While we are all sitting in our homes, keeping our distance from everyone and watching the news for anything that could give us hope that we’ll soon be sprung from what seems like house arrest, there are many news reports that give us “good” news. Do you ever get the feeling, though, that the good news they’re giving us is not quite real? You’re still stuck in your house. You can’t go out to eat. You can’t visit your grandchildren. You still can’t go to church. “But things are getting better,” they claim. “They’re bending the curve down.”
The other day a news reporter said that the “percentage increase” in the number of people being diagnosed with the Coronavirus was “coming down.” And they are right. On the week of March 16, the number of people in the US diagnosed with the virus increased by 806% from the week before. The next week the increase was only 416%, then 186%, then just 99%. So the curve was definitely being bent down, right? Well, let’s look at it another way. During the week of March 16th, 14,000 new Coronavirus cases were added to the roles. The next week we added 69,000, then 159,000, then 243,000. Is that bending the curve down? The percentage may be decreasing, but the numbers are increasing. That’s math. And that’s how some people can use math to cover over some numbers that may not fit their narrative.
But those numbers are not the most alarming to me, the percentage of deaths are. I’ve not heard anyone report these numbers, and they’re even hard for me to believe. But these are the statistics I, myself have been keeping, so I know they’re not cooked. All the information I’m giving you now comes from WorldOmeter, a data gathering outfit. On Monday, March 23rd, there were 41,569 reported cases of Coronavirus in the US. And 504 people had died with it. That is a 1.2% death rate. The next week the death rate had risen to 1.7%. The week after that it was at 2.9%, and one week later it was at 4%. Today when I checked it, the death rate had risen to 5.3%. The death rate, folks, continues to rise. People keep telling us the curve is being bent down, but the death rate is a pretty important statistic, and it’s still bending up. I keep hearing that there are a lot of people who have Coronavirus that don’t know it, so the death rate is “probably” a lot lower than that. That may be true. But if it is true now, wouldn’t it have been true when the death rate was only 1.2% four weeks ago? I don’t want to be an alarmist. I just want the scientists to pick a way they figure the numbers and stick with it.
Four weeks ago the national unemployment rate was at a 50 year low of 3.5%. With another 5.2 million workers filing for unemployment last week, it’s now nearing 18%. During the Great Depression 90 years ago the unemployment rate only got up to 25%. So in a period of about four weeks, our country has gone from having the best record on unemployment in 50 years to having the worst record in 90 years. Does that sound like it should be good news for the stock market?
The Dow rose 11.1% during the week of April 6th. Based on what? The stimulus? While the FED pumped 2 trillion dollars into the economy, how much of that represented “profit” for the companies receiving the stimulus? NONE! If factories are still idle and restaurants and stores are still empty, that means those companies are not only not making any money, but they are hemorrhaging money. Even though they can furlough their workers, they still have massive fixed costs, like rent, and equipment, and maintenance. An 11% increase in the stock price of the market was not only not warranted, it was lunacy! We’re told that markets look ahead, not backward. Of course, that’s true. But are investors really looking ahead, or are they just believing the stimulus will fix everything, thus sort of sticking their heads in the sand?
We just got the President’s plan of how the economy is going to open again in two weeks or a month. However, governor after governor has come on TV and announced their state will stay on lockdown for an additional two weeks. Then they’ve done it again. If we’re bending the curve down, then why are they keeping us home?
I don’t run a factory, but I do run a small business. My business is financial advice. When I invest someone’s life savings for them, I take on a solemn responsibility to manage their assets in the most prudent way possible. I don’t want someone to lose a lot of money because I believed what the pundits were saying and distrusted my own common sense to look around and see what was going on. And folks, what I’m seeing right now is not lining up with what the TV anchors and the politicians are saying.
This came to me in an email dated Friday, April 17.
“We saw markets drop more than 30% in a month, the quickest decline of that magnitude on record,” says Jody Jonsson, a global equity portfolio manager at Capital Group. “This is a truly global downturn that has impacted virtually every sector. It can be very disorienting, and I think the market is having a hard time sizing the depth and duration of the recession that is coming.”
Lord, I hope I’m wrong. I’d love to get back out and go to a nice restaurant for a good steak. I’d love to go back to church. I’d love to just hug my grandkids. But safety is my concern at the moment, not just our physical safety, but the safety of our hard-won assets. If we miss some gains on the upside, so be it. I’d rather lose some of the potential gain in an investment than lose the investment.
I will continue to keep my own records on this virus. When I see a bending down of the statistics that really matter I will let you know. I hope it is soon. Hang in there with me. And if you need anything from us, don’t hesitate to call me at 864-582-7766.