Market Commentary for the week of April 13, 2020

Why can't we....?

Up until recently, the kind of economic and social upheaval we are now experiencing was something out of history books.  But now, immersed as we are in viral plague and discussions about respirators, ventilators, PPE, and masks, we are confronted with a new reality.  The fact is that this historic inflection point offers us an occasion to reformulate our thinking about a variety of issues encompassing social, financial and spiritual reengineering.
But keep this in mind: community-making and goal setting is not necessarily about laws and structure of power, but rather about how opportunity is distributed to all members of society.  Education, both in the schools and in the home, is a key to "raising the tide" for people no matter their geography or social standing.
While the work to be done in the future is fodder for debate, most of us are focusing on the here and now.
In many parts of the world the viral pandemic is still rampant.  That has had the unfortunate effect of displacing workers, disrupting commerce, and placing enormous pressures upon our first, and last, line of defense, our medical community.
Likewise, investors are witnessing trillions of dollars of valuation evaporate because markets are declining in the face of uncertainty about a timeline or strategy for recovery.  In spite of last week's buying frenzy, there is still a long way to go before determining the exact bottom.
With that in mind, I believe that we have an obligation to pose questions that deal with today's turmoil as well as  those that relate to a new order which follows. And, indeed, there are so many questions now for which the answers are indeterminable.   For example, we must realize that there is no immediate antidote either for the virus or the economic pandemic. I wrote recently in my Quarterly Commentary (Q2, 2020) that a consumer led recovery is simply not possible at this juncture.  Instead, government and the private sector must create those stimuli.  Also, traditional "fundamental economic analysis" must be held in abeyance for the time being. 
To gain deeper insight, and consistent with my own biases, I subscribe to a kind of "backwards-looking" science, quantitative (statistical) study, which supposes that the evolution and development of a narrative can be "quantified" through the analysis of assessable cycles, resembling parabolic curves......much like the kind we have been accustomed to seeing from our medical and political leaders during their daily briefings when they talk about "trends" and "flattening the curve".  
Yesterday, today, and tomorrow
Because no one, including statisticians, can actually/accurately predict the future, we rely upon past (or recent) modeling data to draw inferences about those events' likely outcomes.  These vectors, plotted on a graph using algorithmic assumptions, can be V-shaped, U-shaped, linear, best-case, or worst-case.  The peaks (apex), just like the lows (nadir), are very rarely points in time, but look more like periods over time (amplitude).  Investors who "speculate" about when the highs or lows in financial instruments might occur are often frustrated by their inability precisely to "time the market" or to build the perfect portfolio.  

One can, however, reasonably isolate the ideal data or metrics which relate specifically to that cycle to construct a pragmatic solution to any given problem.  Not every financial security experiences the same rate of momentum, up or down, concurrently.  Thus, we have demarcations defining leadership and laggards.
Everything measureable in life is a function of time.
I would suggest that we are quite resilient, medically and economically.  Why can't we begin now to envision solutions to issues which heretofore had been unaddressed.  Imagine, if you will, a portfolio for the future, constructed around healthcare, technology, food and water, ecology, and infrastructure.  I'd put that bet up against anyone else's notions.
The financial markets will return...of that, there is no doubt.  However, we must be prepared to orchestrate the sequences properly to identify the dynamics of what will make for a "new" economy, a new social description, one that will appropriately respond to a network which has been irrevocably changed by the circumstance that envelops us.