The Kung-Flu puke continues

(1) It is impossible to gauge the impact the coronavirus is having on the economy, and not all of it is negative. Most corporations are carrying on with business as usual, but with accommodations for workers they could have easily put in place in the modern era to begin with. More spending is staying here instead of flowing out of the country.

(2) Some major events are being called off, which will impact local economies. But that does not mean people will not spend that money elsewhere. When people attend a basketball game, they are not putting more money into the economy than they otherwise would. They are spending money they would have otherwise spent on other forms of entertainment. That’s what they are going to do now.

(3) The hospitality industry is not systemically important to the US the way the banking system was systemically important to all consumers and corporations in 2008. Treating these events like they are erasing years of earnings for regular corporations in the stock market is idiocy. And I don’t care what anyone says, there is not an argument for bailing out cruise ships, most of which aren’t domestic operations anyway.

(4) Trump’s travel ban to Europe is unlikely to last as long as he says it will. This is exactly what I said he was going to do in an earlier post, and by all indications banning travel to affected areas for weeks has been highly successful at limiting the spread here. If you do not believe that to be true, we should have seen a dramatic escalation in cases here a month ago.

(5) There is likely going to be significant popular push back against these drastic measures at some point, probably some point soon. I do not see most Americans demonstrating fear on the level that the chattering class is pumping out. The resentment toward politicos arbitrarily trying to tank the economy will probably be strong.

(6) Trump has economic stimulus plans in the works, and they include things like a long-term payroll tax holiday. Woe to the politicians who stand in his way during an election year. They will be the ones who own any further pukes, not Trump. The American people have high levels of distrust in the media and Congress on a normal day. If they see you standing in the way of a normal, functioning economy, you are toast.

One thing Trump is doing that his critics underestimate is coming up with stimulus ideas that go directly to households. That is what did not happen in 2009 under Obama, and that’s why recovery efforts then floundered. That also means Trump’s “bailout” ideas will be a hell of a lot more popular with ordinary Americans than bailing out specific corporations (like Government Motors).

(7) Once those stimulus plans are released, you will see stocks reverse sharply, which they already do with even rumors of a stimulus.

(8) In the end, this is going to be a month-long period of extreme volatility. It’s not even unprecedented. It’s a great opportunity to invest in durable American brands.

2 thoughts on “The Kung-Flu puke continues

  1. “One thing Trump is doing that his critics underestimate is coming up with stimulus ideas that go directly to households.” I totally agree. That’s the kind of stimulus that matters to people and will trickle up into the coffers of businesses.

    I’m sitting here wondering when to get back into the market after getting out at the beginning of this drop. From what I’m seeing elsewhere, Coronavirus is basically a bad cold unless you’re 80+ and already compromised. Which is also who bad colds whack. Once we emotionally understand that, things will go back to normal.

    Also, I’d be interested to see the results of a city-wide virus test. My bet is that the infected population is at least 5x what we think it is because the symptoms are so mild for most.

    Liked by 1 person

    1. The coronavirus is literally one of the viruses that cause the common cold. This is entirely a story about medically vulnerable people and how some places are not equipped to deal with an aging population getting sick. My fear is not the illness at all, but the government, and not just the federal government. Imagine getting quarantined over a nasty cold because the government feels like they have to do something, anything, then you get a million-dollar bill. This whole thing is absurd.

      Liked by 1 person

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