by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
May 12, 2020
THIS COUNTRY IS BITTERLY DIVIDED on most issues, including the Big One — the public is wary, hardly convinced that the coronavirus has been subdued, but President Trump wants “warriors” to open up the country. And today the public will get a very cautious message from Dr. Anthony Fauci.
EXPECT A MEDIA FRENZY as Fauci tells a Senate committee later this morning that if the country opens up too quickly, there will be “needless suffering and death.” Fauci enjoys phenomenal polls; he’s widely respected — and he will tell the country to go very slowly. At the least, his testimony will be an implicit repudiation of Trump.
MOST SURVEYS SHOW 60 to 70 percent of Americans are worried that the country is re-opening too soon. But the media has focused on perhaps a quarter of the country — egged on by raucous protesters who say their rights are being violated; they want to return to jobs, beaches and restaurants. The majority of Americans are leery.
NOT SURPRISINGLY, THIS HAS BECOME POLITICIZED: Trump said over the weekend that the state of Pennsylvania was going slow on re-opening because the state’s Democratic governor wants to hurt the president’s re-election prospects. So Trump probably will conclude today that Fauci also wants to hurt his re-election prospects.
BUT THE DESIRE TO OPEN UP is growing, even though new infections and deaths have not leveled off in many parts of the country, such as the Washington DC metropolitan area. Even in conservative rural states the virus still rages, and people are uneasy.
IF YOU WANT A V-SHAPED RECOVERY, you have to accept a premise that the public will continue to embrace social distancing and other precautions, with the economy picking up, thanks in large part to massive stimulus from Congress and the Fed.
BUT NEW STIMULUS from Congress is gridlocked and could remain stalled for at least another two months. Everyone has issues with parts of the next stimulus bill, but without more aid cities could face bankruptcy, prolonging this deep recession. So a bill will pass, eventually.
THE BATTLE LINES ARE DRAWN: President Trump wants “warriors” to end the lockdown — but those pesky scientists, they want to move very slowly, because they know what looms: a second wave, or perhaps a continuation of the first wave as clusters of new infections erupt around the country, with fatalities surging past 100,000 by June.
FACUI CAN WARN AND PLEAD, but the country will open up. We think, therefore, that the key is all of us — will we keep our distance, wear masks, refrain from shaking hands, and sanitize constantly? Fauci will implore us today to adhere to those practices, because he knows the virus won’t be contained until a vaccine is available, hopefully by winter.
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This post was first published at the AGF Perspectives Blog.
