The Covid Lockdown and U.S. Stock Markets

Guest News Brief by Kip Hansen  —  18 May 2020

featured_imageThere has been a lot of talk in the press and from talking heads that the Covid lockdown has crashed stock markets and caused loses of trillions of dollars.

It is true that stock markets took an initial heavy hit – but all things in the stock markets are relative.  Of course, there has been an “economic downturn” – the economy has been literally turned down by edict from national and state governments – millions have been put out of work as their employers have been ordered to stop doing business by the multitude of nations that have sacrificed their economies in the [misguided] belief that doing so “saves lives”.

But the idea that the Worldwide Covid Lockdown has crashed U.S. stock markets   is simply not true.

Here is the data, from Yahoo Finance, as of 1145 hrs ET, 18 May 2020:

[Narrow yellow horizontal lines have been drawn at today’s level to illustrate when this level was last seen in the market. You can see the full sized originals from this page  —  clicking on the three indexes at the top bring up individual pages with graphs.  You can select “Max” for the time period, and “Full Screen” to see the updated interactive versions of the  images used below  – kh ]

It is obvious that there was a shock response to ordered lockdowns visible in each of the three indexes – but these sharp drops only took markets back down to the levels seem in late 2017 or early 2018 – two years of unconstrained gains were temporarily lost.

The NASDAQ has almost entirely recovered.  The S&P is back up to levels seen last year while the Dow Jones (remember, this is the Dow Jones Industrial Average) is still down at the levels seen in 2018 and 2019.

There is no stockmarket crash in response to the pandemic – the three major U.S. markets are all higher today than they were in January 2019.  Only the Dow Jones Industrial Average is even seriously lagging.

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 Author’s Comment:

And that’s the news for the day….

Don’t ask me to explain it, I don’t know.  I am no financial wizard.  But it sure is interesting – even I thought the markets would be severely affected by shutting down of much of our economic engine.

Personal note:  Many of us older citizens have our life savings invested in various ways – some have pension funds, some have personal nest eggs – that depend on the health of the stock and bond markets.  Depending on the savvy of our financial advisors – be it ourselves or finance professionals – we have weathered the storm rather handily, despite ill-advised actions by our governments in response to the Covid pandemic.

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98 thoughts on “The Covid Lockdown and U.S. Stock Markets

  1. Not sure who was the OEM for those graphs, but if they are reading this yellow lines on a white background are a tad hard to see.

    Any chance of a different colour next time? 🙂

    • Craig ==> I know — I do not like to alter other’s graphs very much….so I take a light touch.

      You can right click on the image, select Open Image in Browser (wording depends on your specific browser), and when opened in its own window, usually Control + enlarges.

      The graphs as from Yahoo Finance, and the link is given.

      The Yahoo pages are interactive and automagically draw the line, in black.

  2. I think it maters more what sectors you are invested in. If you are still in oil and gas, then you got hammered with the ‘coincidental’ Saudi/Russian price war and the economic downturn and less oil consumption. But the higher quality names will survive and thrive as long as the ‘new normal’ doesn’t compromise the business climate with a long drawn out recovery, or new taxes such as a GST/HST tax for the USA. Or a carbon tax if the Dems are elected. Then it is a perpetual recession/depression no matter what.

    Even the new debt levels the world is facing is effectively currency debasement which means my few million bucks I saved up for my retirement is worth much less in future purchasing power. Us older middle class with a lifetime investment/saving, house paid for and money in the bank will wind up paying for this, one way or the other. Along with our kids and grand kids since they will inherit our wealth.

    But if you picked some of the higher tech names like Zoom or Amazon, then you did well. And if you picked up some of the promising biotechs that are working on the C-19 vaccine, then you are up big time. My best overall value return the last 10-12 years since the last train wreck is physical Gold. I just hope I don’t forget where I buried it all.

    • Earthling2 ==> Welcome to the nasty world of finance.

      My wife and I have two very savvy financial advisors — we are well diversified and last year dumped about half of our equities taking the profit and re-ordering our war chest.

      I do not make any specific equity purchases — if I do, I tend to gamble — and I am a lousy gambler.

      Hope you remember where you buried that gold….you may need it.

      • @Kip – You do indeed have “keepers” as financial advisors.

        A savvy financial advisor knows that the market does not continuously go up – and that edging into an overvalued condition, there will be an inevitable downward correction.

        That same savvy financial advisor knows what he does not know – nobody knows when that correction is going to be triggered. So he gets his clients out of their exposure when the overvaluation hits his own trigger point (lower than the inevitable one, and setting that is where experience comes into play).

        Somewhere in between a quarter and a third of the drop was the correction for overvaluation – triggered by, but not caused by, the panic reaction. That is the reason for the equally fast upward correction as the panic fades, and business returns to the business of business.

        Still shaky, though – until mid-November. Then either a continued rise, or an even worse collapse. There, I have hopes, but nobody has a prediction that I trust 100%.

        @Earthling – gold is indeed a good hedge. Some, but not a lot of downside (so long as you remember where to start digging). Very good upside if a disaster in November manifests.

        • WO ==> My wife and I self-financed 15 years of volunteer humanitarian work since the turn of the century — and came away with a better financial situation than we had going in. That the results of savvy financial advisors — I take no credit.

      • Hanson
        How could you say there was no stock market crash ?

        Of course there was.

        The crash was followed by a roughly 50 percent rally.

        The purpose of this article seems to be bragging about your personal.finances.

        • Richard ==> The point of the essay is that stock market fluctuations have to be viewed relative to something.

          I say clearly, in the second paragraph: “It is true that stock markets took an initial heavy hit – but all things in the stock markets are relative.”

          For the Dow to have lost 2 years of gains is not a crash — it is at best termed a “correction” — but broadly, the other two major US markets are essentially unchanged only a few months later.

          Compare to the 1929 crash — a real crash — the Dow Jones lost 48% of its value.

          As of today, the Down is down from its highest peak in Feb 2020 (abut 29,500) to 24,500 as of today. That is a loss of 17%. — at the same level as the Dow in January 2018.

          The S&P is back to near a record high against decadaL levels. The NASDAQ closed yesterday just a bit 4% short of its all-time (Feb 2020) high.

          You may call that a “crash” if you wish . . . but for most people holding long-term investments — or even investors who look at their five-year gains and loses, even if heavily invested in Dow Jones equities, — they are 36% up. From the 5-year viewpoint, investors in the NASDAQ equities have still doubled (216%) their money. S&P investors are up 46% over five years — about 10% per year, a very good rate of return — even after what you want to call a “crash”.

          Stock market values are relative — and investors are doing very well. Day traders, who are basically gamblers, if they bet the wrong way, took a terrible hit.

          • Hanson
            You wrote such a long reply that I’m going to be a nice guy and not argue about anything you wrote.

            The crash in 1987 turned out to be a correction in a bull market.

            The 2020 crash may turn out to be an unusally large correction in an 11 year bull market … or the first step down in a new bear market.

            The correct answer can only be known later, by looking back.

            Bear markets have had great rallies (corrections) in the past, but averages failed to reach new highs, and the bear market continued.

            Stock valuations that I have been following since the 1970s were unusually high before the virus showed up. These valuations, such as the Price to Sales Ratio, predict low stock returns over the next 10 years.

            For the next year, no one knows.

            In general, investors are most confident near bull market peaks.

            I want readers to know that I enjoy over 90 percent of your articles, and should say that more often in comments.

            I didn’t understand the purpose of this article, but “crash” obviously means different things to different people.

          • Richard ==> The difference is in perspective — short term or long term.

            My two financial advisors have vastly different viewpoints

            One is a consummate Day Trader who makes his living playing stock market roulette with a trading window of days, weeks, months. “Get in, make a few percent, get out.”

            The other advisor is a long-term investment guy — he looks at the market in terms of years — 5, 10, 20 — depending on client. This guy is steady and holds the course.

            Between the two — we get “pretty goof advice”.

            The Day Trader experienced a “crash” while the long-term advisor is still pleased with his recommended portfolios, unconcerned by “paper loses”.

  3. When the money printer goes BRRRR at the Federal Reserve, it tends to prop up the equities markets. The truth is this could be a short-term bear market rally that subsequently plummets again. After the 1929 crash, there was a 6 month rally in the stock market, before it plummeted to new lows as more bad news about the economy came out. This might be similar.

    • markets are way high and were due for a fall over regardless.
      artificially propped up by all the twisted deals they create to CYA
      wonder how many rehypothecated paper gold certs there are now for every real oz of gold?
      was at 100 per oz last i looked in thelast banksters crash
      but they didnt want a crash this time
      yet..anyway
      give em time.
      stocks n shares are a daft way to provide for old age or anything else
      ephemera
      easy come easier gone.

    • “After the 1929 crash, there was a 6 month rally in the stock market, before it plummeted to new lows as more bad news about the economy came out. This might be similar.”

      You will always get a rebound in the Stock Market, no matter what kind of economy you have.

      The rebound in 1929 was just a reflex rebound. After the market goes down a certain amount, some people figure it has gone too low, and just back in. Whether they are correct or not remains to be seen and in the case of 1929, the basic economy was so bad, that further drops in the Stock Market were inevitable.

      But today is not 1929. Not even close. The U.S. has a robust economy, maybe the best we have ever had, and it has not gone away, it has just been taking a pause, and now it is starting to move again and the stock market is going to go up, up, up.

      Remember: You only lose money in the stock market when you sell your stock. 🙂 As Kip points out, if you are a longterm investor, your portfolio has improved dramatically over the last few months and the stock market was up 911 points yesterday, on news of a possible viable vaccine for the Wuhan virus.

  4. Hi Kip,

    What is considered “data” here cannot be presented in isolation, unfortunately. You have to factor in other drivers, only some of which include:

    1. Even before COVID it was taking USD $3.0 in debt to finance USD $1.0 in “GDP”.

    2. Virtually all of the wealth in the US is now concentrated in the top 5%. But its more complicated than that. The architecture of the ultra-financialized US economy means that what you think of as stock market buoyancy is, beneath the surface, just a marker of US financial elites buying stocks FROM EACH OTHER using freshly minted dollars, with liquidty “to the moon” (well, so far) provided by the Fed out of thin air. Problem is, that debt is allocated equallly among your citizens and so it is in effect just a massive transfer of wealth from poor to rich. A glance at the long term charts makes this clear.

    (And yet many on this blog wonder where the drive towards socialism is coming from – a drive that is deeply intertwined with public opinions on issues like climate, by the way)

    3. In geostrategic terms the globalised world system had in any event been splitting into 2 – like a form of cellular mitosis – between the Shanghai Cooperation Organisation (SCO) and what you might term the Washington/Atlantic consensus. With significant consequences for global commerce, debt and the post WW2 military detente.

    4. Most of these trends were well in place well before COVID. In a sense, all the virus (and the iatrogenic response) has done is act as a “time machine” by compressing what was inevitable over the next 3-5 years into 6-12 months.

    This is not 1929, or 1998, or 2000, or 2009. This time its Main Street for real; Wile E. Coyote can only hang in space for so long, and we all know what happens when he finally dares look down.

    Best

    Peter

  5. With the huge pump of money it seems hard to ignore stocks. Real estate has questions if it is commercial or residential. Public transportation has been rendered beyond fearful. Big buildings are also fearful. If jobs do not return then residential is in question. All of the economic issues certainly have not been thought out by governments taking the nuclear option of lockdowns. Certainly now the fear that they made a terribly bad call and then compounded the problem by rigidly holding to an originally fearful reaction.

    • Las Vegas was at the real estate meltdown epicenter in 2008.
      It will be too again in 2021 as probably 30% of mortgagees and rents out in Las Vegas didn’t make their 1 May payment. And with the Nevada Democrat Governor Sisilak determined to destroy the Nevada economy to make the people desperate for a socialist bailout, the Las Vegas meltdown and real estate implosion is all but certain now.

      • What happens in Vegas stays in Vegas. Nevada has already turned true Blue, as you know, so Sisolak needn’t worry about November. Both state chambers, all major state officers, both US Senators. and all but one of four US congressmen are Blue. Sad.

  6. “It is possible that we are in an entirely fraudulent market.
    A” this is a quote from the Big Short movie.

    Why do you think anything is real?

    I will postulate that it is the bankers that benefits. They will say, as they always do… who could have seen it coming? Certainly, not we bankers, hence we are not liable. Plus, when we replace your fiat monetary system, please trust us again. We are so trustworthy… heavens sake, we sent our own Mark Carney advocate at the UN for your CO2 taxes. Michael Mann will be swimming in research funds!

    Trust us!

    • The stock market has its own brand of logic, which is oftentimes both perverse and the exact opposite of what one might expect. The market is a discounting mechanism of future expectations. And while it may seem like a bit of a stretch, the stock market is currently looking ahead, well ahead, six to nine months.

  7. Forget the stock market. Most of that “money” is unrealized gains, now lost.

    What the COVID-19 response of lockdowns have done is destroy 3 months (and counting) of the 30% of the productivity of a $22 Trillion economy, just in the US. That’s about 30% hit to 1/4 of the GDP for 2020 so far, or ~8% downtick .. and still counting. That is productivity that cannot be recovered. Ever. And since government at all levels takes about 50% (35% federal, 15% state and local) of that for its use, that means tax collections will be down by almost $900Billion so far across all levels of government. The 50 states and local governments collections are down at around $270 billion… and counting. Gov Newsom of Cal last week said Cal had at that point a $54Billion hit so far to its tax collections. So the $270 Billion figure for the whole 50 states and local governments is in the ball park. That is just in lost tax revenue collection.

    That does not consider the hit to state public employee retirement funds investments, that are also on the negative side for 2020, when they were in January forecasting at least a 10% gain on investments. So there are huge fiscal problems just waiting to blow up at the state level now, between ever widening gap in revenue vs budgets, and a growing under-funding of public employee retirement funds. And since CalPERS and CalSTRS are heavy investors in the renewable energy scam, it is no wonder Pelosi is working hard to try to fund Green Renewable Energy projects by having the US Treasury print money that will ultimately funnel some of those many billions into the deeply underfunded Cal public employee retirements plans investment vehicles.

    • Seems like if one holds cash the printing presses will win just like Zimbabwe and Venezuela. Indeed I hear the experts in charge of California are looking for more free money.

    • Regarding state and teacher employee retirement plans. Now would be a great time to replace all of these gold plated defined benefit plans with defined contribution plans. When government employees can spike their last two or three year’s of earnings so they end up getting 100-125% of their final salaries in defined benefits for the rest of their life that is unsustainable. And look at how many states pension funds are way underfunded. California & Illinois come to mind.

    • In reply to: “What the COVID-19 response of lockdowns have done is destroy 3 months (and counting) of the 30% of the productivity of a $22 Trillion economy, just in the US. ”

      Your above comment is a fact, not an opinion.

      We and the fake news outlets are asleep. (Delingpole is awake, see link.) Our house (GDP) is on fire.

      https://www.breitbart.com/europe/2020/05/14/enjoy-your-furlough-your-grandchildren-will-be-paying-for-it/

      Our countries only have one GDP.

      The fire that is burning up our GDP, is as dangerous as,….

      …. losing your entire life savings, losing your well paying job, and losing a chance to get a well paying job.

      Isolating is destroying our economy.

      It is estimated that 2/3 of all independent restaurants in the US will be bankrupt by the end of this year. Most of the airlines will be bankrupt by end of year, if we continue to isolate. No airlines, massive public debt, no tourism. Banks are starting to go bankrupt.

      Companies are now starting to cut and stop dividends payments. The problem as you note, is US private and public pension funds have invested in companies to get funds to pay pensions.

      Joel,
      China’s GDP has only dropped 8%. They are no longer isolating.

      The US, Canadian, UK, France, German, and so on money machine (GPD) is down 30% and we are borrowing money to pay people not to work. That is not sustainable.

      We are spending more than we make…. …

      And we believe that since this is an emergency spending more than you make will somehow not result in currency collapse.

      Comment: There are two scientific options that are available now to enable us to break isolation with no significant increase in cases or deaths. We need to stop fighting and change what is broken in our countries.

    • Joel,
      “That is productivity that cannot be recovered. Ever.”
      Now that is speaking truth to power. This is exactly what everybody out there that is sitting home contentedly collecting unemployment needs to understand. You are not “safe” sheltering at home. They are lying to you. Our economy is collapsing in slow motion. We can still stop it, but the longer we wait, the harder it will be to prevent a catastrophe. Already the damage is enough that I don’t have any doubt that the total loss of life over the next couple of years attributable to the shutdown will be greater than the losses due to the virus itself. The virologists and infectious disease folks may be experts in their fields, but they know jack about the economy. Our leaders are supposed to take all the input from the experts and make balanced decisions. They failed and panicked (or took advantage of the public’s fear). Just remember later how we sat around and fiddled (worried only about the virus) while Rome burned (the economy shrank/collapsed).

  8. The stock market has predicted nine of the past five recessions—a joke from master Keynesian of decades ago Paul Samuelson.

  9. Kip,
    it seems obvious that the stock market is not longer a particularly reliable indicator of the underlying
    economy. Part of that is due to the COVID-19 relief bills which meant that the Federal Reserve is printing
    trillions of dollars in quantative easing and that money goes to the rich who have nothing to spend it on
    except buying assets. The same thing happened in 2008 after the finanical crisis and in 2018 after Trump’s tax cuts to the wealthy. Going further back after the dot com bubble burst in 2000 the government deliberately inflated an asset bubble in the home market to make people feel better despite reality.

    • Izaak ==> Good thing I wasn’t talking about The Economy.

      This post is simply observational — to counter misleading MSM reports.

    • 2018 after Trump’s tax cuts to the wealthy.

      And yet, You are probably one of the ones that whines about the 10K cap on SALT, when it’s the wealthy that that 10K cap is “hurting”. the poor don’t come close to meeting the 10K SALT cap. (and if you don’t know what the 10K cap on SALT is then you clearly don’t know what you are talking about when it comes to the Trump tax cuts).

  10. “2018 after Trump’s tax cuts to the wealthy”

    LMAO wut? Lay off the booze. You are so far off the facts lol

    • If you define “wealthy” as anyone with a job pulling in enough to pay the rent, utilities and put food on the table, then sure that talking point works great. It used to be in the microprint at the bottom of the page, but then the people publishing that talking point forgot to include it.

      Just like the former US presidents “Billionaires Tax” that hit me rather hard even though my family income at the time was about 125,000. A billion sure was a lot smaller than it used to be!

      • Pelosi’s new COVID19 “relief” bill includes:
        Payments to people who are in the country illegally
        New regulations to make it easier for those who are in the country illegally to find work
        Tax cuts for wealthy individuals in blue states

      • Yes basically any one who works and save money. Those of us who did not try to spend ourselves rich.

  11. Well, the stock market is not the economy, after all!

    “There’s been a disconnect between the stock market and the real economy for years. In the wake of the pandemic, it’s become much more profound, – Joe Brusuelas”

    The chasm between the real economy and S&P is because its components, which include Microsoft (MSFT), Apple (AAPL) and Chevron (CVX) have the financial resources to ride out the storm. Some of them, like Amazon (AMZN), are even benefiting from the crisis. Microsoft and Apple added $170 billion in stock market value between them in a single week this month.

    I wouldn’t be getting too excited, its also one of the most expensive valuations (23X) in history – near dot-com-era levels and predicted to go above the all time record of 26, approaching 30 times the market multiple.

    The stock market is being propped up by The Federal Reserve* and it is spending trillions. My uneducated guess, is that this action will come at a real cost to the life and livelihoods of everyone in the end.

    “The Fed gave up on bazookas, skipped helicopters and went straight for B-52 Stratofortress Bombers to carpet-bomb the financial markets with cash…The immediate reaction of the financial markets was: ‘It’s raining money! Hallelujah! It’s raining money!’ – Ed Yardeni”

    You don’t solve a debt bubble by making it bigger. We have debt based money supply and that – euphemistically termed – “montisation” is its lifeblood. The problem is that there are too many ticks and not enough dog! The ticks being financiers and the dog the people!

    Not to be too pessimistic but It’s almost as if it’s not enough to simply plunge the economy into debt, they first want to ring every last penny of credit out of it! ;-(

    * ‘The Federal Reserve slashed interest rates to zero, promised to buy an unlimited amount of bonds, rolled out a series of emergency lending programs and for the first time, is directing the purchase of corporate bonds including junk bonds. A vehicle run by the US central bank has already begun buying corporate bond ETFs.’

  12. And I’m a fan of Monet: “montisation” above should be monetisation an alternative spelling of monetization! 😉

  13. It’s worth noting that the actual hardship imposed on society directly from the virus is pretty inconsequential. No mass die-offs, food rotting on the farms with dead farmers, commercial transport stalled with dead drivers, etc. The economic impact is a direct (and calculated) result of government action and its cheerleaders in the MSM.
    I can hardly wait for our governments to take similar actions to reduce the road toll.
    Nonetheless, any post-COVID inquiry into this situation is practically bound to conclude that government actions were proportionate and reasonable. I wonder what will happen next time a mildly dangerous pandemic hits. Will crashing the global economy be seen as preferable to carrying on as normally as possible while directing resources to the most vulnerable? I suppose we’ll just have to wait and see.

    • “I wonder what will happen next time a mildly dangerous pandemic hits.”

      Well, first of all, how do you determine it is “mild”? Answer: You don’t, because you have very little information about the new virus, so you have to guess and buy time until you can find out something about the virus. Which way do you guess? To safeguard the most people, or to allow society to go along with business as usual?

      What will be done when a new highly contagious virus shows up is exactly what we did with the Wuhan virus. We will socially distance until we have taken the measure of the virus.

      Given our experience with the Wuhan virus, we will socially distance in a much better way than we have done with the Wuhan virus, and the focus on medical solutions that the Wuhan virus has caused will benefit us when the next virus comes along.

      We may acquire the abilty to quickly develop a vaccine for just about all viruses. The company president who has developed the vaccine that made the stock market soar yesterday says his technology can be applied to all viruses. His technology is really a fascinating subject in itself.

      The next time we will handle an unknown virus much better than this time. We should consider ourselves lucky that the Wuhan virus wasn’t any more deadly than it is, although it is certainly deadly enough to take measures against. This whole exercise was a learning experience for science and for society and we will know better how to handle future incidents as a consequence..

      • Unfortunately, there are two competing lessons that may be learned from COVID-19 and the reactions thereto. One might be termed the “Swedish lesson”: “Let’s identify the risks as soon and as best we can, inform the public of them, and let the public accept and adapt to the risks as they desire.” The other could be called “the Pelosi option”: “This is a good excuse to seize as much power as we can, and spend as much money as we want, on what we want, as long as we want.” I would be hard pressed to predict how “we will handle… the next time”.

        • Exactly! I won’t weigh on whether there will be a working vaccine or a real cure because it’s above my head. I will say that given what I do know the odds are low anytime soon. Other than those two things there is absolutely nothing we can do about it. Move on with life (and stop shooting ourselves in the foot or worse) and the living as we have with every other pandemic in history.

  14. The uncorrected effect of shutting down businesses is to eliminate the goods and services they would otherwise provide. Throwing money at the problem will not restore these. You can create new money and give it to my barber so she can pay her mortgage, but that will not give me a haircut.

  15. CHRIS MARTENSON: THE EVILS OF MONEY PRINTING (CORONAVIRUS RESPONSE)
    video – 40 mins 51 secs

  16. From the article: “millions have been put out of work as their employers have been ordered to stop doing business by the multitude of nations that have sacrificed their economies in the [misguided] belief that doing so “saves lives”.

    The initial lockdown was *not* misguided. If the Wuhan virus were as lethal as the Ebola virus and as infectious as the Wuhan virus, then you wouldn’t be saying such things. You would be saying we should have locked down sooner and more tightly.

    After-the-fact analysis is not helpful, in fact, it is harmful, as it misrepresents reality.

    What should we do when the next unknown, highly infectious disease rears its ugly head? Just let it run wild? That seems to be your implication.

    It’s easy to see what should have been done NOW. Hindsight is 20/20.

    • The initial lockdown had a possibly reasonable rationale: to avoid overloading our hospitals so as to avoid ADDITIONAL UNNECESSARY deaths such overload would cause. However, within 2 weeks it became obvious the only place in the US that might need that lockdown was NYC. Therefore, lockdowns except NYC should have been 100% lifted.

      The rationale that has evolved, which has no basis in science or in reasonable public policy, is that lockdowns will “slow” the spread of the virus. Two points: (1) there’s little evidence that is true, (2) there would be little ultimate benefit even if the virus spread were slowed.

      • “The rationale that has evolved, which has no basis in science or in reasonable public policy, is that lockdowns will “slow” the spread of the virus. Two points: (1) there’s little evidence that is true, (2) there would be little ultimate benefit even if the virus spread were slowed.”

        You couldn’t prove those points if your life depended on doing so. That is your *opinion*.

        Come back and argue this position when you get some facts.

    • Tom, the point to contend in that sentence isn’t the word “misguided”, as that can be debated and there’s good (and bad) arguments to be made on either side. Rather the contentious part of that quote is the bit about “save lives”. That was not the purpose of the lockdowns, the purpose of the lockdowns was to prevent the overwhelming of the hospitals (IE “flatten the curve”) – the same amount of cases were expected (the area under the curve) and consequentially the same amount of lives were expected to be lost, it was just the distribution of those lost lives that was hoped to be changed (spreading them out over a longer period instead of having them all at once).

      • John ==> Listen to any of NY Governor Andrew Cuomo’s daily press briefings. He claims everything he has done is to save “even one life”.

        • Which is why he authorized the sending of COVID-19 patients back into nursing homes, where the most vulnerable (the elderly with comorbidies) reside? Sorry his track record doesn’t match his rhetoric. And his rhetoric doesn’t change the facts of what was said when the lockdowns started – that they were meant to “flatten the curve” to prevent overwhelming the health systems, which is an entirely different goal than “saving lives”

          • John ==> I certainly agree with you — Cuomo is one of the Governors that have made tragic deadly decisions while asserting that they are “saving lives”.

  17. Fascinating, this being the architects of our own demise. Making irrational decisions that will destroy everything never used to be part of the human DND. I am sure the cov2 did not cause this change, did it?

  18. OT: Isn’t it about time that WUWT mentioned that President Trump said yesterday at his White House news conference that he had been taking hydroxychloroquine “for a couple of weeks” now?

    That would seem like a topic of discussion.

    I was watching the news conference yesterday where Trump said he was taking hydroxychloroquine and it was going on during the Fox News Channel program hosted by Neil Cavuto, and after the news conference was over, I thought Neil was going to need medical attention, as he got so exercised over Trump’s mention of hydroxychloroquine that he started talking so fast you couldn’t hardly understand what he was saying and what he was saying was an effort to throw cold water on hydroxychloroquine just as fast as he could.

    Neil just happened to have the president of Moderna, the maker of the new Wuhan virus vaccine that caused the stock market to soar 911 points, and Neil asked him about what he thought about the effectiveness of hydroxychloroquine and the president said he had treated numerous patients with hydroxychloroquine and had seen no measureable effects from it, which was just what Neil wanted to hear. Apparently, so much so, that he asked the man the same question over and over.

    And then Neil cited the flawed VA “study” which claimed hydroxychloroquine had no effect, but others say these conclusions were just the opposite of what the data showed. And then Neil cited some other study with which I was unfamiliar where he said it showed little of no good effects from hydroxychloroquine.

    Obviously, Neil was scared to death that someone was going to hear what the president said and would then run out and take hydroxychloroquine and it would harm them. I think Neil is sincere in his beliefs, but I think he is also misguided.

    It’s funny, the president of Moderna, said he had used hydroxychloroquine in his practice for 40 years for lupus and other patients and had never had occasion to send any of his patients to the hospital. That statment seemed to go right over Neil’s head.

    Dr. Seigel, the Fox News medical consultant, was asked about President Trump’s taking of hydroxychloroquine, and he said if the president’s doctor thought it was ok, then that was all that was required. And Dr. Seigel added that he thought hydroxychloroquine had saved his father’s life when he had the Wuhan virus not long ago.

    A doctor from Dallas was on the Laura Ingraham show the other night and she was treating her patients with hydroxychloroquine and she said she was having trouble with the pharmacists who were telling her she had to tell them why she was prescribing hydroxychloroquine before they would give it to her (Texas officials, where are you at on this?), and she was having a very hard time obtaining the drug in Texas.

    She was asked how effective she thought hydroxychloroquine was for her patients. You should have seen her face! It lit up like a light bulb with pleasure, and she said that hydroxychloroquine had been effective on all her patients from the sickest to the mildest cases.

    And of course, we have several studies that have shown that hydroxychloroquine is effective and does eliminate the virus from the body within about six days. And eliminating the virus from the body is very important right now.

    Anyway, the White House reporters were stunned when Trump made his announcement. Trump said he had been looking forward to making the hydroxychloroquine announcement and then seeing the looks on the reporter’s faces. From the sound of their voices, Trump got the desired effect! 🙂

    And the Leftwing News Media is hammering Trump about hydroxychloroquine. So what else is new?

    • You might imagine the Titanic has just been sunk, judging by the way this little blurb about HCQ was the lead news everywhere.

    • Tom ==> WUWT is not really a public health discussion blog. Generally, the blog tries to avoid 2-Party Politics (with varying degrees of success).

      I will be writing, after the smoke clears, an essay titled “Modern Scientific Controversies: The Quinine Wars”.

      What is [almost]ever mentioned in the press is that many major hospitals (Lenox Hill, NYC; Mass. General, Boston, etc) administer HCQ (sometimes with Azi) as a first line treatment to doctors and nurses as a preventative and as a first-line treatment for Covid atients.

      • “Tom ==> WUWT is not really a public health discussion blog.”

        It is since this Wuhan virus hit, Kip. 🙂

        We are discussing this topic more than any other, and for good reason, since it affects all our lives drastically.

        • Tom ==> Everybody is talking Covid — but not the nitty-gritty medical side — not the treatment side — etc. I was just agreeing that your Trump and HCQ comment was, as you said, Off Topic.

          There are medical sites that discuss treatments and symptoms and outcomes.

          Truthfully, I don’t think the virus had affected the world much more than any other of thew worst of the flu seasons. Government responses to the pandemic have had horrible consequences for little to no public health gain for most of the country.

      • Tom ==> WUWT is not really a public health discussion blog. Generally, the blog tries to avoid 2-Party Politics (with varying degrees of success).

        How cute, you actually believe that. So-called “Climate change” has been nothing but politics for decades, and it’s very much a 2-party politics issue with few exceptions.

        • John ==> The fact that Climate Change in the US is an issue that aligns often by political party does not change WUWT’s official position to try and avoid blatant 2-party politics.

          It is part of the Climate Change pathology that it is so political.

          The science is less so (but not immune).

    • It’s important to keep pointing out: millions of people have taken hydroxychloroquine during the last several decades, as prophylaxis against malaria and for its anti-inflammatory benefits in arthritis and other disorders. It is one of the relatively safest out there, based on real data. The heart rhythm issues and neurologic complications are rare and mostly reversible. Recent studies (eg the French Gautret study with over a thousand patients) show that the QT interval prolongation which does occur is rarely if ever a clinical problem.

      There is considerable evidence that hydroxychloroquine suppresses coronaviruses in the lab and in patients. Many trials are under way to see how well it works clinically as a prophylactic vs covid, for treatment of mild-moderate cases, and for salvage of severe cases, often paired with azithromycin and zinc. Double-blind controlled and randomized studies are the gold standard for science. However, they take time. Meanwhile the “art” of medicine, like in other areas of critical decision-making such as investing or military ops, is to do the best you can with the information you have here and now—-often incomplete information.

      When researchers like Dr. Fauci say they are against a treatment being used until it is proven in randomized, double-blind controlled trials, they reveal why they had best stay in the lab and out of the clinic. They are not wrong on the science; they are wrong on the application of the science in a time critical clinical setting.

      Trump is in a high risk group, by age and weight, and as president he cannot hide in the basement like Joe Biden. For him to take a safe drug combo like hydroxychloroquine/zinc for a few weeks is reasonable.

      • “They are not wrong on the science; they are wrong on the application of the science in a time critical clinical setting.”

        I’ll agree with that. Dr. Fauci is not wrong on the science, he is just very conservative about making claims he can’t back up.

        I’m not sure I would agree that he is wrong on the application since they have approved hydroxychloroquine for emergency use by anyone whose doctor will prescribe it.

        Dr. Fauci is just cautious. Wouldn’t we love to have a couple of hundred scientists like him in the climate science community, who demand evidence of something before claiming that something is true..

        • Tom ==> As I have said (many times here so far) there is a Science War motivated by Politics surrounding HCQ.

    • Here’s a link to what I was describing above about how Neil Cavuto was behaving after hearing Trump say he was taking hydroxychloroquine. It seems Trump didn’t like Neil’s diatribe, and I can understand why, since Neil was promoting the flawed “VA study” that Neil was using to claim hydroxychloroquine would harm people. This “study” has been debunked and the actual results show that most of the veterans who recieved the drug improved.

      Then, after the VA secretary further debunked the VA study at a Cabinet meeting yesterday, Neil again used it the next day to claim hydroxychloroquine was dangerous, dismissing the VA secretary’s explanation. I guess ole Neil is one of those folks who sees what he wants to see and nothing else. Neil should stick to reporting on business and get out of the medical advice business.

      https://www.breitbart.com/politics/2020/05/18/trump-slams-fox-news-hydroxychloroquine-coverage-looking-for-a-new-outlet/

  19. Well I bought oil and boats at the bottom. Has worked out pretty well. At the same time, I can tell you that our company orders are still very weak. Running at 50% of normal. We need to open up right now because the risks to the economy are much greater than the virus at this point.

    Of course they will drag it on and on.

    • “Of course they will drag it on and on.”

      I don’t think so. If we don’t have any major outbreaks, I think the American people are going to open up as fast as they can.

      One reason treatments like hydroxychloroquine are so important is that if they prove effective then people can resume their normal lives, filling up the sports stadiums and everything else.

      I think Americans are going to be pushing ahead as much as they think they can get away with, and if the infection remains under control, then we will be off to the races. And, so far, we have had no big infection outbreaks, although it is still a little bit early to see which way it is going.

      • Tom ==> Feel free to send me, by email, as much data on HCQ use as you ;like. My first name at the domain i4.net.

  20. The US markets will be the strongest coming out of the pandemic. There will not be a better place for your money over the next couple of years.

    • I agree. The U.S. is practically self-sufficient when it comes to generating GDP. About 75 percent of U.S. GDP is generated internally with buying and selling going on within the U.S., which leaves 25 percent of GDP, half of which is generated by trade between the U.S. and Cananda and Mexico. So almost 90 percent of U.S. GDP is generated “locally”.

      This means that as the world recovers from the Wuhan virus, many of the nations economies will be basket cases (the poorer nations) and won’t be able to generate much economic activity so nations that are dependent on that economic activity will also not do well, even if their economies are in fairly good shape.

      So in this circumstance, the U.S. is definitely well-postioned to recover quickly, and will be the best place in the world for economic activity.

      I heard some talking head on tv yesterday asking the question: “Where’s the demand?”

      He seemed to be fearful that there is no demand in the American economy and we need to pump more money into the system. My answer: The Demand is there already. It was there three months ago, before the virus, and it hasn’t gone away, so you shouldn’t be worrying about demand. The only thing this situation needs is for people to get back to living their lives and the demand will take care of itself.

  21. The markets are getting cash transfusions from the fed and have been for years. It’s why the stock markets are divorced from the real economy. No different from the banker in Monopoly handing out more money. The price of Park Place gets bid up.

    • Hail ==> Thank you — I was being lazy not to upload thew full-sized images and link to them. The yellow line is just an aid for the eye to see across the chart to where the market was at the same level.

  22. It’s more than just likely that soon enough the current financial politbureau punishes all players at the rigged casino that falls afoul of the “correct” dogma. We are enmeshed in a Neo-Soviet economic system that leads only one way: towards greater tyranny and tremendous suffering.

  23. Weak.

    The much stronger (and valid) argument is that most of the 40% drop in US stocks was caused by the oil price war between the 3 top producers – USA, Saudi Arabia, and Russia. Russia just took the opportunity to start throwing Molotov cocktails as demand was already drying up because of the Wuhan plague.

    The markets didn’t come back because there was some great news about plague treatments, or vaccines, or local governments lifting lock-downs. The markets recovery caame as soon as Trump negotiated a partial truce with the Saudis and Russians.

    • Duncan, Stocks were already falling before the Saudi/Russia dust up and would have continued to fall, with or without the oil price war (probably not as far nor as fast, but it was still already heading in that direction). The stock market hit bottom on March 23rd. Trump mentioned having talked with the leaders of both Russia and Saudi Arabia on April 2nd (a week and a half after the markets had already started their climb up from the bottom) and it wouldn’t be until the following week that they actually agreed to a deal. So nice try, but your theory doesn’t fit the timeline.

  24. FWIW, as a generally well-respected market timer, I think new highs are baked in. Yields in money markets are net negative, yet they are packed with money. Shorting the market via the SH is at record levels, despite a handsome rally. Implied volatility is quite high (which equates to options premiums being fat) means that smart money will be buying every dip, even if they are hedging risk, if only to capture those fat options premiums. The stock market’s the only liquid game in town that isn’t a guaranteed losing proposition.

    If you want to see some eye-opening charts, sign up for a trial and I’ll send them to you.

    • Ah yes Charting! Burton Malkiel used to have students create charts by flipping coins. He once punked one of his chartist friends by getting him spun up only to tell him it was created by one of his students as an exercise.

  25. I always go to a climate site for my financial analysis. /Sarc

    The market did indeed crashed. Investors acted like we were on the verge of a nuclear exchange. Once the panic subsided money flowed back into the market. All they did was transfer their wealth to those who get greedy when people get scared and scared when people get greedy. (The Buffett Rule.)

    • John ==> You may call it a “crash” if you wish . . . but for most people holding long-term investments — or even investors who look at their five-year gains and loses, even if heavily invested in Dow Jones equities, — they are 36% up. From the 5-year viewpoint, investors in the NASDAQ equities have still doubled (216%) their money. S&P investors are up 46% over five years — about 10% per year, a very good rate of return — even after what you want to call a “crash”.

      • People who held onto their sticks through the 1930s did very well. I guess there wasn’t a crash in 1929.

        • John ==> The Dow Jones did not return to its prior-to-1929 crash high until sometime in 1954 — 24 years later.

        • People who held onto their sticks through the 1930s

          their sticks were probably worth more than their stocks 😉

        • More seriously, John, by 1932 stocks were only worth 20% of what they were just before the market crashed in 1929, even by 1939 stocks had not regained the ground lost from that high as it was still over 50% below. so no, they didn’t do very well through the 1930s (hence why that time period is known as the Great Depression). Now if they were prescient enough to sell just before the crash and bought in at the 1932 bottom, they weren’t doing too bad, but not many people have that kind of psychic stock-timing ability.

          Bottom line, it took a long time to recover from the 1929 crash. And indeed most other crashes, the recovery tends to be measured in years. So far it’s only been a little over 3 months since the market started heading down and it’s been only 2 months since it started climbing back up and the market has regained more ground than it did throughout the entirety of the 1930s, so, sorry, but your comparison to the great depression era crash doesn’t pass the laugh test.

    • John, I’d personally describe it as more a severe correction than a crash. Yes the market did drop considerably, it’s also regained a good portion of that ground since (and it’s only been two months since it hit bottom). So even if you want to call it a crash (and many do), it’s unlike any crash we’ve ever had. On the plus side, It helped me make some really nice stock purchases that I’m quite happy with thanks to the Buffet Rule, though I’d have preferred China had done the right thing and prevented it from ever leaving Wuhan instead of allowing international travel out of there for a month after they stopped travel within China from there.

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