Before the Aftermath
Could it be Easter Week is on our doorstep?
Will this be the week we start to see numbers that hint of a turning side?
Is there really a positive message in this for us all?
Well, over the coming weeks we’re likely to see what are at first some uglier numbers, and then some lower numbers.
Too many experts are competing for time to tell you how much the world has changed and how much more negative it will get.
And while this all is unlikely to end very soon, we can ground out our understanding a bit about what’s happening by taking some lessons from the past.
I remember in the weeks following 9/11 that no one would ever fly again.
Never were those words used more often than then.
Sports were a no-no as "large gatherings of people were clear targets for terrorism."
Similarly, restaurants would never be used again, and shopping was finished because "how would you ever know if there was a bomb in someone's backpack?”
Those were expert opinions. And we saw what reality did to them.
Does any of that sound familiar, because we’re hearing it all again.
The main difference is that we’re now hearing it 10 times a day promulgated through umpteen new channels of communication.
Let’s Consider a Few Ideas
So, think back to the time before 9/11, when you simply grabbed your airline ticket and ran to the gate. Literally, the only thing you may have been stopped for was to check your bag.
Now, depending on the airport, we go through at least one security line and then - after searches and scans - we get to walk to the gate and get into those larges metal tube terrorists used to blow up buildings, and travel to the same places we said we’d never be able to visit again.
Today, we’re imagining the same scenario.
But entrepreneurs somewhere will begin to create small businesses that sell services to restaurants, malls, et al, that allow patrons to have their temperature checked as they observe an orderly line upon entering. And if you’re fine, you come right in. And if not, maybe there’s a second line for a swab check or back-up "quick-Covid" test check.
You and I, of course, would be footing the bill - maybe a £$1 or £$2 here and there - as a surcharge for "protection," which is much like the way we now pay $5.50 per flight in America to have the airport security check-in. This would all change once we have a Covid Flu shot, which maybe does take another year to get into national supply lines.
Now, I’m just imagining at the moment in order to demonstrate how we’ve adapted to things in the past, and that we will do so again in the future.
The reality of this transition in process is fairly basic, and it arrives in stages:
- We’re currently under stress but begin to see early signs of improvement.
- The news is going to always first leap to the worst-case scenario, and then burn off that bad news as good news "surprises" - much like we’re seeing in the NYC daily reports.
- New businesses replace old ones, failed ones or closed ones. Tech explodes. New services emerge and blossom.
- And we find once again that we’re running out of people to fill these new job roles, just as we were before the Covid storm.
Think about it: John Doe restaurant owner loses business for 90 days because of a government-demanded response to a health crisis. And when the dust clears do, we really think he won't start that business again (even if from scratch)?
Massive amounts of scientific endeavour are underway, creating faster and faster tests; speeding up the test for antibodies or even creating them, massive capital investment, massive tech and world-leading knowledge focused on the delivery of solutions.
And all that’s required, as with investing, is patience and seeing the long game at play.
And as For All the Bad News...
Keep in mind that we are witnessing massive numbers in many of the uglier reports - the largest of which are being triggered by the shutdown (jobs, incomes, etc).
While it’s painful we have to try and view this as a two-act play.
We’re now watching the first act, and hopefully nearing the end of the health slide of this process.
And while the bad reports have paralyzed many, we will have the second act – the other side of the coin - revealed in the months ahead.
For example - let's pick the second week of October (arbitrary) or November - but I suspect we see a 3,000,000 "new jobs" report somewhere out there.
That’s the start of the second act.
The Big Picture
The health crisis has made any near-term or short-term analysis of specific data nearly useless.
In essence, it’s just guessing, and usually driven by high emotion.
This is no longer about 2020, realistically it’s about the 2021 stabilization process and beyond.
The Barbell Economy© has not changed.
The same forces working on our behalf to drive this country forward before the virus - are still in effect and expanding - but hidden just out there in the fog.
And the Markets?
Let's look at the NASDAQ on the top and the S&P 500 on the bottom:
What we learn over time when the machines are at work is that all markets look alike.
I could add any index you like to the snapshots above and they would likely closely mirror one another.
What that means is that every baby was dumped out with the bathwater in this event. And the purpose of the two red squares overlaid on the NASDAQ and S&P 500 charts is to help us focus in one what is likely becoming a trade range.
As wide as it is (thousands of points in the Dow Jones), it would be ideal to see the volatility find a channel - which indeed could see the lows tested.
This part can never be foretold so try not to get caught up in that prediction debate.
What we’re looking for is a semblance of some control - versus the raw emotional roller-coaster we have witnessed for weeks now.
Winston Churchill Once Said…
"When you are going through hell - keep going."
Let's agree to do that.
We’ll win out and be stronger for it.
And we’ll higher highs as we breach this enemy and recover.