Rock and a Hard Place
Regardless of your age, impressions from childhood linger. As the first days of summer approach, we all remember the feeling that accompanied the end of a school year. Yet as much as many of us would like to believe we again have the summertime freedom to do as we wish, the reality is quite the opposite.
Although months of confinement and limitations on social interaction have increased our personal discomfort and severely impacted the business community, our current situation is not analogous to the end of any school year. It’s quite the opposite.
There is every reason to continue wearing face masks, social distancing, and avoiding close contact with others. Nothing suggests that we can modify our behavior significantly or resume patterns of daily living we enjoyed only a few months ago.
There are no meaningful advances in medical treatments. At best, there are attempts to combine different approaches that might speed up recovery. The hoped-for vaccines are still in early stages of development. What we’ve accomplished so far is a flattening of the infection curve, essentially stretching the pandemic over a longer time to ensure availability of healthcare to those who become sick.
Given this reality, we must wonder about people who are now gathering in large groups as if the storm has passed. The rising rate of infection in places where constraints have been eased strongly suggests that we’re far from being out of danger.
At the same time, there has been grievous injury to business, especially among weaker companies. No doubt the big tech companies will grow even bigger. They benefit from any shift away from one-on-one personal communication to impersonal digital interaction. But consider the numerous mom-and-pop shops that will disappear and all the jobs that will go with them.
The freedom to open up may bring greater interaction, from both personal and business standpoints. If this were an ideal world and everyone carefully observed the discipline needed to open up properly, it might be successful. But that’s hardly the case and we begin to see rising rates of infection in states that have relaxed restrictions.
As you might suspect, the investment markets are confused. During what amounted to a lockdown from March thru this month, key statistics related to Covid fell steadily, indicating the effectiveness of the approach. This led to an illusory feeling of confidence that the situation was under control. The temporary result was one of the strongest market recoveries in history.
Now, the markets are fluctuating widely again and probably will continue gyrating until there’s a substantial basis to believe real solutions are at hand. The good news is that we’re getting closer to that day. But it’s more than a few months away.
N. Russell Wayne, CFP®