptrend. Yet that Nasdaq pressure reflects some fatigue among former leaders. Amazon, Apple, Tesla and Zoom Video, to name just a few, have struggled, while homebuilders, semiconductors and cloud-software have come off the boil.

Stocks of companies reporting results responded without much enthusiasm, even for big upside surprises, a sign investors already assumed good numbers were on the way.

And while this looks like benign ebb-and-flow at the index level, investor sentiment and positioning has not reset much from fairly aggressive postures. This is evident in hedge-fund leverage, rampant speculation in upside call options, individual-investor attitudes and general commentary implying most everyone is looking to catch a post-election rally no matter the outcome.

At the end of last week, Citi strategist Tobias Levkovich wrote, “The backdrop for the equity market is mixed, muddled and inconclusive.” Investors leaning bullish, valuations fairly stout, indexes hard-pressed to rise easily without dominant growth stocks working and the Street attitudes toward the election swinging from intense anxiety in September to confidence that any outcome is market-friendly now.

Last week’s lethargic action could well be the market’s chewing through these issues and creating a chance for both bulls and bears to second-guess their views. For what it’s worth, one of the strongest seasonal stretches of the calendar starts early this coming week, just as industrial and Big Tech earnings bombard the market.

Through it all should come a few more hints of whether the bond market’s upbeat-seeming message is worth heeding.

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China to reveal its five-year (FYP) growth strategy in Xi Jinping era

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One technique for staying upbeat during the pandemic

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As the coronavirus pandemic rages on, it can be difficult to remain upbeat.

Aside from the health implications and associated financial stressors, uncertainty over the outcome of the virus has eroded one of the key contributors to our overall happiness, making optimism hard to obtain.

“A sense of control is very important for happiness,” Tali Sharot, a cognitive neuroscientist and author of “The Optimism Bias,” told CNBC Make It.

Indeed, in her research during the height of lockdowns, Sharot and her peers at University College London found that control was the number one contributor to people’s overall level of happiness: Those who felt they had a sense of agency in their day-to-day lives were far happier than those who did not.

In the months since then, people have adapted to the pandemic and the average person’s happiness level has returned to a “baseline,” said Sharot, describing happiness like a treadmill.

Tali Sharot, cognitive neuroscientist at University College London and author of “The Optimism Bias”

Tali Sharot

“You can go up and down, but people do converge to a certain baseline of happiness,” she said. “That’s true when things are very, very difficult; they eventually find their way back to that baseline. But also when things are good; after a while, they adapt to these good things and go back to the baseline.”

However, that doesn’t mean we shouldn’t find new ways to boost our happiness levels, said Sharot.

One of the best ways of doing that is to start making plans, or what she calls “anticipatory events.” Such tactics can not only help us regain feelings of excitement but also that sense of control, she said.

Anticipation makes us happy in and of itself.

Tali Sharot

cognitive neuroscientist, University College London

“Anticipation makes us happy in and of itself,” said Sharot. Indeed, in a 2010 Dutch study of close to 1,000 holidaymakers, researchers found that the act of planning a holiday contributes a greater boost to respondents’ happiness levels than the aftermath of the trip itself.

Of course, planning for the future can be easier said than done right now. With so many unknowns ahead and further potential lockdowns looming, it can be difficult to arrange anything with certainty.

However, such plans don’t need to be huge or immovable. They could range from vacation for next summer to smaller highlights like dinner with friends, watching a movie or going on a hike.

“It’s important to still get into the habit of making those plans, putting them in the diary, and having things that we can look forward to,” she said.

Don’t miss: Why optimism could be unhelpful in a pandemic, according to behavioral psychologists

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