06 May 2020

Some Americans’ initial and relatively short-lived bravado for flattening the curve has quickly shifted over recent weeks.  Ultimately, this is not surprising as the types of sacrifices that would have been required to sustain a suppression of the outbreak in the US have not been seen in generations.  Now, many people either have justified to themselves why it’s not best to social distance – or think for some reason this is over.

That reason is ultimately, in my opinion, a function of failed leadership on both sides of the aisle as the crisis progressed.  Authorities have accomplished painfully little since March – other than likely working on their own safety.

“Live and Let Die”

It is concerning that the President seems to be leading the charge – perhaps in some ill-advised Machiavellian political calculation.  First, he fueled the earliest flames of rebellion with his “Liberate Michigan” Tweet.

Yesterday, he toured a Honeywell plant that is manufacturing masks while he and his team did not bother to wear masks.

They even blasted the song “Live and Let Die” during the tour in case we missed the point.

Once again, the politicians from both sides have totally failed the decent American majority.

On a personal note, I suggest you don’t fall into this wave of selfish idiocy and instead remember that all COVID-19 indicators today are still lagging indicators by 14- to 21-days:

  • While new cases have purportedly peaked, we still have not seen any meaningful reduction in the number of new cases.
  • Some places, including Dallas where Dux Advisors is based, still have rising new cases.
  • Deaths are still peaking nationally.
  • We were the last continent in the Northern Hemisphere to have an outbreak – reviewing what happened in Asia and Europe leaves little mystery in this debate.

Shifting back to markets, progressing anti-viral treatments and eventually a vaccine are something to be hopeful for.  The fact that the virus has already mutated would be pause for concern about how much we can count on that end game.

Beyond that, authorities haven’t really accomplished much since March.  For example, where is the PPE for front-line essential workers?

Capital Markets

  • We are witnessing the forecast of the new economy reflected in the stock markets: Technology and Sciences continue to pull the markets forward, weighed down by those sectors hurt most by the sea changes underway.
  • Crude oil prices are showing signs of an expected demand recovery as some states have already begun to reopen.
  • As our recent analysis of reopening shows, there remain more critical needs than successes in this fight.
  • Our March 31 guidance contemplated three scenarios and we maintain our guidance as unfortunately we expected that an “all together” attitude was unsustainable in the US.

While authorities apparently have everything riding on future medical intervention, it seems more that fundamental attitudes are shifting among some of those that don’t think they would die if infected – the value of others’ lives versus the specter of continued hardship.

The emerging “Live and Let Die” movement will fail spectacularly.  Most of all, it will put Americans into conflict with one another as those who care have no choice but to mix with those who don’t.

We will end up with more economic loss if a resurgence causes a reluctant shutdown 2.0 – this time likely enforced by martial law thanks to the breakdown in our social contract and the authorities’ collective loss of credibility.

We would likely arrive at the end of this battle with exponentially more deaths, longer lasting economic depressive forces and the greatest level of antagonism among our citizens that we have seen since the Civil War.

 

Steve Yen is Founder of Dux Advisors, he has career experience in Finance, Consulting and as a former Army Captain. He was educated at Georgetown Preparatory School then as a BBA (Finance) with graduate-level coursework at business schools in the United States, England and Germany. Follow him on Twitter @DuxAdvisors.

Disclosure:  This is an opinion article not intended as investment advice – any opinions expressed are as of the date of publication.