Deaths Will Spike This Week, But Trump and the Markets Are Focusing on Summer

April 6, 2020

4 minute read

THERE’S BITTER DISPUTES over alternative drugs, no one is sure small business relief will work, and Donald Trump continues to feud with detractors — same old Washington. But there’s a glimmer of hope: new virus cases have decreased in Italy and Spain, a breakthrough that bodes well for the U.S. by late April.

SINCE MARKETS LOOK AHEAD, there’s a decent rally brewing this morning, because investors can now envision something close to normal returning by summer. The most hopeful sign: social distancing is working on the West Coast, which eventually will give Donald Trump his rationale for ending the lockdown.

BUT THERE’S NO SUGAR-COATING how bad this week will be, with U.S. fatalities blowing past 10,000 and scientists worrying about new “hot spots.” And there will be a continuation of White House press conferences which simply increase confusion over new drugs, wearing masks, Easter services, etc.

A MAJOR FOCUS THIS WEEK will be the small business loan program, which got off to a rocky start late last week. If there’s a legitimate hope of getting the economy back on its feet by summer, this program will have to be running smoothly. Our guess is that it won’t provide much relief until early May, amid intense criticism.

MEDIA REPORTS THIS MORNING contend there was a tense confrontation over the weekend between Dr. Anthony Fauci and the volatile White House aide, Peter Navarro. They disagree over new drug therapies. Should Fauci depart, it would be a body blow to the Administration; should Nararro depart, virtually all of Washington would rejoice.

TWO VILLAINS: First — China, which is justly criticized for its lack of transparency.
Once this crisis is over, U.S. manufacturers may take a very hard look at their dependence on Chinese supply chains. China’s economic growth may not return to pre-virus levels for a very long time.

THE OTHER VILLAIN IS SAUDI ARABIA, which has overplayed its hand on energy policy. The U.S. has protected the Saudis from assaults from Iran and its proxies, but in return the kingdom has grossly increased its oil production in an attempt to crush competitors, including U.S. oil companies.

TRUMP CONSISTENTLY SAYS HE’S A “TARIFF GUY” and we wouldn’t be surprised to see him use that weapon if there’s no breakthrough in talks, now scheduled for Thursday. Trump may be running out of patience with the Saudis, which is why we think they’ll cut production moderately — perhaps not enough to produce a major price spike, but enough to put a floor under the price.

EVEN A MODEST DEAL would be good news for the stock market, which is beginning to factor in a return to normal by summer. We hope the market is correct, because the greatest risk is a premature end of the lockdown, which could revive the virus.

BUT A SENTIMENT IS GROWING, once again, that the lockdown must end soon because of the enormous damage to the economy; the Wall Street Journal editorial page and Fox News are leading the charge to loosen restrictions.

THIS WILL BECOME TRUMP’S GREATEST GAMBLE: If new infections continue to fall amid a return to normal, he will get credit. If infections head higher again after the lockdown ends, amid confusion over federal aid, Trump will be a one-term president.

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