In a fortnight, if current models of the coronavirus spread remain unaltered, there will be about 2,300 dead from the virus in the US, and about 150,000 known to be infected. We won't know how many are actually infected, or were and recovered. We are blind -- not only for lack of good test information, but also for not having a familiar context. The last time anything like this happened was in 1918, and there's no one around now who remembers it. But Samuel Johnson's dictum is true, and we see it in the markets. Our collective minds are being concentrated on what matters.
Take, for instance, one of my pet peeves. Bitcoin is selling this morning at about $5,300, almost half its value a month ago. Compare that to the S&P500 (down a quarter, though it depends on the day and the hour), silver and platinum (down a third), or gold (down 7%). Sure, oil is down more, but that's manipulated. Hmmm . . . .
But I'm more interested in the counter-examples.
Consider what happens when a large chunk of the country is forced to work from home, and can only attend meetings remotely. Or when the country's students all need to attend classes on line. Well, what happens is that a mobile app that was popular among high school video bloggers and chatters suits up to shoulder an adult challenge. Zoom Video Communications is poised to be the leading facility for work-from-home learning and conferencing. https://www.investors.com/research/breakout-stocks-technical-analysis/zoom-stock-ipo-leads-coronavirus-stock-market/ Its stock went up 20% in the past month.
This is what concentrating the
mind means, coming to grips with reality and giving due concern to what really
matters. It's interesting that bitcoin's price today is about what it was a
year ago. In the meantime, it had gotten as high as $20,000. One now has to
wonder what that was all about. Not me, of course; I've been wondering that all
year long. In the end, Zoom
matters, and bitcoin doesn't. Zoom will be an essential tool for
sheltered-in-place knowledge workers, and bitcoin will remain the oddity it
always was. In a crisis, oddities don't do well. They get zoomed by
reality-based goods and services.
A few columns back, I noted that markets have never before reacted so badly to
epidemics. The Fever ([In]Securities Guest Blog by Aegis Frumento, Esq., BrokeAndBroker.com / March 5, 2020)
http://www.brokeandbroker.com/5100/aegis-frumento-insecurities-covid/. Not even the Spanish Flu pandemic of 1918 caused the markets to
quaver like they have today. I suggested from that historical perspective that
something else was at play this time. The fate of bitcoin offers a clue: unlike
in 1918, too much of today's economy is built on sand -- on unessential goods
and services. The hospitality industry, for example, may lay off 4 million
workers in the next few days. That's 2.5% of the US labor force. The ripple
effect of those job losses could easily result in an increase in unemployment
of over 8%. That will put us almost back where we were during the Great Recession
a dozen years ago.