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article imageOp-Ed: Hey, finance morons – What’s so surprising about a second wave?

By Paul Wallis     Jun 11, 2020 in Business
New - The rest of the world has been talking about a second wave for months. The Great American Stupor, aka the stock market, apparently wasn’t listening. This inexcusable failure of basic analysis deserves to be kicked.
It’s understandable that incompetent politicians who couldn’t run a dunghill can babble on idiotically about reopening while hundreds of thousands of people are dying. The huge Dow plunge, however, comes on the back of literally months of endless warnings about a second wave. This is a major leap off a cliff for the Dow, in particular.
The basic theory of a second wave is so obvious that it shouldn’t even need discussing to a mildly literate child. Since the finance sector believes the real world has nothing to do with anything, I’ll explain:
• Diseases don’t hold meetings.
• They show up when conditions are right. Those conditions include having large numbers of infected people onsite.
• The United States is by far the most highly infected country on the planet. No other country has millions of officially reported people infected.
• Reopening naturally includes a risk of a second wave if the original wave wasn’t contained, which it wasn’t, mainly thanks to political issues.
• A second wave was predicted, regularly, by everyone and anyone who knew anything about it, since the lockdown.
The finance sector, aka the world’s biggest case of hypochondria
I have some experience in the finance sector. I’ve been watching for a long time. I worked for Motley Fool for a while. Few things surprise me these days except the astonishing depth of market imbecility in crises.
This is a sector where a hole in a Nigerian oil pipe is an excuse to crank up oil prices by $20 a barrel. Where slight moves of “indicators” (sometimes called rectal breezes), causes stampedes to safe havens where a lot of capital is suddenly boosted.
A real crisis, however, produces much more than a stampede. It produces a massive hit to assets, real and imaginary. The market knew there was a lot wrong with the sub-primes in 2007, but kept going until the big crash of 2008. This time, the glaringly obvious risks of another long shutdown of the US economy have been totally ignored. Brilliant, aren’t you?
Let’s spell it out, shall we?
1. The US economy is in pitiful shape thanks to this pandemic.
2. The shutdown was necessary, and the Fed is keeping the markets alive and money circulating right now.
3. The 3 grudging months of condescension of the current shutdown were managed extremely badly. Mediocrity barely describes it.
4. Millions of jobs were lost, beggaring Main Street USA as usual.
5. Revenue is tanking thanks to the huge money being dragged out of the economy. Federal support can only do so much unless the economy restarts.
6. The restart will backfire badly if it has to shut down again due to months of chronic inefficiency in support and selective ignorance of key issues.
7. Debt and credit markets could be hit very hard indeed due to lack of cashflow and reduced availability of capital.
8. You could easily have a cascade of business failures that will make 2008 look like Christmas.
In other words, sky blue, grass green. …And you’re surprised by the big Dow kamikaze dive? Why?
Allow me to say that it’s highly unlikely the US finance sector could find a sunny day. Nobody expects much of the seemingly endless parade of serial nobodies in US finance. People who have to buy their degrees don’t do much right, ever. They usually don’t even understand basic information, and in this case, crayon-level communications don’t seem to work either.
It will cost a lot of money to manage a second wave in the US. Investors, shorted again by the insularity of markets which should know much better, are voting with their dollars. This will cost you, very big time, and you deserve it.
Call yourselves analysts?
These facts couldn’t possibly have been made clearer. The risks were always gigantic and highly visible, like 50 mile high billboards, and you missed all of them? What the hell are you there for, decoration?
This is not a risk environment you can avoid. To hell with the politics and the rest of the circus act. The bottom line is looking for you, and it’s not famous for its tact.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about Dow Jones crash June 2020, finance market culture, pandemic US, US economy pandemic
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