2020/03/25 Commentary: The Big 'Dis…'
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COMMENTARY: Wednesday, March 25, 2020
US COVID-19 Cases Map Courtesy Johns Hopkins University & Medicine. All rights reserved.
In modern slang that term means ‘disrespect’. And there is certainly no small amount of that going around… most recently in the US Senate’s sharp partisan barbs that members threw at each other in a manner not seen for many years. That was based on highly divergent views on the phase 3 COVID-19 economic rescue legislation. Should it contain additional funding that goes way beyond the essential financial support to individuals and companies during the current social distancing economic shutdown?
The rolling debate on that has belied all of the recent assertions that the rescue package is a ‘done deal’. Consider the announcements into early this morning that the Senate had passed its version of it which was such a fillip for the US equities and others. Yet here we are this afternoon listening to House Speaker Pelosi saying that in deference to their sensibilities, her members would get ‘at least’ a full 24 hours to review the legislation before being asked to vote on it. So no vote until Friday morning… maybe.
Wonderful, except for one factor: as recently revisited again, the old axiom remains, “The market is a creature of expectations.” And the poor markets are having a hard time knowing what to expect in the context of these rapid ‘agony and ecstasy’ (apologies to Irving Stone) rescue effort reversals. That has fostered another ‘dis’… disorderly price activity in the context of how critical that government action is to any sense the US and other global economies are going to come through this in good order.
Legislative Lollygagging
While the Republicans are also guilty of their own legislative shenanigans at times, the Democratic ‘asks’ in the case of this hypercritical situation were a bit outrageous. As noted previous, Pelosi & Co. were demanding quite a few items that are far removed from getting emergency financial support to businesses and individuals. Even a partial list hints at no small amount of, in psychological terms, dissociative (there’s that ‘dis’ again) behavior... like a split personality.
‘Nice Nancy’ wants to ‘look out for the little’ in the face of another ‘corporate giveaway’. However ‘Hard Bargaining Nancy’ is willing to sacrifice the essential timely passage of the rescue package on the altar of what Senate Majority Leader McConnell has rightly characterized as a ‘liberal wishlist’. After counselling his troops on their objections to some spending items in the phase 1 rescue legislation “"...gag and vote for it anyway", he was faced with the following demands from the Democrats (just a partial list):
Eliminate the US Postal Service debt; wind and solar tax credits; impose emissions standards on aircraft manufacturers and airlines; extension of nonimmigrant visas; corporate board diversity quotas; same day voter registration; even major funding for The Kennedy Center for the Performing Arts… and it goes on and on from there. It seems they are following the advice of top Obama advisor Rahm Emanuel (from 2009), “You never want a serious crisis to go to waste” ...regarding the ability to use it to further a broad agenda. (That’s real: https://youtu.be/1yeA_kHHLow.)
Yet as we have noted previous, her and Senator Schumer should wake up to the fact that the ‘little guy’ (who will soon be in the bread line) doesn’t give a damn about any of that. They want to know they can pay for their next meal, and won’t appreciate it if the companies they work for go bankrupt waiting for the ‘more enlightened’ Democratic Party approved rescue package. Holding up funds flowing at this critical time in an attempt to ‘shoehorn’ in the Green New Deal they can’t get passed during normal times is not the little guy’s idea of support.
The latest House shenanigans are going to make for an interesting market psychology into the weekend. And not just for the US equities. There will be some influence into the global govvies and developed economy currencies. Yet the impact from any further stall in the legislation passing will likely be far more major for the already recently slammed emerging currencies.
Disconsonant Dissembling Don
All of that said, it is also important to consider the ‘Disconsonant Dissembling’ (more ‘dis’) noted in last Friday’s research note. There are more than a few folks in government and the press who are guilty of ‘spinning’ their partisan view in a manner dissociated from the facts. However, the Trump administration’s attempt to paint everything in a favorable light leaves it less than effective in a way (as we noted two weeks ago) that has left an empty ‘well of confidence’.
This may seem inconsistent with Trump’s still relatively low approval rating rising through the course of the crisis. Yet that could be more so due to him taking a more presidential tone at the COVID-19 expert press conferences than any actual higher level of effective action. While we had already referred to his disconsonant dissembling in last Friday’s research, it is worth revisiting briefly to show it remains an issue on any truly effective address of the crisis in the US.
The Dissembler-in-Chief’s serial misstatements or outright falsehoods had already led to the emptying of the ‘well of confidence’ (March 12th research note on that.) The US government failure on the lack of COVID-19 testing kits has led to the message from Trump as recently as Thursday that, (paraphrased) “...if you have no symptoms, there is no need for you to get tested.”
In the context of the COVID-19 two-week ‘stealth’ (i.e. asymptomatic) contagion period… that’s crazy! An extensive Reuters article (https://reut.rs/3a2NyZh) referenced previous, reinforces the evidence that South Korea was far more well-prepared that the US to counter the COVID-19 spread. That was simply by identifying the necessity, and ramping up their COVID-19 tests production. They put their private pharmaceuticals companies on a ‘war’ footing (language Trump has belatedly adopted), and demanded massive COVID-19 test production for extensive testing; even of asymptomatic individuals.
By comparison the US lacked, an continues to lack, leadership on testing. Trump’s inability to allow a major problem was coming (not possible on his watch) versus seeming very demure and (falsely) assuring the American public that the government had it under control was a major failure.
Quite a bit of blame has been laid at the feet of a ‘bad’ old system for medical device approval. And that is true to some degree. Yet Trump came in as the ‘get it done’ kind of leader who could slash ‘red tape’. And in that regard his inability to shove the old rules aside to motivate the private pharmaceutical sector to solve the problem of a lack of test kits (as South Kores did) is a signature failure of his administration.
Still Averse to Testing?
This has led to the disconsonant dissembling that is cover for failure. Successful testing had allowed South Korea to close down selective areas of its economy. The alternative for the testing-deficient US is wholesale quarantine shutdown of much of the economy. It appears to us that a Trump who did not appreciate the severity of the situation and move timely to sweep away the red tape that prevented the US from ramping up test production must now maintain the party line that testing is not necessary for the asymptomatic.
While we will return to that shortly, first we’d like to share a very good COVID-19 resource: the Johns Hopkins Coronavirus Resource Center (https://coronavirus.jhu.edu/) that has so much accurate and relevant information. Also note a link fairly near the top to the COVID-19 Interactive Map (the source for this post’s opening graphic.)
This is a great actively updating and easily manipulated graphical and statistical resource, which will provide the real story regardless of what the politicians are saying. Along with other features, clicking on specific countries on the left sidebar will provide ‘Confirmed’ cases and ‘Daily Increase’ graphs on the lower left… very interesting. (Check out the graphs on that for South Korea.)
Getting back to Trump’s rear-end-covering aversion to testing even at this critical time, the sheer cost of the major US ‘social distancing’ shutdown has now caused him to develop a new fixation: reopening the economy as soon as possible to mitigate the cost. This means by possibly as soon as Easter Sunday on April 12th. That’s just 18 days from today, even as the virus is obviously still spreading into new areas.
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