A client wrote me over the weekend, asking if I thought recent news of apparent flattening of the curve of new infections of Chinese Flu in Italy, Spain and, perhaps, even New York City, portended incipient prevalence over the virus. I responded:
It looks clear in retrospect that the addition of some more information over the weekend reduced market uncertainty and thus might have restored some confidence that civilization is not yet quite altogether over. Items that might contribute to market confidence, in no particular order:
- The Trump Pill+ concoct – hydroxychloroquine, Zithromax, zinc, and nitrous oxide – has shown terrific clinical success – albeit, so far only anecdotal – in forestalling the worst effects of the virus. I’m not troubled that the data are so far anecdotal. All data originate that way. Experimental data are anecdotal data controlled. That the experimental controls do indeed clean up the raw anecdotal data does not at all vitiate the raw anecdota. On the contrary. Does it change the herd of wild horses when we corral them? No. They remain wild horses. The corral is a change, not to their nature, but to their circumstances. When they are in the corral, we can keep track of them. That’s all. Only a fool would say of a herd of wild horses cresting a distant hill that, because no experimental controls on the data of our apprehensions had yet been established, there were therefore over yonder no wild horses to be seen.
- The curve does indeed seem to be flattening; and that flattening must have started about 2 weeks ago, if it was to show up now.
- 98% of patients recover. We never hear that, but it is tremendously reassuring.
- Trump is President, and Trumpism is on the rise, so we are less likely than in past panics to see the “emergency measures” enacted in response thereto become permanent fixtures of our society, the way that the Fed, the Income Tax, Social Security, and withholding all did.
- Biden has all but disappeared; in his few appearances, he is less and less coherent. It begins to look as though Trump might run effectually unopposed. Markets gotta love that.
- China is systematically and pervasively exposed as a national bad actor, and as a nation of bad actors. So much for their hegemony. Watch now as manufacturing massively moves away from them; no one can trust them an inch, any more. That is over. As manufacturing moves away from China and toward cultures that can be trusted to deal fairly, watch for the American national advantage to wax.
- Likewise globalism: now utterly dead. Watch for the rise of national, state and provincial borders, everywhere.
There’s lots more, but that will do for now. Near term, I’m bearish, because we are not through this yet, not by any means. Long term, I’m more bullish than I ever have been since I hit puberty.
Keynes: In the long run, we’re all dead.
Israel: In the everlasting run, we’re all everlasting.
The first is the basic liberal recommendation of fundamental despair and listlessness, no matter how good things now seem, and no matter what we might do to make them better. The second is the basic traditional recommendation – traditional in the West, anyway – of fundamental hope and thus of energy, no matter how bad things now seem, and no matter how poor the prospects of anything we might possibly do.
If the liberal recommendation were reliable, vis-à-vis reality, then we would all be dead already; for, our parents would not have survived to engender us. We ourselves are the outcome of the Keynesian long run. We are not all dead already. QED.
Turning back to the more practical: if Keynes is right, then it makes no sense to be an investor, properly so called. Keynes was himself a famously successful investor. Nuff said.