On top of those devastating numbers the GDP reported at that time will show an astonishing unprecedented fall of minus 39%.
Some states, depending on their infection and hospitalization rates, will begin phased-in re-openings, with the requirement that everyone wears face masks and maintain at least six feet distance from others. These restrictions will translate into reduced occupancies in all areas of commerce. Many businesses that require high capacity occupancy to survive--theaters, restaurants, concert halls--will close permanently.
But wait, I have some good news. There is a bright light in the ruins. I see that Wall Street's answer to the catastrophe will be to drive the indexes higher. Yes, the Nasdaq will reach a historic high, and the Dow will soar toward its pre-pandemic levels.
How would the business and financial leaders respond to my future casting? If they didn't immediately dismiss me as a madman or crank, can you imagine any response other than laughter and ridicule? "Ha ha--yeah, a virus that will shut down the country. You must have been reading some bad science fiction. Even if what you say about a virus is true, the prediction that the markets would react with new highs is crazy and could only happen in a madhouse."
Well, tune in to CNBC and Bloomberg Business channels that cover the financial markets and see live streaming of the madhouse in action. And pay particular attention to this stunning correlation. Almost every time a surge in the contagion and death rates for COVID-19 is reported, the stock market notches up.
How can we explain this seemingly bizarre counter-intuitive phenomenon?
Two extreme groups have opposing responses to the COVID-19 pandemic. Each is generating a surge. One, a surge in virus infections, the other, a surge in the stock market.
At one extreme are those who rebel against science by refusing to wear masks, not maintaining social distancing, and not avoiding large group events--thus defying the recommendations of every medical expert here and abroad. No surprise that in states where denial has reigned supreme---and put to a reality test--the rates of infections, hospitalizations, and deaths have soared.
At the other extreme are those--like the titans and traders of Wall Street--who have blind faith in science. They have boundless confidence that science will come up quickly with treatments and vaccines that will kill the virus, prevent infection, and thus put America on the fast track for total business recovery. The economy, they foresee, will soon reset to a date before the virus. Their unrestrained optimism accounts for the surge on Wall Street.
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