The Wall Street Journal - 04.03.2020

THE WALL STREET JOURNAL. **** Wednesday, March 4, 2020 |A

WORLD NEWS

ROME—The Vatican on

Tuesday sought to end specu-

lation that Pope Francis might

have contracted the coronavi-

rus, following nearly a week of

concern about the pope’s

health amid the epidemic’s

spread in Italy.

"The Holy Father’s cold di-

agnosed in recent days is run-

ning its course, without symp-

toms attributable to other

pathologies,” the Vatican

spokesman, Matteo Bruni, said

Tuesday evening.

Mr. Bruni was responding

to an Italian media report that

the pope had been tested last

week for the coronavirus, with

a negative result. The spokes-

man didn’t say whether in fact

the pope had been tested for

the virus.

Pope Francis was visibly ill

last Wednesday, when he spoke

with a hoarse voice and blew

his nose at Ash Wednesday

Mass. For the following three

days, he observed a restricted

work schedule, canceling

speeches to large groups but

continuing to hold private

meetings in his residence, on

account of what the Vatican

called a “slight indisposition.” It

was his longest stretch off work

for health reasons since his

election nearly seven years ago.

On Sunday, the pope said he

had a cold and would be skip-

ping a weeklong retreat for

Vatican officials scheduled to

start that evening. “I will be

following the meditations

from here,” he said.

Mr. Bruni said afterward

that “there is no evidence to

diagnose the pope with any-

thing other than the cold he

mentioned this morning.”

The pope’s schedule for this

week had been cleared long

ago because of the planned re-

treat, so he hasn’t had to can-

cel any other appointments.

BYFRANCISX.ROCCA

Vatican

Says Pope

Only Has

A Cold

100,000 people so far. Drive-

through testing sites have

sped up the process. Visitors

fill out a questionnaire about

their travel history and symp-

toms, then get tested while

sitting inside their car.

The government is paying

for people who fit certain crite-

ria, but is also offering the test

for a fee, equivalent to about

$130, for anyone who wants it.

If a person tests positive, they

get their money back.

For the most part, countries

are leaning on government-run

laboratories to conduct the

tests. The labs receive swabs

from health-care workers by

mail and run them through

machines that can identify a

DNA sequence uniquely found

in the new coronavirus. It can

take two or three days for re-

sults to come back.

But in places where case

numbers are rising fast, gov-

ernments are increasingly

turning to private laboratories

to step in to help. The U.S. re-

cently authorized hundreds of

academic hospital labs to offer

coronavirus testing, to relieve

the strain on the CDC. The na-

tionwide testing effort has

been hampered by some faulty

test kit components, which the

Health and Human Services

Department is investigating.

Japan, with more than 200

confirmed cases, initially lim-

ited testing for the Covid-19 vi-

rus to high-risk groups includ-

ing people who returned from

Wuhan, China, in Hubei prov-

ince, and elderly people with

symptoms. After receiving criti-

cism that it was too hard for

people to get tested, the gov-

ernment called on private facil-

ities to help conduct testing.

Initially the testing was carried

out solely at the National Insti-

tute of Infectious Diseases and

other public facilities.

Officials said the nation

now has capacity for some

4,000 tests a day, and regular

doctors can order one if they

think it is needed.

—Noemie Bisserbe in Paris

contributed to this article.

Passengers prepare to board an Underground train in London. The U.K. has set up a system for early detection of the virus’s spread.

ANDY RAIN/EPA/SHUTTERSTOCK

“A rate cut will not reduce

the rate of infection. It won’t

fix a broken supply chain. We

get that,” Mr. Powell said. “But

we do believe that our action

will provide a meaningful

boost to the economy.”

When the Fed cut rates three

times last year, officials charac-

terized those moves as an in-

surance policy against the risk

of a global slowdown amplified

by the U.S.-China trade war. Be-

cause the source of the latest

shock isn’t primarily economic,

it could be more difficult for in-

terest-rate policy to buoy con-

sumer spending and confidence.

“Finance didn’t start this

thing. It’s not the Asian debt

crisis. It’s not a currency cri-

sis, a mortgage crisis. It’s not

from Fed policy being too

tight,” said Steven Blitz, chief

U.S. economist at research

firm TS Lombard.

Mr. Blitz said it was rea-

sonable to expect a short but

swift downturn that would re-

verse by the summer, once the

impact of the virus fades. But

he added it was difficult to

tell if other fissures in the

economy might now surface

after an 11-year rally in the

stock market accompanied by

a corporate-lending boom, all

underwritten by lower inter-

est rates.

“The risk is that whenever

any recession takes hold, a dif-

ferent reality can emerge from

what caused it once unac-

counted-for excesses underly-

ing the U.S. economy are laid

bare,” he said.

A separate risk is that the

Fed’s response won’t be effec-

tive without a robust response

by public-health authorities

that maintains confidence in

the nation’s ability to contain or

mitigate the spread of illness.

Even then, steps to limit out-

breaks could lead to changes in

social behavior that temporar-

ily depresses spending and cur-

tails hiring. That could lead

weak businesses to fail and dis-

tressed households to fall be-

hind on monthly payments.

“Right now the public

health response is the most

important. How effective are

they treating people?” said

Claudia Sahm, a former Fed

economist who is now eco-

nomic-policy director at the

Washington Center for Equita-

ble Growth, a liberal think

tank. “The Fed is not going to

be the lead policy lever.”

President Trump in recent

days called on the Fed to cut

rates and said he was disap-

pointed the central bank didn’t

do more on Tuesday, repeating

his longstanding preference

for U.S. borrowing costs to be

lower than other advanced

economies, including those

with negative rates.

Mr. English said while he

was confident the Fed wasn’t

being swayed by political pres-

sure, there is a risk that the

central bank’s credibility suf-

fers because not everyone will

see it that way.

After Tuesday’s cut, inves-

tors expected the Fed would

lower rates again in the com-

ing weeks, including at the

March meeting.

Fed officials repeatedly said

last year it would be important

to act aggressively at the first

sign of a downturn in spending

or hiring because they have

less room to counteract a re-

cession by cutting rates.

Fed officials are likely to

look for evidence that busi-

nesses not directly affected by

the virus are seeing a weaken-

ing of demand as they plot

their next move. “Are house-

holds and businesses hunker-

ing down to see how this

goes? If they see that, the Fed

would provide more accommo-

dation,” Mr. English said.

here and abroad for some
time,” Fed Chairman Jerome
Powell said at a news confer-
ence Tuesday.
The Fed’s response shows
how policy makers are bracing
for greater economic distress
from a contagious, flulike vi-
rus than seemed possible just
a week ago.
In China, where nearly
3,000 people have died since
the initial outbreak there,
steps to contain its spread
prompted steep declines in
production. The coronavirus
has infected more than 10,
people outside China.
The epidemic roiled global
financial markets last week
amid signs containment ef-
forts were jeopardized by new
clusters in Italy, Iran and
South Korea. Stocks posted
their largest weekly losses
since the 2008 financial crisis.
Commodity prices fell, signal-
ing a hit to global demand,
and long-term U.S. govern-
ment-bond yields reached re-
cord lows, reflecting lower
growth expectations and in-
vestors seeking havens.
“The concern was that by
the time they got to the meet-
ing, things could have spiraled
far enough that they would
have a much bigger problem,”
said William English, a former
senior Fed economist who now
teaches at Yale University, re-
ferring to the Fed’s scheduled
March 17-18 policy meeting.
Positive test results for in-
fections in the U.S. last weekend
further raised the prospect of
changes to behaviors that could
lead to a drop in consumer
spending, especially travel,
tourism and entertainment.
Even if any shock is tempo-
rary, there are big unknowns
over how long it will last and
how deep output might decline.
While an interest-rate cut won’t
address the cause of the down-
turn, Mr. Powell said he hoped
it could soften damage to
spending and confidence, stem
financial-market disruptions
and speed a recovery once any
epidemic is under control.

ContinuedfromPageOne

Fed Makes

Emergency

Rate Cut

As the new coronavirus
spreads around the world,
governments are grappling
with a difficult question: Who
should be tested?
For now, many countries in
Europe are limiting tests to
people who have symptoms
and have recently traveled to a
virus hot spot, such as China
or northern Italy. Those who
have been in contact with peo-
ple who have tested positive
also qualify for testing.
The U.S. testing regime, run
nationally by the Centers for
Disease Control and Preven-
tion, is doing largely the same,
though the agency has come
under fire in recent days for
its slow provision of test kits.
These methods only go so
far. The virus’s often-mild
symptoms can mask its trans-
mission between people with
no obvious connection to a
known case or affected region.
In theory, mass testing of
people with symptoms—similar
in many ways to a common flu
or cold—would help identify
these cases more quickly. In
France, where the number of
confirmed cases stands at 204,
authorities have widened test-
ing in recent days. Now, people
showing signs of acute respira-
tory distress are tested, even if
there is no reason to believe
they may have been exposed to
the virus, said Vincent Enouf,
deputy head of the National
Reference Center for respira-
tory infection viruses at the
Paris-based Pasteur Institute.
Such mass testing would
challenge many health sys-
tems, especially during the
winter’s flu season. It could
also exacerbate the spread if
the testing is done at centrally
located facilities, such as doc-
tors’ offices or hospitals.

“What would you gain by

that?” said David Heymann, a

professor at the London School

of Hygiene and Tropical Medi-

cine, speaking of blanket test-

ing. He said it would only make

sense to roll out wider testing

in an area where the coronavi-

rus is already spreading.

Some countries are seeking

a middle ground. In the U.K.,

the government last week ex-

panded testing to include any-

one suffering from severe re-

spiratory infections at a

handful of hospitals and

around 100 primary-care clin-

ics in England. It hopes that

doing so will give it an early

warning signal of how far the

virus is spreading. As of Mon-

day morning, the U.K. had

tested 13,911 people, of which

51 were positive.

Britain’s National Health

Service has also introduced an

online questionnaire for any-

one concerned about whether

to get tested, directing them

to special testing centers if

they meet the criteria. Prime

Minister Boris Johnson, an-

nouncing fresh measures to

help contain the virus on

Tuesday, emphasized sanitiza-

tion over testing, advising

washing hands for “the length

of time it takes to sing ‘Happy

Birthday’ twice.”

Some countries have focused

more aggressive testing in areas

where the coronavirus is already

known to be spreading. An out-

break in a church in Daegu, a

city of around 2.4 million in the

southern part of South Korea,

triggered an effort to test all

10,000 members there.

South Korea set up more

than 500 coronavirus testing

sites, processing more than

BYDENISEROLAND
ANDDASLYOON

ManyinEuropelimit

screening;wherethe

illnessisspreadingmore

rapidly,governmentsare

turningtoprivatelabs

Nations Diverge on Virus Testing

500

The approximate number of

testing sites in South Korea

Dow Jones Industrial Average

25500

26000

26500

27000

10 a.m. noon 2 p.m. 4

RATE CUT

ANNOUNCED

Source: Federal Reserve (rate), FactSet (market performance)

Federal Reserve rate target

3

0

1

2

%

2010 ’15 ’

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