“Spike!” “Surge!” “Precipice!” (Please Check One)

Donald L. Luskin
Tuesday, June 16, 2020
The media and the experts who overhyped the first wave are hallucinating a second one.
US Macro
Asia Macro
US Stocks
An inevitable correction in richly valued risk-assets was triggered by a narrative that a “second wave” of Covid-2019 was “emerging,” and might delay or reverse the re-opening of the economy. In the US, the focus is on Arizona, California, Florida and Texas. None has changed its rank in terms of observance of social distancing, and there remains no correlation across states between re-opening and virus cases or fatalities. Except for Arizona, fatalities are no different than they were two months ago at the peak of lockdown in early April, and there are fewer than a month ago. We don’t think governors or local officials have the will or the moral authority at this point to impose new lockdowns. The Trump administration is leading by insisting the economy continue to open up, even should a second wave actually emerge. China’s draconian response to a small Beijing outbreak is an exception, where credibility in the eyes of the world is at stake.