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Thursday, November 30, 2023

Christmas is Canceled – The Reformed Broker

Okay this is probably not true everywhere but it’s definitely true in New York.

Omicron is the sequel nobody wanted. Stocks are already selling off because case counts exploded over the last seven days. I personally know more than fifty people who’ve tested positive this weekend. Almost none of them know each other. All vaccinated. All breakthrough infections. Maybe the vaccines are keeping them from getting really sick, but they’re not stopping shit.

Scientists are saying J&J and AstraZeneca offer no protection whatsoever. The Chinese and Russians gave themselves their own vaccines. Neither of them work. Unfortunately these are the shots that most of the “vaccinated” populations in Africa and Latin America got. India too. In poorer countries they couldn’t get the mRNA double shot vaccines from Pfizer and Moderna. So now they have to survive this as though they’re starting all over again.

Back to Long Island. My friend’s son had a Bar Mitzvah scheduled for Saturday night. His wife had to cancel it on Friday as all the “We can’t make it” texts came in. They weren’t canceling because they’re afraid of getting sick. They’re canceling because they’re afraid of testing positive, getting put into quarantine and missing their flights down to Aruba and Boca. This is the holiday break kids get to see their grandparents. No one from around where I live is risking that now.

Sporting events are being canceled, in some cases due to lack of non-quarantined players. Saturday Night Live went without an audience this weekend. The Christmas show. This is the big meme of the moment as lines for tests wrap around the block:

“Maybe the problem is all the testing” is the new thing people are saying. Most (not all!) of the positive tests I’m hearing about are asymptomatic people (kids) who are surprised they have something. “We don’t test for the flu or a cold, think about how many people are walking around with that all the time!” Fair, but the common cold doesn’t have the potential to overwhelm a hospital emergency room.

My personal opinion is we should stop testing healthy children / young adults who have been vaccinated and start encouraging vulnerable people to take extra precautions every winter from now on. Assume you can get it. I also think the anti-virals need to be out ASAP. They should be as prevalent as the Z-Pack or Claritin. More boosted adults would also be great. Put a picture of Trump on the box if that’s what you need, I don’t give a shit. Just take it.

I share all of this anecdotal stuff with you as a reminder about the playbook. This is the playbook that got you through both the onset of the pandemic with as well as the delta explosion this past summer:

We only know two things at this point – we know for sure the headlines are going to get worse (way worse) into January. But we also know their ability to shock us will only diminish.

Here’s what I published on this site March 15th 2020 – a week later the stock market bottomed (as the pandemic got much, much bigger):

I am going to share with you something I said to the clients of our firm last week. I think it’s the most profound thing I have ever learned about crisis in the investment markets.

That something is this:

Without a doubt, the news will get worse from here. But its ability to shock us will diminish.

The economic news about the US economy was not getting better at the end of the financial crisis. But stocks stopped going down every time that bad news hit. It took a lot of pain to get to that point, but eventually, bad news fatigue had set in. This happened with regards to potential terror threats in the wake of 2001. It happened during the Asian currency crisis of 1998. It happened during the Latin American defaults of the same era. It happened during the Ebola scare of 2014. It will happen now.

That advice turned out to be solid gold.

The shutdowns, cancelations, case counts, etc are going to be horrendous this coming January. But, at a certain point, stocks will react less to each piece of news. And eventually, it’ll be “let me guess, more cases. Great.” and stocks will rise. You will not see this turn in sentiment coming. It always comes.

But not yet. The realization of Omicron’s immediate impact on the economy I’ve just described is only now beginning to wash over us all. The stock market can still be surprised. It’s early and it’s going to suck. Be prepared.


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