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Flat curve...it's all alright then...


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Many equities and indices ( eg. the S&P500) are around the same level as the Dec 2018 dip, which is surprising. Then there was no world health emergency, no 26 million Americans on welfare, no global lock down. The markets seem to think it an irrelevance, such trifles are merely temporary rocks in the road, it would appear.  They suggest hits to earnings are already priced in and dividends and bonus bonanzas are just around the corner in Q3, early 2021 latest.  It would appear these analysts don't get out much. That's lock down for you. "The rebound will be a V"......I may suggest the beta blockers are working, as social distancing will be around into 2021 and a "U" shaped recovery or even a double dip as equally, if not more likely. Naturally, no one mentions the invisible elephant in the room....the second wave.  Most of us would have researched the "Spanish" flu epidemic of 1919, or at least conversed with some that have. The virus then came in 3 waves between 1919 and 1920/21. The second wave being the worst. It would appear the markets think there will be no second wave because the curve has been flattened. That is a mighty assumption indeed.  So it's all alright and the only way is up......the curve has been flattened let's get back to normal as quickly as possible......yes, in our dreams.

If I may suggest, the reality of Covid may be different to market hopes and expectations. There still is no cure, there is no herd immunity (as happened in 1919-1920), social distancing and cleanliness are the only weapons. And ventilators. So far. That is the reality on the ground, where normal people live. It is irrational exuberance and optimism to think that because the curve has flattened, the crisis is over. It is not. I share the markets view that this crisis will pass, but disagree with the timeline.

As an aside, I would strongly suggest to all concerned they refrain in total from taking any of president Trump's advice regarding health, safety and Covid... do not inject or ingest bleach, do not lay on the sunbed for hours at a time, don't waste your money on chloroquine (unless you have malaria). He is a showman, not a doctor and he really wants to be reelected whatever the cost. Social distance, keep your hands clean and stay safe. 

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