Second derivatives of COVID-19

With COVID-19 being a reality now for over 6 months, I wanted to share some “second derivatives” I’ve noticed.

By “second derivative” I don’t mean the actual mathematical definition (which measures concavity/convexity of a function). Instead, I mean some of the indirect changes in our lives which have been triggered by direct consequences of COVID-19.

The spirit of this article is not to go into an in-depth discussion of each of these. Instead, its intent is to highlight some of the endless ramifications of COVID-19 and their impact in today’s world.

1. Sleep patterns are affected (for the worse)

First derivative that triggers this change? COVID-19 generates stress and anxiety while weakening established routines and eroding societal “behavior boundaries”.

COVID-19 will likely take the silent but pervasive “distorted sleep” epidemic that was already present in the lives of many and catapult it to new heights. Across the world, people have slept worse during H1 2020. Take for example the UK, where all age groups (except 18-24) are sleeping less.

Or see the unbelievable spike in searches for “insomnio” (insomnia in Spanish).

Source: Google Trends – searches for “insomnio” (past 5 years; worldwide)

What’s curious about this phenomenon is that the issue is not driven that much by lack of time to sleep. Teleworking and staying at home have resulted in more hours being available for resting. But the clear stress that COVID-19 poses, be it regarding health, finances, emotions or all the above, takes a toll. And when this is coupled with the less obvious but more dangerous phenomenon of “routine erosion”, this results in more people than ever having sleep troubles. Which leads in turn to dangerous behaviors – see Poland for an example where sleep-inducing medications are on the rise.

The corollary? Sleep is a key driver of physical and mental health. The “sleep industry”, which is already valued above $500B+ in the US, will likely skyrocket into the trillions. Yet despite its relevance, there are few reknown players actively working in this space, be it companies, medical institutions or policy makers.

2. Despite the lockdown, people are exercising the same or even more than before

First derivative that triggers this change? Less availability of recreational activities + reduction in commute time.

Despite the fact that gyms and training facilities are closed, and that sport practice is greatly hampered, most people say they are exercising the same or even more than pre COVID-19.

Source: CN: Kantar Health – Feb 2020; US: YouGov/The Economist – April 2020; UK: Populus – April 2020

There are couple of things going on here. Firstly, this is “reported” (Ie. What people say they do). So it might be wishful thinking. But some datapoints like the surge in sales of fitness equipment or the spike in health & fitness app downloads make this believable.

Past the first impact of lockdown, fitness became the N1 category in sales on MercadoLibre
(Source: Mercado Libre Feb/Mar 2020)

And although initially counterintuitive, there’s some credence to this. People are bored, with more time on their hands given reduced commuting and less recreational activities available. Additionally, there’s the fact that in the midst of the pandemic, health is top of mind for many, and hence a greater emphasis is put on exercising.

It’s interesting to imagine what this might mean for the future. In a world where social distancing has become a notion that will likely survive COVID-19, and where gyms in particular are seen as “no-go” places, it’s likely that we’ll be seeing exercise become even more focused on individualized/small groups, and with a greater outdoor or in-home focus. In particular, the next few years will show us greater measurement and quantification of the impact of exercise in our bodies, driven by health regimes like Livongo, Hinge Health, or sensor companies like Oura, Apple, Fitbit and Dexcom.

The corollary? Exercise will see an accelerated drive to being not just about sport or social recreation. Instead, it will continue to become intertwined with the health and wellness secular trend. Expect an even greater surge in individualized fitness routines as the boundaries between health monitoring and exercise continue to be blurred.

3. People are watching way more videogame streaming than ever before

First derivative that triggers this change? People play more videogames and watch more content as they stay at home.

This trend is hardly surprising. Videogame streaming has been a thing for a while. Twitch, YT, FB, Nimo TV are some of the players vying for this rapidly growing market.

What is staggering though, is the acceleration rate it has seen in Q2 2020. ~40% incremental hours vs. Q1 2020 on YT Gaming Live, marking the highest QoQ growth in the past 3 years. More than double the hours of video game streaming vs. Q1 2019.

The trend is global and exceeds the big players. Take the example of “Booyah!”, Sea Ltd.’s recent launch into the space. (In case you don’t know what Sea Ltd. is – they’re the creators of Free Fire. And if you don’t know what Free Fire is…it’s the most downloaded game worldwide in 2019).

The “battle royale“ genre has proven ripe for deep player engagement, leading to a multitude of influencers/gamers establishing their brands and imprint across the web. Sea Ltd. launched in January 2020 its “Booyah!” channel. Despite the fierce competition previously mentioned, Booyah! has already achieved in 6 months circa 10 million MAUs. And while its concurrent users are still an order of magnitude below Twitch’s (which during COVID-19 has reached during 2400K levels!), it is proof that it is still early days for the streaming & sharing of in-game content. (Disclosure: Long $SE)

Source: Tech in Asia – Jul 2020

The corollary? Staying at home means a greater demand for video content + greater demand for videogames. Expect this explosion of videogame streamers to have lasting impact in the shape of content creation as a whole, particularly as these games become social networks in their own right.

4. Marked reduction in premature babies being born in some countries

First derivative that triggers this change? Less mobility given COVID-19?

This one is really surprising, and more rigorous research is needed before jumping to conclusions. But anecdotal evidence has popped up in many places around the world pointing to a reduction in premature births. And this has actually been followed by some research in both Ireland and Denmark with some surprising datapoints.

(Source: Medrxiv: Changes in premature births during the danish lockdown – May 2020; Reduction in preterm births during the COVID-19 lockdown in Ireland – June 2020)

What can the causes behind this be? Hard to tell. Surely investigating the association between reduced mobility and premature birth reduction is required. But it’s early to tell, and as with many things COVID-19, more research is needed.

The corollary? COVID-19 will undoubtedly have an impact in multiple aspects of our health. And while many of these impacts will be negative, there will be silver linings and positive unforeseen developments as well.

5. Gold, silver and crypto see massive year to day gains

First derivative that triggers this change? Central banks and governments across the world ramp up monetary stimuli to unseen historical levels.

The governmental response to COVID-19 when it comes to economic stimuli warrants a whole discussion in itself. I’m certainly not making a judgement on it here (spoiler alert: I personally think it was inevitable). The fact of the matter is that governments across the world have engaged in what can be called as “money printing”. This definition is simplistic and unfair, but ultimately, kind of right.

We’re still in the initial innings of this game, but one thing is clear. Both the so called “safe haven” (I don’t like this definition) assets like gold or silver, or more speculative assets such as crypto, have seen massive gains year to date. Some reacted earlier, some later. And some are definitely pricing in other things as well (eg. ETH and the whole DeFi movement). But all of these assets have, to a greater or lesser extent, fixed or limited supplies and are outside governmental control.

Source: Koyfin/Yahoo

With Gold and Silver seeing 5yr+ highs (and an even longer time frame for Gold), and BTC/ETH on the verge of breaking 2year marks (the only prior reference above these levels are 2017 mania values), the underlying interpretation is that part of the market is pricing in future inflation. This might be either generalized inflation (hard to imagine in the short term in a world where GDPs have been massively hit) or selective inflation (a much more interesting discussion – but probably worth a post in itself on the second derivative impacts of QE!).

The corollary? One thing is clear. Central banks have opened the floodgates when it comes to money printing to a degree never seen before. No single person has proven experience in shutting them back. We are in uncharted territory.

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We are in uncharted territory. Caution is required, yet opportunity will be abundant for those who can see it and execute accordingly.

Stay safe.

Featured image copyright of Michael Gaida.