Your Week In Brief
Having left New York several months back, absconding to an undisclosed location in the woods, I have not seen the need for a Covid-19 test. No degree of accuracy would motivate me to go to a place populated with people who may be infected to tell me what I already know. Frankly, so long as I can work, I have no plans to leave the house until a proven vaccine is delivered to me in pre-washed plastic wrap inside a bleached box by Amazon Prime—along with more much-needed toilet paper.
My girlfriend, however, is a different story. Stuck in New York where testing has been nearly impossible for non-healthcare workers until recently, she was able to finally procure a testing appointment, a prerequisite for joining me and my family, as there are elderly grandparents to worry about. So that is good news. Now the only question after all this is: Do these things even work?
"…she tested very good for a long period of time…and then all of the sudden today she tested positive."—Donald J. Trump
The "she" to whom Trump referred is Katie Miller, a spokesperson for Vice President Mike Pence. Her positive diagnosis puts the potential threat of the infection at the center of the president's inner circle. As his top spokesperson, Miller travels with Pence frequently. And she is married to Stephen Miller, who writes the majority of Trump's speeches (yikes), and with whom Trump spends a lot of time.
Now, at first glance, this quote seems just another manifestation of the president's vast ignorance coupled with his deepening mental illness. What is the big mystery here? She tested negative one day and then positive another because one day she didn't have the virus and then one day she did.
Simple, right? Not so much, and what he was driving at in his incoherent babble was what he has since clarified in other statements: These tests are not to be trusted.
What Am I, a Doctor?
Back on April 3, I recommended Abbott Laboratories (NYSE: ABT) at $79 per share after the company made headlines when it announced its five-minute test to treat the coronavirus. The stock is now trading at around $91 per share. If you bought the stock then, you're welcome. If you decide to trust that test with your life and someone else's, well, what am I, a doctor?
The Trump administration apparently only uses the Abbott rapid five-minute test (Trump doesn't have the time to sit for longer for results; he has reporters waiting patiently to be berated, after all). But now, as it turns out, that test may not be as reliable as hoped.
Hailed in April by the president as a "whole new ballgame," the rapid Abbott test seems to only be good for speeding up shoddy results. In a study at New York University, the Abbott ID NOW test missed one-third of infections using the more reliable deeper-up-the-nose compared swap than did a rival diagnostic device by Cepheid, and more than 48% of cases compared to Cepheid when the less invasive but less reliable dry nasal swabs were used.
Not yet peer-reviewed, the study raises questions about the efficacy of the Abbott rapid test. There are 18,000 testing units in the United States, and more than 1.8 million testing kits shipped to doctors, clinics, and other testing facilities.
Abbott questions the study's accuracy. For now, you should do with the stock what you do with your breath: Hold it and hope the findings are wrong so yet another setback on the glacial ramp-up to widespread accurate testing can be averted.
A Negative Times a Negative Equals (Hopefully) a Negative
Backing up, rapid tests more difficult to perfect, so if you are thinking of getting a test, do not let Abbott's bit of bad news convince you that testing for Covid-19 isn't doable—we don't want to throw out the baby with the bat water.
There are basically two types of tests: There are tests to determine if you have the virus now, and tests to determine if you have had the virus in the past. Both tests are essential for us to know:
1) How many people have it?
2) How many will get it?
3) How many will probably die from it?
4) How many people do we need to quarantine so it does not spread?
The accuracy of Covid-19 tests (and viral tests generally) is measured in two ways: sensitivity and specificity. A sensitive test is a test that correctly identifies the disease; a specific test is one that correctly identifies someone without the disease—true positives and true negatives, respectively.
In a lab setting, RT-PCR tests (tests that determine if you currently are infected), are, even for Covid-19, extremely reliable. According to Popular Science, researchers at the Foundation for Innovative New Diagnostics, a nonprofit research center in Geneva, Switzerland, tested five different Covid-19 RT-PCR tests. All five achieved 100% sensitivity on positive samples, and at least 96% specificity on negative samples.
But in the real world, testing isn't so simple. Sample collection is the main culprit of false negatives; sometimes, the sample tested does not contain enough of the virus to be identified. Right now, the clinical sensitivity of RT-PCR tests ranges from 66% to 80%. That means nearly one in three infected people tested will receive false-negative results. Again, the main culprits here are human error and bad samples. In a perfect setting, these tests are perfect or, to use a Trumpian testing term, "beautiful."
Antibody tests, known as serological tests, identify antibodies in your blood you have created to fight the virus, that is, your immune system's response, not the virus itself. Less invasive and faster results, just a prick of the finger will do. Unlike the RT-PCR tests, specificity (the ability to register a true negative) trumps sensitivity. Rendering false positives are an additional factor here.
There is some good news on this front. The University of California compared 10 serological tests. The authors reported that most of the kits were 95% to 99% specific, meaning there would be less than a 5% false-positive rate. While that sounds good, if a million people get the test, that is 5 million people who have it who were told they didn't—let's hope my girlfriend isn't one of them.
Xi Whiz, What a Testy President
An exchange made headlines this week when Trump stormed out of a press conference after a typically hostile exchange with a reporter. Weijia Jiang, a White House correspondent for CBS News, asked the president why he sees coronavirus testing as a global competition with more than 80,000 Americans dead and more dying.
"Maybe that's a question you should ask China," Trump told Jiang, who was born in China and raised in the United States. Charming, I know.
Now, naturally, the focus was on Trump being a racist, which he likely is, but I was stunned that additional focus was not placed on the silly nature of the question itself.
First, while we should help lead a global effort and bring countries together to fight the virus (which is total anathema to the Trump way), there is nothing wrong in principle with comparing our country's performance to another country's to shed light on how well or, in this case, how poorly, we are faring.
It is true that nationalism is a growing international problem during this pandemic. In a brazenly aggressive marketing campaign, China's leader Xi Jinping can be found on huge billboards in countries like Serbia where China has donated medical equipment and protective gear with the words: "Thank you, Brother Xi" under his profile. While Beijing's efforts are to be commended, the Berlin Airlift it is not.
Second, the exchange showed not only (once again) what a schmuck the president is, but how lazy our reporters are (maybe he already kicked out the all the good ones). Instead of challenging Trump on the etiquette of jingoistic jousting during a time when people are dying and international cooperation is critical, she should have challenged him on his deeply misleading assertion, one which that he has made repeatedly— that we are testing more than any other country.
Initially, Trump said we were testing more than any other country, not taking into consideration that we are over 320 million people so that, in absolute terms, of course we are; it's not so impressive to test more than South Korea, a nation of only 53 million.
Then, as we ramped up testing, Trump said we are testing (mind you, not have tested) more than even revered Covid-19 responder South Korea both in absolute terms and also per capita as of very recently. Well, that may be true, but you want to know why? Um, it is because they do not need to test as many people because they already have!
This is like saying Australia saves more kangaroo babies per capita than Spain, even though you'd be hard-pressed to find a marsupial in Madrid.
Covid-19 microcap stocks are the new cryptocurrency/marijuana hybrid stocks, the kind penny stock peddlers use to tantalize risk-taking traders. That is not to say there aren't big small-cap winners like Moderna, Inc. (Nasdaq: MRNA). I put out a "buy" on the stock back in late February when it was trading at $25.90 per share. Since then it has increased 158% and just announced a fast-track designation from the FDA for its Covid-19 vaccinating candidate. And there is now testing hopeful, Applied DNA Sciences Inc. (Nasdaq: APDN) which skyrocketed nearly 54% to $13.67 per share by midday Thursday on news of the FDA approval for emergency use authorization for its Covid-19 assay kit.
But for every winner, there are more losers, and among those losers, many frauds. Indeed, the Covid-19-focused sub-sector is comprised of many a microcap stock making big claims that have raised eyebrows at the Securities and Exchange Commission. In April, the SEC suspended 23 companies for making illegal false claims in efforts to defraud investors and make a buck.
Shares For, But Not On, Sale
To play Moderna, or any stock, is becoming increasingly difficult. With falling rates of employment and a rising body count, it would make sense that the stock market is cheaper than ever. But that's not the case. The U.S. stock market stands 4% higher today compared to a year ago, despite the monetary and medical mess we find ourselves in. Wall Street is up; Main Street is down. What else is new, right?
More than 80,000 Americans have died and over 33 million have lost jobs, and yet the S&P 500 has spiked 31% since the March 23 lows. This is why it is time to look overseas for broad-based bargains or wait until the market falls 18% as predicted by Goldman Sachs this week; the investment bank expects the S&P 500 will plunge back to 2,400 over the next three months.
The aforementioned statistic punctuates just how expensive the U.S. market is for investors. Right now, the S&P 500 trades at 22.5 times projected earnings, according to Refinitiv. So, are stocks overvalued? Maybe. Are stocks too expensive? Without a doubt.
The stock market has become increasingly the playground of the rich. As the old adage goes, "The rich get richer, and the poor just want to get a haircut without dying of respiratory failure." Of course, rich people with substantial equities investments can die of the virus, too. After all, only a few weeks ago British Prime Minister Boris Johnson was in the ICU on a ventilator. And he has access to maybe the best healthcare in the world.
Not to mention, have you seen his hair?
(The opinions expressed in this article do not reflect the position of CapitalWatch or its journalists. The analyst has no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only and does not constitute financial, legal, or investment advice.)