Where We Go from Here
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Predictions are difficult, especially those about the future. That old proverb (often attributed to Yogi Berra) is right but you can’t live without making certain presumptions.
Right now, some basic assumptions are no longer safe. The economy will keep suffering until they are reliable again, or we replace them with new assumptions. We can’t travel or even go to a restaurant or visit friends without wondering about our health. Where does that leave us?
Today I’ll defy the proverb, consider what we know and don’t know, and try to tell you where I think we’re going. In the long run (after The Great Reset in the late 2020s), I still foresee a wonderful new world. But we have to get there first.
And just for the record, because I am not optimistic about the speed of economic recovery does not mean that I am necessarily bearish on the stock market. When the Federal Reserve pumps $5 trillion (or whatever) into the system it is going to find a home. While I think earnings will take a severe hit in 2021, the market could hold simply due to massive Fed support.
Here’s what we know. Many of the first countries the virus struck—China, South Korea, Japan, New Zealand, Italy, Spain—brought it under control with aggressive lockdowns, testing, contact tracing, social distancing, and isolation of confirmed cases. Yet little outbreaks keep popping up. Life is still far from normal in those places. Read this Financial Times account of conditions in South Korea to see what I mean.
Here in the US, the national numbers are much improved since March and early April. That’s not the case everywhere, though. Look deeper and you’ll see the New York/New Jersey crisis is easing but cases are rising elsewhere. Testing numbers are up but that’s not the full explanation. Hospitalizations are also up in some states, as is the testing “positivity rate.” Those indicate actual virus spread. This was expected as more people circulate in public but could get out of hand if not handled well.
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