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The Great Reopening Begins, And It's Going To Be Messy


  • With some states starting to open, how will the economy rebound? Let's take a look.
  • The new normal might be more adopted than you think.
  • While the data is grim right now, we might have an equal surge at the end of this.
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Modern economics is a set of formal models and equations purporting to fully determine human behavior, at least in the economic realm. And there is no way that uncertainty can be compressed into determinate mathematical models.

– Murray Rothbard

This week, we will start to see some state economies begin to open, for better or worse. The big ones to talk about are that some retailers are set to open in Alabama and Texas with capacity restrictions in place. Simon Property Group (SPG) is preparing to open 49 of its malls and outlets alone. However, the psychological effects of this are going to be immense and need to be considered. While there will be many citizens who opt to stay home instead of going to the malls, there will be plenty of others who are mentally anguished at home and will not be able to stay away. Why, in the face of a pandemic, would those risk their health to go shopping? The answer might be ingrained into our brains far deeper than once thought.

Source: CNBC

Before we get into the psychology of being together, while there are some reasons to be worried about a slow restart, adaptation may be faster than expected. This is probably adding to why economists are projecting a massive rebound as the economy restarts. The Federal Reserve is at our backs here, noting that it will not pull back stimulus and that the recovery can be "quick" and "robust." With fiscal and monetary spending at incredulous rates, not just locally but around the world, the gas pedal is to the metal right now. And it's not going to stop, even if things return to a semi-normal state, until full employment and/or inflation increases unexpectedly. Don’t underestimate this Fed – it has taken steps never taken before, in doing things like buying junk bond ETFs in order to

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This article was written by

Michael A. Gayed, CFA profile picture
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Comments (74)

MWinMD profile picture
Today an expert from Johns Hopkins testified in Congress and said there are NO states that meet the four required criteria for reopening.

This is going to be a mess. A deadly, regrettable mess.
Eduardo A Carrera Graniel profile picture
It's going to be very bad, states are already spiking in cases :'( https://youtu.be/KwyJ3treo58
This article leaves out the fear factor in its psychological analysis. China's consumerism has not recovered. People will find other ways to socialize and some will capitalize on it. Teens and young adults will reenter some venues because they are less fearful of the consequences for good reason but they are not the consumers with the bulk of the capital. Recovery is going to be slow until an effective treatment or vaccine is produced. No reason to expose one's self to infected strangers by heading into the mall.
AAA Investments - PayONLY4Performance profile picture

“No reason to expose one's self to infected strangers by heading into the mall”


Same as fast-food as well as restaurants, especially when the vast majority of the workers are under 30 years old (don’t take the virus and their own {or customers’} safety seriously due to their sense of immunity and invincibility)

I know I’m not eating food from either a fast-food or restaurant any time soon 😳
According to World statistics, ourworldindata.org/...

more than "50" million people die each year from all sorts of causes. Covid related deaths are just a drop in the bucket compared to that.... Why are we panicking? This is just blown up out of all proportions.
If you come into contact with someone with cancer, heart disease, diabetes, etc. you are not going to catch any of them. If you have any of these ailments, you are not going to spread them. It can't be said about COVID-19, highly contagious and still too many unknowns.
BarkingShark profile picture
@ On Bubble Because Dr. Fauci has done an impressive job on creating fear and the news feeds make it even worse. So what’s one to do...walk around in Hazmat suits while grocery shopping? I’m entertaining the idea of staying healthy and fit. Eating a good diet that doesn’t include fast food. Getting a little sunshine. I find this to be a better fit for me personally than walking around with a mask on 24/7 and letting my immune system rely on it.
Lots of frontline businesses will be decimated. Restaurants, casino, events need high headcount to make money. And this is money that average consumer doesn't have from the lock down. Retailers may be just waiting for a reopening so that they can liquidate their stores and decide to go bankrupt after. Some companies don't belong in the new world and will be zombie companies,... Comps that have cash from Fed but can't do anything with it. However stock market momentum keeps looking the other way, pushing to the upper limits from massive stimulus. I can't see significant upside from investing in stocks at these levels. If you do want to invest, try to play the "story" of recovery knowing that reality will keep you in check. Also, probably an impending China trade war (voters from both sides want it) and God knows what election shenanigans are going to do to this bipolar market
Agreed...too much downside risk for any possible reward at this moment. This is a long way from over.
Agreed, it has not even properly started yet. At the moment the Fed is a juggler trying to keep a thousand balls in the air. Soon they will start dropping and it will become clear that even the Fed cannot support all the small and big businesses and all the consumers. Then there will be waves of bankruptcies, with even more people losing jobs. I am waiting for the right moment to start betting against the Fed. My guess is it will come towards the end of the year after the virus spike and lock-down in the autumn...
jf31 profile picture
Hmmmm, let’s see, we all wear masks all the time. So that rules out nightclubs, no dancing, too hot with a mask. Bars? So much for the hook-up generation. Casinos? We can’t sanitize the machines between uses, cards and chips would be a no- no. Nevada, no state tax? No Casinos? Good luck with that! Planes, Hotels, theme parks, major sports, conventions, Sit down restaurants, they can open , they just don’t have the margins to be profitable at those reduced capacity numbers. They’ll bleed out a little more slowly, but they’ll still bleed out over the summer. This assumes NO new virus outbreaks. That is no what the science guys are telling us. I’m hoping for the best. My fear is the best May be another test of the lows and sideways from there until growth is restored.
BarkingShark profile picture
@jf31 no schools or school buses or elevators either. You sound exactly like me for the last two weeks. How are we to do anything going forward? The virus started with one host, then turned into an exponential number. So now what, we get the vaccine and or RFID chip embedded in our necks and then back to our regularly scheduled programs.
The bigger question: just how badly did we over-hype C-19. Anywhere from 30% to 60% of those "infected" are asymptomatic, which effectively negates the Leftist talking points of "testing" and "contact tracing."

1. wear masks in public.
2. carry hand sanitizer.
3. maintain practical social distancing.
4. stay home if you have symptoms.
5. stay home if you are high risk.

Don’t smoke. Loose a couple pounds, don’t develop chronic pulmonary, cardiac, renal conditions ie don’t smoke and loose a couple pounds. BEFORE round two comes this fall
Asymptomatic individuals can test positive - fox6now.com/... Still some debate about whether asymptomatic individuals are transmitters so this is not settled science, I believe.

Testing and contact tracing are useful for addressing "hot spots" and other planning needs.
Didn’t you write an article a couple weeks ago stating the Fed is building a massive stock market bubble that will eventually pop? There are so many conflicting messages being sent by finance professionals, it’s very frustrating. Is a market bubble being formed or not?? It can’t be both scenarios from your previous articles.
1 million people die every week anyways, don't see anyone crying over that, let's get this thing moving.
Eduardo A Carrera Graniel profile picture
It's not only about people dying, it is about the nurses, doctors and all health workers who are already super tired and are also at higher risk because hospitals concentrate the virus more. If hospitals get even more overwhelm, they won't be able to heal and attend the sick people. But you don't understand that because:
1.- You don't have family members sick in the hospital.
2.- You don't have family members who work in the medical industry.
3.- You lack of empathy.
@Eddie616 Which hospitals?

The doctors, nurses and health workers are tired because they are either A) furloughed or B) doing nothing.

I'm sorry, but NYC is not the center of the universe.
We docs and nurses are bored stiff by lack of patients

DEPRESSION as the response the to the Whuhan virus, while awaiting a vaccine, is MADNESS
It'll be the biggest Summer bubble economic boom we've ever see. If we as a nation don't get close to a 100% reopening, & consumer confidence doesn't return we'll be back to square one where were are now by Fall or Winter later in the year.
If you study the bear market bounce from 2008-2009 crisis, we are in for a day of
reckoning. I can afford to miss out on a little upside. I can’t afford a 35% loss .
"I can afford to miss out on a little upside. I can’t afford a 35% loss "

Well said. I'm out.
Agreed...this is far from over.
What are you talking about? We will come out united? Aren't you following current affairs? The country is more divided than ever. Regardless of the outcome of this crisis, it will get more divided based on the class and idealogy. The election may be the last straw. This crisis is the first and foremost social crisis with enormous impacts on health and economy and will reshape the economies and societies around the world.
I get that stock market right now is almost unstoppable or it may continue to have that bias in the short term. But make no mistake about it that payback will come in a few months when the true extent of global damage is revealed maybe during July/August timeframe. Just think the common sense, entire monetary and fiscal bodies in the developed world have thrown everything and kitchen sink at this problem. Are they that stupid to not know that this will be a painful and slow recovery? In the end, it may not be enough actually and the global financial system will take a structural hit due to EM/Europe/Asia issues.
I don't blame the initial excitement though. Spring is in the air and people are fed up of monotony, I personally made some trip to the grocery store and carry out place. People definitely seem excited and eager and some over-eager and ready to get past this "bump" in the road especially young ones. But we just can't just wish away this problem I am afraid. Another fear I have is, did the fed/treasury react too quickly with too much? What if this is just the beginning? spine chilling thought that no one wants to think about. If things were this rosy the greatest investor of our time will not be sitting idle at this time.
But with all that said, hopefully young ones and hopiumist can pull us out of this crisis.
@Michael A. Gayed, CFA

So... it's over I guess? Coronavirus defeated. Once we "open back up (TM)", everyone can just get back to work/shopping/life. Right? Or is this more hopium?

Unfortunately, nearly every epidemiologists in the world believes there will be multiple waves of this and no way for it to end until there is enough immunity in the population. One way or the other. Since we are nowhere close to herd immunity, how do future waves of virus impact your predictions?

Welcome to the denial phase of a bear market, folks.
if there are waves then why is China not in the top 10 anymore for covid? do we need their traditional medicine?

Is that a serious question? China's authoritative rule (not to mention their outright lies) can't be replicated here. China's economy is also not improving much despite their building of the second wall to keep out the virus.
Many people here are clueless about the CCP and don’t get much info if any from MSM. Watch news in Australia and India is more informative about CCP and it’s role in this pandemic mess.
We can return to work and activity while stopping the spread of the virus, simply by wearing masks. "Models show that if 80 percent of people wear masks that are 60 percent effective, we can get to an effective R0 of less than one. That’s enough to halt the spread of the disease."


Things do not have to get ugly and messy.
In Taiwan the schools were open!
Low death rate.
Fines for breaking mask laws.
In schools clear acrylic sheets separated students
Each and every person temperature checked before entering schools.
Work continued.
of millions avoided.

"people wear masks that are 60 percent effective,"

So everyone is going to wear an N95 all day? I doubt this very much. Surgical masks don't provide nearly that efficacy.
Wiekierc profile picture
I think I've heard that somewhere before. I just can't place where it was.

First it was a deja-vu moment then it became deja-vu all over again. Now I don't know what to call it. "The third time's the charm"?
"messy" is when you need to clean up your room.
this will be more like your room got BOMBED!
just wait until all the infection and death counts start rising.
politicians will play the "blame game" and the public will be scared
to death and not TRUSTING doctors, media, government.
come to think of it, WHY should anyone trust any of them now???
Well done, interesting perspective on a name I follow and own, SPG. Love that you quote Murray Rothbard too.
I hope you are right, but would not bet the “farm” on such but then maybe that’s why it will go up. Debt does not matter is something that has been a struggle for me.
Seems like only/main reason to be in the market is FOMO...Would like to have/find stronger reasons than that...
If I miss out on the beginning of the next bull run nothing in my life changes. If I we're to loose 50% or more that would be life changing. Sitting it out in cash right now.....
This where I am at with my money too. I doubt we see bull run, even if I miss a year of 8% because were normal, I'm ok with that. What I am not ok with is a 30 to 50% haircut that takes an entire 8 year bull run to break even from.
Yup...me too, since February 13th and I see no close reentry point.
The light at the end of the tunnel is s train!! In an economy based on consumer spending, the Covid recession takes away discretionary spending which holds down growth. We may look forward to higher unemployment, defaults, personal and business bankruptcies and the fed bailing out banks and everyone else until the dollar goes away. There can be no happy ending the only question is when the train gets here. Have a nice day.
It doesn't have to be that way if we all let go of our panic and realize we can go back to work and to life, and stop the spread by wearing masks:

Models show that if 80 percent of people wear masks that are 60 percent effective, we can get to an effective R0 of less than one. That’s enough to halt the spread of the disease.

It’s not really about Covid anymore, it’s about what’s left of the economy and seeing how much destruction has been done. The “new abnormal “ will be hard and making life changing decisions and trying to keep what’s left. Asset protection is the real goal and the sooner we realize that the sooner we can get started and stop falling. Wear your mask if you wish, but sit on your wallet!!
Not going to happen.
nyckingo profile picture
good piece...so shd. I gather that you're thinking we've crossed the lows already?
1000-3000 deaths per day and people at home not understanding that stay at home orders are the only weapon we have against this virus. Hospital doctors and nurses are already fatigued and near exhaustion, and the system is now more fragile from a medical professionals supplies than actual ventilators. Opening up will be messy to say the least .....
@Goodmils Have you looked at how hospitals are being impacted? It's not because of overuse. It's under-use.

Did states that locked down "late" or "not at all" fare worse than the early locker-downers? Compare FL to NY. When is SD going to go boom? Wait two weeks...right?

We have an entire country that did not lock down (Sweden)...so please stop with the data-free panic crap.
Sweden didn't lock down by law, however, they had the same guidelines. Many people practised social distancing there as we do here. Although news photographs show crowded places, people who live there say the shops and restaurant traffic is subdued. It's not like Swedes don't see international news.
Eduardo A Carrera Graniel profile picture
I agree with you, I have plenty of nurse's friends in Eureka, California. I feel very bad to see how they are already super tired from all this shit and scared of them getting infected. I'm happy, though, that CA isn't reopening the economy because they would get even more hard work.
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