Position Update: No Changes, Ignore The Stock Pump, 15 Days Doesn’t Help

Reminder: No webinar today, our next webinar is Wednesday, no changes to our portfolio, don’t worry about the stimulus bill or little pop in the stock market.

Trump rolled out a national “15-day slow the spread” stay at home order yesterday that I’m afraid is only the first step in many America will need to take to fight this disease.

Unfortunately, it takes more along the lines of 60 days and at the very minimum 30 days for such actions to really have a positive outcome for society and the economy.

Why is 15 days not enough?

#1. The first 7-21 days of this illness you show no symptoms and the virus simply grows in your throat or chest and is highly contagious during this period.

#2. After the disease has caused enough damage in your body your immune system finally figures out what’s going on and you begin to have a fever, cough, shortness of breath, headache, diarrhea or a sore throat. This period lasts 7-21 days and you’re also contagious.

#3. Assuming you are able to beat the virus after your fever has come back down you’re still contagious for what I believe could be another 7-14 days based on limited data.

All in all you can safely catch the virus, beat it and develop immunity so you don’t get sick from it again in the future nor can you spread the disease in around 56 days.

So what good will 15 days of “we trust you to stay at home” do for America?

It won’t have any immediate effect on the hospital systems which will soon be tragically overloaded in epicenters like New York.

I still expect the death count to rise ~10 fold at the end of this 15 day stint.

However, assuming this is just “Phase 1” of Trump’s Covid-19 response and that a “Phase 2” will be martial law enforcing further restrictions, then in 2 weeks time we may see the number of deaths per day flatline in 2 weeks time instead of grow exponentially.

If we can then keep people inside for no less than an additional 15-30 days after this 15-day period, we may be able to “convert” everyone who’s been infected thus far into an “immune covid-19 human” who can get back to work.

Trump continues to say, “the cure can’t be worse than the disease,” which anyone who’s had a family member face cancer and treatment with chemotherapy can relate to.

If we let everyone back in in 15 days, a very small group will find immunity and the rest of the populace already infected will go on their merry way of spreading the disease.

If we really want to curb the spread of the disease it will take no less than 45-60 days.

The longer these restrictions go on, the more economic output America loses, the more money the Government will have to handout and thus more losses to asset classes which currently store value.

Does giving corporations and the general populace free money create economic output?

Not at all, not if that populace is sitting at home and the corporations are turned off.

So where will the 2 trillion in economic value really come from?

It will come directly out of assets that currently store value, likely from the stock market and directly into the Bond market, so I would ignore today’s stock rally, it won’t last.

The ONLY economic cure I’m afraid, is to let this disease rip through society, do it’s damage, create herd immunity and get everyone back to work ASAP.

America cannot survive 18 months of this for a vaccine and unfortunately until our healthcare system has a massive “upgrade” we’re not ready to let it rip through and do it’s damage.

So we’re stuck staying at home in the meanwhile which is extremely negative for stock valuations the longer this goes on and bullish for Bonds and Gold.

See everyone tomorrow live!




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