Reopening Too Soon Could Cause Mega-Crash And Depression

Summary

• Coronavirus/COVID-19 has caused an unprecedented economic shock to the global economy that has been met by unprecedented policy response.
• New infections continue to hit, and the U.S. set a high for deaths in a day this past weekend.
• There's mounting pressure to reopen the economy quickly, and several southern states have started the process, ignoring health guidelines.
• The infection and death curves, which had been starting to bend down around Easter, have suddenly started to threaten to bend back upward.
• Reopening too quickly could undo all the progress made and create a chain of events leading to deeper stock market crash, a depression and more death.
• This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Get started today »

I don't play an epidemiologist or biologist on the Internet. But I do understand math. And this weekend, the United States had the deadliest day yet from Coronavirus/COVID-19. We have not "bent the curve." And that's very dangerous as 30 states, some faster than others, begin the reopening process.

I believe the evidence shows very convincingly that if we reopen too much, too quickly, we will see an extension of the first wave of COVID-19 and a second wave that comes quicker and more fierce than the CDC already predicts will happen in autumn.

If those are the scenarios that play out, then the stock market will react first to more anticipated economic carnage. A longer, more severe first wave of COVID-19, followed by a severe second wave, would necessitate an even stricter shutdown that likely lasts about three months.

In that scenario, we could see a mega-crash in the stock market that not only sets new lows, but heads to a levels not seen since 2012. What's worse is that could thrust ourselves into a depression that does, in fact, rival the 1930s and is marked by a period of stagflation.

If you are a risk-averse investor and do not want to lose a year or two on your investing calendar, in addition to some permanent losses from companies that do go to zero, then I urge you, sell down your equity holdings today and reassess your planned asset allocation strategy for the 2020s.

Unbending The Coronavirus Curve

We have learned that coronavirus is very contagious. Yet, when I went to pick up my groceries curbside at a Kroger food store this weekend, I counted over a 100 people walking into and out of the store, with fewer than one-fifth wearing masks. I drove by another grocery store and observed the same thing. I also saw a bar parking lot full (Wisconsin bars are still not supposed to be open) with people walking in and out, none with masks. I know of at least four speakeasies in just my corner of Greater Milwaukee.

It's not just a few places though. You know it. You have seen pictures and heard about people hanging out in close quarters without masks. There's a very large segment of society that's not helping to contain coronavirus. These people are somehow attached to the idea that COVID-19 is no more than a slightly severe flu, that it won't hurt them or those they come into contact with.

Let me try remedy anybody having that ignorance. The following chart is from MIT using machine learning. It's a predictive model based on our behaviors. Remember, these are same people who beat Vegas for years before "the house" figured out it wasn't just their own cleaners pulling money off the tables.

As of May 4, over 70,000 people have been recorded as having died from COVID-19. The best-case scenario is 100,000 deaths by August 1 if we turn the curve over now - which is not going to happen.

Those recorded deaths are people who were seen by a doctor. According to CDC numbers, of expected deaths for the time of year versus actual deaths, the actual impact of this coronavirus is more than 100,000 additional deaths so far.

That means that either there are more COVID-19 deaths than recorded, something else leading to more deaths, or a combination of the two. The Bayesian equation we are looking for answers to is how many of those additional deaths are directly tied to COVID-19 and how many are indirect due to people not getting treatment for other maladies (which likely happened in New York City, as well as in nursing homes).

Snatching Defeat From The Jaws Of Victory

New York City, the epicenter of the U.S. outbreak, saw success in bringing the death rate down with a strict lockdown.

These are the states moving fastest toward being more open, some already opening certain businesses in a limited capacity.

As a member of the White House Coronavirus task force, Dr. Anthony Fauci has said that: “If you follow the guidelines, there’s a continuity that’s safe, that’s prudent and that’s careful... The concern that I have is that there are some states... who are looking at that and kind of leapfrogging over the first checkpoint.”

And that leapfrogging is where a great risk lies. Rather than plateauing around 100,000 deaths in August, which is the best-case MIT scenario, deaths could jump toward the upper bound near 300,000 if the infection rate accelerates.

Does anybody really think that the economy would do well under a scenario where infection and death rates pick up? If the infection and death rates accelerate, then the bailouts and lockdowns so far become wasted if we have to start over again in a month or two.

A Matter Of Confidence

The stock market and economy both work on confidence. If the COVID-19 infection and death rates are allowed to accelerate again, the sock market will pick up on that almost immediately. I believe the selling late last week was a taste of more than a technical breather in the rally. I believe it was smarter players taking profits knowing that we are very likely to massively mess this up.

With money tightening and a disease stalking, reopening an economy that people are afraid to go out into will not cause the "V-shaped" recovery people hope for.

Without dramatically cutting the infection and death rates, what are the odds that the economy picks up? People can say they want to get back to work, but how many are going to head out and spend? The economy is directly linked to beating back COVID-19.

The question that governors and the president need to ask right now is: Is reopening in the next few weeks the prudent economic action? I would suggest it's not. I believe the southern states already are putting their regional economies at greater risk than staying shut another month would do.

If infections and deaths surge, they are essentially resetting the clock on shutdowns. And because of the amount of interstate travel, they are risking stoking the infection and death flames in other states, which is remarkably unethical.

Household Finances, Wealth Inequality and COVID-19

I understand why people want the economy to reopen. They need their paychecks. Even in by far the richest large nation on earth, three-quarters of Americans live paycheck to paycheck.

So, it would seem that given the protests occurring around America, at least some of that angst is rooted in financial stress. I think we can all agree that is true.

At this point, to keep American mostly at home and doing what it can to beat COVID-19 down to buy time for better antivirals and vaccines, there would clearly need to be another relief bill. That's what we should be doing rather than reopening the economy.

The Treasury and Federal Reserve just pumped upwards of $4 trillion to bail out the bond market. Another $670 billion has been earmarked to keep businesses from firing people through the Paycheck Protection Program. The $1,200 checks that went out totaled about $200 billion.

At this point, given the considerable financial efforts already made, it makes no sense to allow COVID-19 to regain its rate of infection and undermine those efforts. The president and Congress should expand PPP by a few hundred billion more, commit to at least three months of $1,200 checks and pass a law requiring banks to move up to six months of mortgage payments to the back end of loans, while allocating some relief money to paying the banks some missed interest in the meantime. That might add up to near another trillion dollars, but that cost would be far less than a brand new shutdown.

In a recent piece, "Use The Biggest Sucker's Rally In History To Kill Your Zombies," I projected that the economy, presuming we would keep our collective boot on the neck of the disease until the curves were bent, would lose around $3 trillion. We are on that pace, and large firms, as well as Jeffrey Gundlach, came around to my thinking at the time.

If we allow the disease spread to accelerate, I believe the economy would lose closer to $5-6 trillion this year. This would occur because in a second shutdown, versus extending the first for another month or two, we would be starting over and looking at another three- to four-month lockdown to relieve stress on hospitals and bend the curve for real next time.

How Bad Is The Economy?

There's an idea floated that pent-up demand will create a rocket-like take-off for the economy. That's not just unlikely, it's impossible. Are you going to run out and make up for all missed meals out, trips taken and movies seen at a theater? Ask AMC Entertainment (AMC). The company is already on the brink of bankruptcy. People aren't flooding it with gift card purchases for future viewings.

There's no way that manufacturing will pick up again either. Consider Boeing (BA). The airlines do not expect to reach peak travel again until a year or two or three after a vaccine is mass-administered, which at the earliest is late next year (yes, we could see some vaccines in limited supply earlier, I hope so). So, with the airlines likely suffering a retrenchment that will last years, that hits Boeing because demand for new planes falls. That rolls onto suppliers. Boeing is a big deal in the economy.

Now look at autos. As Ford (F) Chairman William Clay Ford, Jr., recently pointed out, auto manufacturers already were struggling in trying to build for both the old (internal combustion engine) world and the new world (EVs). Now, with demand crushed, where does that leave the entire industry? There are thousands of cars parked on ships right now with nowhere to go. That rattles down through the economy too. Better to suffer for the next few months, or have a rerun too?

The depth of the economic destruction will be the basis of books someday soon. There's no shortage of bad data. But what makes it worse is that the economy has been weakening for over a year now.

I always watch employment. As it goes, so goes the economy in short order. This was not a solid foundation we started on. Now, with Coronavirus, and don't forget the destruction in the oil space, there's almost no hope for a quick recovery. And if we do more damage in the short run, then the long run gets further away.

How Low Can The Stock Market Go?

I have seen face-ripping bear market rallies before in the early 2000s and during the months after the financial crisis began in 2008. The current rally is similar. As I pointed out, it's based on the "hopium" that the Fed can float the stock market and that we can beat back Coronavirus enough to restart the economy at nearly full speed quickly, the so-called "V-shaped" recovery.

Don't hold your breath. Hopium isn't based in reality.

There's misplaced hope that the Fed's money can float stocks. The reality, as mentioned above, is that the Fed's firepower is aimed at bailing out the bond market. Very little is going to get into the stock market. There's almost no likelihood that legislation would allow the Fed to buy stocks, especially not with its balance sheet the way it is now.

The stock market is waking up to the reality of the long-lasting economic damage that this pandemic has wrought and that the Fed really isn't infinite.

The damage we face cannot be wished away. And it can get worse with ill-advised actions. The market will react if things do not improve fast as expectations from the rally warrant.

How low can stocks go? Here's the chart I have provided for members of Margin of Safety Investing. Each line represents a broad confluence of support levels. While I don't share the algos I use, the red lines are all very viable ranges for the SPDR S&P 500 Trust ETF (SPY) to get to. The yellow line would represent a partial retrace if a bull market has indeed begun.

I'm not a great Elliott Wave technician, but I understand them. We are currently in a "decision phase" of a fourth wave. We'll see how it goes. I do prefer money flow measures, however, and that is not rosy at all.

The S&P 500 clearly got overbought recently, and that makes very little sense given how many companies in that index are in zombieland now.

The line to be concerned with is the bottom green dotted line. That represents a confluence of supports coming out of the financial crisis. What would it take to get down that low? First off, the mega-cap stocks would have to lose about 50%. That means Microsoft (MSFT) at about $80, Apple (AAPL) at about $150, and Amazon (AMZN) at about $1,100. While those prices might sound far-fetched, take a look at their charts. Not long ago, they traded at those prices.

The next thing that would need to happen is for a wave of bankruptcies to take dozens of stocks down to zero. While this would fairly quickly remove them from the index, it would be a wave that could last a few quarters at least.

Finally, if ETF holders started to panic, that could pull down even surviving companies by well over 50%. Have you ever known investors to mass-panic?

I walked through this scenario in my most recent Friday webinar and included a chart book with ETF picks for subscribers to Margin of Safety Investing:

Investment Thoughts

I will keep this simple. You need to get rid of any weak companies. Recoveries will be long and slow where they happen. There isn't a single American oil stock I want right now (a series on that coming so make sure to follow). I don't want banks, as they are very vulnerable to recession, and without stock buybacks, their share prices are in trouble. I really don't want any stock that has to cut its buybacks, which is well over half, according to Goldman Sachs. Many REITs are in for years of pain.

Also, sell any S&P 500 ETFs. That index is in for a major retrenching that will see a transition from older, lower-growth companies to newer, growth-oriented companies. That transition will take time and be frustrating.

In the meantime, start looking at companies that will thrive in this new "work more from home" and "cook at home more" economy. And look to technology. There are ETFs that focus on the things I talked about earlier this year after I returned from the Consumer Electronics Show (CES 2020). Utilities suddenly look attractive again, in particular the ones leading the alternative energy revolution. At some point, home builders will be interesting, but you should wait for lower prices for now. And don't forget gold stocks, as I described in "Massive 2020s Gold And Gold Stock Bull Market Is Just Beginning."

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[brianklu]

Great article...Thank you Kirk !

[Random Logic]

More color and context to the Covid-19 situation:

Lockdowns Haven’t Proved They’re Worth the Havoc

by Joe Nocera, May 21, 2020, Bloomberg

My junior and senior years in high school were 1968 and 1969; five decades later, I can still remember some of the main events of that era: the assassinations of Martin Luther King and Robert F. Kennedy, the bombing of Cambodia, the Apollo 8 spaceflight that orbited the moon, and Woodstock, which I pleaded with my parents to let me attend. (They said no.)

In my personal life, I remember playing on the basketball team, buying my first car, working in my family’s corner grocery store and wishing I had the nerve to ask certain girls out on a date. Here’s what I don’t remember: the pandemic of 1968-1969.

And yet there was one. It was called the H3N2 virus — less formally, the Hong Kong flu — and it took a significant toll. The Centers for Disease Control and Prevention has estimated that 1 million people died worldwide, 100,000 in the U.S. Conditions in large U.S. cities sound similar to what they’re going through now, with overwhelmed hospital workers, millions of people getting sick and the elderly most likely to die.

More - finance.yahoo.com/...

[Doneonbadstreet]

Random Logic-Hong Kong Flu 1968-69

The CDC estimated that about 33,800 people died in the U.S; most excess deaths were in those 65 and older

en.wikipedia.org/...

[Sanjay John]

@Random Logic thanks for the yahoo finance story link. good dig.

[SowingAlfalfa]

"... The outbreak in Hong Kong, where population density was greater than 6,000 people per square kilometre, reached maximum intensity in two weeks; it lasted six months in total from July to December 1968. Worldwide deaths from this virus peaked in December 1968 and January 1969. By that time, public health warnings[10] and virus descriptions[11] were widely issued in the scientific and medical journals.

In comparison to other pandemics of the 20th century, the Hong Kong flu yielded a low death rate.[8] The disease was allowed to spread through the population without restrictions on economic activity, until a vaccine became available four months after it started.[9]

The H3N2 virus returned during the following 1969/1970 flu season, resulting in a second, deadlier wave of deaths.[12] It remains in circulation today as a strain of the seasonal flu.[12]

... Mortality

The United States Centers for Disease Control and Prevention (CDC) estimated that in total, the virus killed one million people worldwide,[15] from its beginning in July 1968 until the outbreak faded during the winter of 1969–70.[16] The CDC estimated that about 33,800 people died in the U.S; most excess deaths were in those 65 and older.[17] However, fewer people died during this pandemic than in previous pandemics for several reasons:[15]

Some immunity against the N2 flu virus may have been retained in populations struck by the Asian Flu strains which had been circulating since 1957;

. The pandemic did not gain momentum until near the winter school holidays, thus limiting the infection spreading;

. Improved medical care gave vital support to the very ill;

. The availability of antibiotics that were more effective against secondary bacterial infections.

For this pandemic, there were two geographically distinct mortality patterns. In North America (the United States and Canada), the first pandemic season (1968/69) was more severe than the second (1969/70). In the "smoldering" pattern seen in Europe and Asia (England, France, Japan, and Australia), the second pandemic season was two to five times more severe than the first.[18] ..."

en.wikipedia.org/...

[Andy D.]

When will we get data so we can understand who is REALLY vulnerable to DEATH.
Just about everyone gets sick a few days a year.
10,0000 + deaths in NY/NJ nursing homes. Estimate to be > 30,000 country wide.
As my wife says "how many people were morbidly ill with one foot on a banana skin ?"
BTW,

[PapaWhisky]

@Andy D.

The real metric for loss is not how many people died, but how many person-years are lost.

So accepting the loss of a bunch of people who were 'going to die anyway' may sound callous, it's a calculation that's made every day in life.

[Random Logic]

For those who pride themselves on decision-making informed by data and science, the verdict is in on the "Reopening Too Soon Could Cause Mega-Crash And Depression" hypothesis:

Our Four Largest States: Compare and Contrast
twitter.com/...

[Frank the Frowner]

Way too early. Given the incubation period, the actual results won't come in for a couple weeks. Now that NYC no longer dominates the charts, we'll have a clearer picture of how things are going. The case count and deaths are on a lower trajectory, but so much of the reflects NYC coming off a terrible peak that it's difficult to tell.

[PapaWhisky]

@Frank the Frowner @Frank the Frowner

I hope there is a good review published to see who and what we lost in New York ...

[Frank the Frowner]

Well, we know that already. Old folk and those with pre-existing conditions made up almost all the deaths. Poorly protected nursing homes accounted for more than a third of the deaths, especially after the bloody fools moved virus patients out of hospitals. Minority communities were hit harder, and two thirds of the deaths were people who claimed to have been at home. All from those screens the sainted gov presents every day.

[Dale Roberts]

I saw so many images on TV of parties and clubs with party goers paying no attention to social distancing. We'll see what folks can 'get away with'.

Next wave to come in a few weeks. I saw a lot of close action in Ontario as well.

Folks have misunderstood the 'opening up'.

Dale

[thor11]

nothing yet from Georgia which opened up three weeks ago.

[BrutalHonesty]

Perhaps people understand the stats better than you do. If you are healthy and under 60 your risk is minimal and your risk of death should you get sick is likely on a scale similar to that of the regular flu and probably lower.

[Kirk Spano]

that's fundamentally wrong it turns out. While younger and healthier people might not die because their immune system fights it off, we are finding out there is lasting damage from many cases. That of course leaves you weaker and at higher risk in the future. Further, it is clear that either we can get this more than once (blows herd immunity by infection idea) and/or can lie dormant.

[Doneonbadstreet]

What happens when your country adopts a lower standard for social distancing?
Sweden is currently number 8, out of over 200 countries, in highest per capita death rate, and getting worse. Sweden has Europe's highest number of coronavirus deaths per capita over the last 7 days.
news.yahoo.com/...

[Dale Roberts]

@Doneonbadstreet cases and deaths have been trending down. Deaths have been quite low the last week.

If we're playing the herd immunity game, Sweden may have shown the way. But they are more responsible in general when out and about.

The US could not try this as the Swedes are very healthy, and the US is one of the most sick peoples on earth in regards to obesity and diabetes and general poor health and habits.

Dale

[Doneonbadstreet]

Dale-Sweden is number 8 of 48 countries in Europe, in deaths per capita. Number 1 in Europe in deaths per capita in the last week. They were number 20 in cases per capita two weeks ago, and have moved up three notches to number 17, since then, so I don’t know how people can describe their model as a success, or something to emulate.

People can blame the poor relative health of folks in the US, the poor health system, and while the poor health of individuals is an issue, it smacks of blaming the victims.

The fact is our government had adequate time, adequate warnings and resources, to prepare and respond to this type of threat. They chose not to, and/or not to do so effectively.

Sweden in deep economic crisis despite soft lockdown, as per capita deaths rise.
nationalpost.com/...

Sweden has Europe's highest number of coronavirus deaths per capita over last 7 days.

news.yahoo.com/...

Sweden's per capita coronavirus death toll is among the highest in the world — a sign its decision to avoid a lockdown may not be working.

news.yahoo.com/...

Sweden Stayed Open. A Deadly Month Shows the Risks.

www.nytimes.com/...

[thor11]

@Dale Roberts re Sweden, they only have had what? 6-7% infection rate? at this rate it'll take years to get to that herd immunity.

[Andy D.]

Two camps, for and against lockdowns.
For: Stay home its your choice.
Against: Let them make their own decision.
Cuomo should resign.

[stegosaurus1]

I'm almost 79 and recognize that a healthy American economy (and society) is more important than any one long life.
I can live on SS and, as long as early geezer hours at Walmart would continue, I'm all in on getting America back to health.

[kata]

40% of the Covid deaths in ny were in nursing homes. 70% of the deaths in Pa were in nursing homes, in Pittsburgh it was 80%. I don’t know the stats for nj or Mass but it certainly looks like the over whelming number of deaths were in vulnerable populations where the virus was seeded by Covid positive patients, deliberately, by public policy.I cannot understand how or why anyone would mandate a policy almost guaranteed to push up the numbers of dead.but they did.

i wouldn't be surprised if they actually wanted those numbers higher to put pressure on those states to close down. Literally anything to cause a depression just to beat Trump. But they would kill the elderly? Cripple their own children steal the future from the young all to win an election and crash an Economy? I knew Pelosi and Schumer were crazy but I never imagined they were truly monstrous. And the media ignores it and continues to lie. What did they say about fooling all the people all the time? I guess they learned from Maos little red book that yes you can brainwash everyone if you control the media.
.

[SowingAlfalfa]

Believing tin foil hat conspiracy theories (or worse yet, using AH's "big lie" technique to push far right wing political agendas) doesn't do one single a thing to help solve the present economy/health crisis.

We aren't facing a black or white choice- it's a matter of starting to opening up reasonably soon, and in an intelligent way.

We must implement intelligent and pragmatic social distancing and vulnerable population protection approaches simultaneously with the opening up of the economy that's already underway, such that *both* the daily death rate will start to drop *and* the economy will begin to recover.

[kata]

Name calling is rarely helpful to anything. Do we have to socially distance? Probably a good idea, just to be sure.

Did some of the nursing home administrators take their own relatives out when when the governors of ny, no, pa, ma MANDATED putting Covid patients in nursing homes with the most vulnerable even though there was plenty of hospital space for them? Yes they did. They knew how deadly it would be.

Should those at lower risk go back to work, be careful, wear masks, more than likely.

Should low risk kids get back to school with low risk educators? Of course.

Be specific, address the issues. And please just speaking for me, Cuomo has become insufferable. Old people die anyway indeed. Where is the DOJ.

[kata]

Seems to me you are damned if you do and damned if you don’t. But that said, some are more damned than others so to mitigate the overall societal risks, we must let local and state communities deal with their local conditions.

The young are at risk in school and at risk out of school but on the whole the young of those parents that can care and Educate at home should do so and the young of those parents who cannot should be in school. Localities can assess their communities the best. Pragmatism will work best for all until we find sufficient ways to mitigate the risks for all.

I also think testing must be smarter not just used as a blunt instrument. One days test tells you little about tomorrow. But testing a communities wastewater tells you the disease is present in the community and let’s you narrow it fro there. I’m sure there are smarter and more knowledgeable but testing 300m everyday is silly and accomplishes little.

Most healthy and young should return to their businesses and lives while socially distancing, mask wearing, hand washing and adjusting to life w Covid until they don’t have to any more. And that may be years away from now.

Those at greater risk unfortunately must adjust to greater than normal social isolation to survive. And for Pete’s sake stay out of nursing homes. Most of the deaths have occurred there from terrible public policies like New York’s.

[Cashflow Curator]

For consideration ... many local and state communities and individuals within them are going bankrupt ... who are they increasingly turning to in order to keep them afloat? Do you think that support is going to come with no strings attached?

[BrutalHonesty]

"The young are at risk in school and at risk out of school"
Not really. The young are largely not impacted by this virus. Just look at the statistics.

[kata]

The young will be indoors in schools with crowds. Schools can and should reduce that as much as possible. But if they stay home they lose all the benefits of their education and socialization and some will lose the meals or the ability of their parents to go to work. There are as many severe risks for children their families and their communities for staying home as there are for the children to go to school.

These aren’t just immediate health issues, there are longer term public policy issues as well. That’s why we maintain professionals in a multitude of areas to advise those we elect so they can weigh the risks and choose what is best for all of us.

And we hope they use all the advice they can get and choose wisely and most of all course correct when necessary. No one gets everything right all the time.

[geologist]

5/13/2020, and things are bad. Look at these comments from 5/5/20.

Using models isn't looking to good. We need to let nature runs its course because trying to fight it is causing worse results vs letting nature runs its course.

I'd rather fight going down vs just giving in.

[SowingAlfalfa]

re "Using models isn't looking to good. We need to let nature runs its course because trying to fight it is causing worse results vs letting nature runs its course"

"Weather models aren't looking too good. Tornado and hurricane forecasts aren't 100% accurate. We need to let nature run its course and stop hiding in cellars and evacuating before hurricanes are predicted to hit because trying to fight it is causing worse results vs letting nature runs its course."

["B"isForBob]

Very concerning. And the problem with re-opening is there really is no safe alternative. Congress's response has been a giveaway to corporate America while ordinary people have been left with nothing. Absolute robbery. Now people are forced between staying holed-up and starving or taking their chances and going back to work, if not already-laid off. The outlook is grim.

[diroha]

@"B"isForBob You could not be more off base.

[djh7522]

No over counting you say? CDC says chronic lower respiratory disease, influenza and pneumonia have been among the top ten leading causes of death over the last decade. You know full well ALL of those deaths are being chalked up to covid this year.

[SowingAlfalfa]

Death rate per day in NYC has been 4x the average for this time of year (run rate this year was same as other years, then CV cases ramped up exponentially- went up way, way above the trend line).

Death rate also has gone up by very obvious amounts in the graphs for NY state and 6 other states shown in Kirk's article.

No way that this was due to misclassifaction of cause of death..

[djh7522]

Never said the spike wasn't real. Just saying that covid cannot be unequivocally assigned to every death that in other years would have probably occurred anyway. You will see that even strokes and heart related death stats will go down relative to other years, because EVERYTHING is covid this year. The numbers are inflated.

[Frank the Frowner]

"ALL of those deaths are being chalked up to covid this year"

Completely wrong, look at the CDC website, they list pneumonia separately from virus cases. However, you'll also notice that that those cases are totally correlated with the virus and not the flu, which indicates probably the death toll on popular sites like Worldometer are low.

[Dale Roberts]

South Korea had a recent flare up. They opened night clubs. Clubs and any other large social gatherings are now shut again.

www.bloomberg.com/...

And this is in a country that has the virus under control. Imagine when we try this in North America. Sorry, no clubs, Disney, sporting events, conferences, crowded parks, crowded restaurants.

30% capacity opening of Disney in one China location might be a disaster as well if the virus is still about, even though they believe they largely have it under control. Yet their kids in school are in masks with social distancing head gear, so, who knows?

Read the tea leaves.

If Disney is a medical disaster, everything gets reset/rethought.

We learn as we go. We learn from the mistakes .

Dale

[thor11]

@Kirk Spano in light of recent growth in the stock market even in the face of dire unemployment numbers do you reassess your estimates or sticking with them? thanks.

[SowingAlfalfa]

" U-Economy, V-Stock Market

Summary-

. As the Nasdaq turns positive for 2020, more than 20% of Americans are likely out of work.
. On the surface, this is utterly incongruous.
. Squaring the U and the V.

...... Conclusion-

We see a U-V scenario playing out in the near-term.

The economy won't begin rebounding until 2021 while certain segments of the stock market will stage a full V-shaped recovery.

We caution that the V-shaped stock market is still likely to be a rough or jagged V, and our message is certainly not to get complacent.

And should signs appear that recession will drag on well into 2021, our forecast is for the stock market V to become a W. "

seekingalpha.com/...

[RDJ97321]

Your comments about the upcoming vaccines are correct. These new vaccines are not like the attenuated pathogen of previous vaccines, but RNA vaccines. These rushed vaccines will not be adequately tested and the undesireable side effects of RNA vaccines have not been determined and will take years of patient followup to determine the range of harmful side effects.

[grharbart201]

One of my daughters is an epidemiologist,(who taught at Yale and Brown), and one of my granddaughters is a dr. in her 3rd year of fellowship in infectious disease, and they are of the opinion that there is a real good risk of this disease coming back with a real fury. I am an optimist , but 65% in cash. I will stick with mostly dividend stocks for now. Some gld, as well. Stay healthy. GLTA

[Chris Valley]

...And, hey you should know.... I am up for adoption!

[Finici]

@[e-mail] - me to if Chris @Chris Valley is unsuitable......

Jay

ps - have a good friend who took 8 years to graduate Brown - he liked it so much!! Ya know, it's one of those 'elitist' schools.... :-)

jp

[Dale Roberts]

@[e-mail] CDC estimates are for a 7x cases on economic restart. Quick move to over 3000 daily deaths, for starters.

Reports being dismissed on religious grounds, ha.

Dale

[richcola41]

Not opening will cause a recession or worse a depression.

[SowingAlfalfa]

Misleading statement- it's not a black or white choice- it's a matter of starting to opening up reasonably soon, and in an intelligent way.

We must implement intelligent and pragmatic social distancing and population protection approaches simultaneously with the opening up of the economy that's already underway, such that both the death rate will start to drop and the economy will begin to recover.

[snc77]

The data shows that the death rate is minuscule for healthy people that get the virus. Closing down our economy was a gigantic mistake. You do not quarantine healthy people. Flatten the curve, what a joke ... the death curve doesn’t exist for healthy people .

[Kirk Spano]

completely and utterly wrong. We're learning that young people to have complications regarding clotting after infection - weeks later. It blows my mind people want to act on incomplete medical information even though it might kill them, especially when the alternative is a 12 week staycation that the government can EASILY afford to give us. Just mind boggling.

[snc77]

www.aier.org/...

[snc77]

Sorry KIRK ...we’ve been there done that .... do you know that we had a pandemic in1968 .... during Woodstock? Media fear mongers today..... hi

[own_account]

With the admitted advantage of hindsight, it seems obvious that every developed country needs a financial plan for pandemic type events.

Instead of dropping helicopter money on everyone, all the basic necessities should be free to everyone.

Mortgage and rent payments all on automatic hold with pre-arranged consequence. Food rationing coupons for every family based on size for free food at the grocery store of choice. Post tragedy the government covers the LOSSES of the industry under pre-arranged plan. Utilities are free for all personal residences. Post tragedy the government covers the LOSSES of the industry under pre-arranged plan.

Now that survival is guaranteed (food, shelter, heat all free) everyone can stay in quarantine without worrying about how they will survive without money. In today's society our highest order need, for survival, has become the need for money.

[diroha]

@own_account I submitted this very suggestion 5 weeks ago and it got no traction. How much simpler the situation would have been.

[Kirk Spano]

In general "free" doesn't work. But, a helicopter money drop to support folks from the bottom up vs top down (which is our other affliction) would work. The very simple truth is we could have done a national shutdown with only essentials (liberally applied) paid everybody for 12 weeks and beaten this down well enough to buy time for a antivirals and a vaccine.

[glinsight]

@own_account You say "Instead of dropping helicopter money on everyone, all the basic necessities should be free to everyone." Then give some examples.
Except, why should I go to work at the grocery store? Or the utility company? Of course you don't expect healthcare workers to stay home. What about law enforcement? I could go on.
It's just not that simple.

[be called mountain]

Hi Kirk and thank you for a very vivid picture of our future should opening up occur too early. Many, many more deaths combined with a population who understandably may not be able to psychologically handle another forced shut-down. Then what? This goes even beyond market consequences. My only objection is that you've not forwarded your article to the folks in charge of the Federal gov't, some/many state gov'ts, Health and Human services, the CDC, et al. Shame on you LOL. The only other possibility are vaccinations. On NBC nightly news, Pfizer is reported to be working on a vaccine that's in the testing stage and may theoretically be available as early as September. Posssibly Moderna, China's CanSino Corp, or others may come up with something. But barring a vaccine, your depiction is so apt - and hopefully none of your readers will be lured into enjoying their newly found "freedom." Kudos, Kirk!!

[Kirk Spano]

In my March and April webinars are made it very clear I believe our biotech/pharma people are so good that we can have mostly tested vaccine by late this year and production in the first half with most people getting vaxed by the end of 2021. Most didn't believe it. But, that is the pace we're on. We don't need to sacrifice hundreds of thousands of lives. For a couple trillion, everybody could have stayed home until June 30th and beat this down. Now, there's going to be either A) a lot of death and a stock market crash or B) a lot of death, another shutdown and a stock market crash. It didn't have to be that way.