Declaring Victory as Cases Continue to Rise
Author: Greg Valliere
May 6, 2020
WE USUALLY SEE THE GLASS AS HALF FULL, but declaring victory — disbanding the conovavirus task force within weeks — strikes us as bizarre, because new infections and fatalities continue to rise. At best, this pandemic is half over.
ELIMINATE DATA FROM NEW YORK, and the rise of new infections is striking — especially in rural America, where enormous clusters persist near prisons and meat packing companies. Nationwide, 100,000 deaths are virtually certain by July, with new cases persisting well into winter.
SO WHAT GIVES? Why the optimism among policymakers and the markets?
It can’t be based on polls: Nearly two-thirds of Americans worry they will get the disease, and overwhelming majorities say they’re not willing to go to restaurants, movie theaters, stores, etc.
It can’t be based on the near-term economy: Friday’s jobs report could approach 20% unemployment, and this quarter’s grim GDP could be followed by a halting recovery, not a V-shaped bounce-back.
It can’t be Congress: Lawmakers showed further signs yesterday of heading into a long gridlock over provisions in the next aid package. There’s virtually no support among Republicans for President Trump’s demand to cut the payroll tax.
It can’t be social distancing: Streets and parks and beaches were packed this past weekend, and some stores defied governors and re-opened. Perhaps 25% of people (including the president) refuse to wear masks.
SO WHY IS THERE SUCH OPTIMISM, especially in the markets? Our take is threefold:
First, there’s significant progress toward developing readily available vaccines.
Scientists at Pfizer apparently have a drug that could become available this fall, fabulous news if accurate. Other labs, from Oxford to Gilead, are making astonishing progress.
Second, markets look ahead, and what many investors see by late this year is an economy clearly on the mend, with enormous monetary and fiscal stimulus still in place. Trump is correct — the economy should be surging a year from now.
Third, this is a traditionally optimistic country, filled with a can-do attitude and a fierce independence that rejects being controlled by authority. We get that, and it’s great to see America re-opening.
BUT WHEN WE HEAR THE PRESIDENT virtually declare victory while abolishing the task force, we have to state the obvious — the virus has not been defeated, not even close.
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