By the time the Dada Economist was old enough to read, Superman was passé. We read the comics, but what captured our attention were the quirky tales at the back of the book: Elastic Man, Zatanna, Bizarro. It's Bizarro that comes to the Dada Economist's mind now.
Bizarro was Superman's doppelgänger, and he came from an alternate universe where everything was the opposite of the "real" world in Superman comics. Bizarro was mean but sort of pathetic at the same time, a fitting mascot for the author of America's current cognitive dissonance.
The Dada Economist tries to avoid saying the obvious, but certain realities bear repeating: Donald Trump is gaslighting the country by parading around without a mask and telling Americans, in effect, to do the same, while the Centers for Disease Control and Prevention, better known as the CDC, is saying the opposite. This point was recently made rather delicately by The Washington Post, whose reporter pointed out that while other countries are using U.S. science to make policy, the Trump administration is ignoring it.
Fine for The Donald, who gets a Q-tip stuck up his nose at regular intervals, plus there's that whole two weeks of quinine thing that somehow didn't manage to engender a coronary event.
Ordinary Americans outside the Cult of the 38 Percent need to do a quick study of risk assessment. The health questions are bad enough but assuming one survives the haircut or dentist visit, questions surrounding one's financial future are yet another stagnant pool of dread and uncertainty.
The stock market has only the most perverse relationship to the economy as a whole, not to mention the state of the country. What it sometimes reflects is the national psyche, and in the near future, that looks a lot like an old Bizarro comic. There are parallel worlds, just as physics tells us there might be in the universe, somehow, somewhere. Unfortunately, for regular people desperately clinging to any shred of predictability, this isn't a lot of fun.
In other words, if you bought cloud computing stocks in November, you’re not exactly happy now (what kind of monster would be happy with 116,000 dead?) but relieved. If you own what are called “value” stocks, old school companies like Honeywell and Proctor & Gamble, you’re wondering if the World As We Know It As Ending.
We’re all wondering.
Even if you can’t stand thinking about the stock market (we get it) the bifurcation offers hints about the future of work, families, America’s general slippage, and whether Little Johnny will be going to college or Working In Big Box Union-Busting Slavery.
The Great Reorganization is upon us. Here's what it looks like so far.
In the short- and medium-term, many large and ultra-large companies are adapting to changing conditions. (Forget the airlines. Don’t fly on them and don’t buy their stock. Stay safe, kids.)
Certain smaller companies are advantaged by the crisis. Their challenge will be having a future without Covid-19— assuming it ever goes away.
The long-term political economy, not to mention your 401k, is a Giant Blank Spot on the Mental Map.
When I'm confused, I go to my friend Bob. Bob's father was an economic advisor to a long-ago president and Bob ingested economics with his Cheerios, growing up to start a software company, sell it, and retire to a mountaintop in Virginia, from which aerie he does good works. In other words, he doesn't have a dog in this fight, unlike the hedge fund buccaneers who predict doom on TV before rushing in to buy the dip. Herewith, the Wisdom of Bob:
Will the market crash again? Anybody who says they know is lying: it’s is only a guess. If you looked at the market on Dec 31 and then again 100 days later, you would have said that the market is up a little but mostly flat. Pretty boring.
(Really, Bob? In between, the rest of us lost a quarter of our net worth! Sigh.)
In July and Aug we’ll get the official GDP data which will tell us we are in a recession. We will also be getting the second-quarter earnings and they will be dismal. OH MY GOD! THE SKY IS FALLING! SELL! SELL! Sell the car! Sell the kids! Head for the hills!
The market will go down. The third quarter will show improvements in GDP, earnings and employment, not a return to February levels but an improvement off the lows. Look for this data in the November/December timeframe—post election).
On the other hand, if the Democrats take the Senate, keep the House and win the White House, then The Street may panic again. They never seem to remember that the market does its best during Democratic Administrations. Kennedy, Johnson, Clinton, and Obama all had great returns. And not so much during Republican Administrations. Nixon, Ford, Reagan, Bush 41 and Bush 43 had poor returns with little to no growth and big deficits.
The Street may have a poor memory; then again, nobody remembers a time like this one. The Pandemic will reorganize our economy in ways we are only starting to imagine. There are intimations of a Japan-like recession that lasts 8 or 10 years. But for people who do have money, where are they going to put it? Real estate is as inflated as stocks. Bonds are so low, you might as well keep cash.
We don't usually trust money managers, because their real objective is making money off you and selling you stuff their firm is pushing. But they're advising people to back off from buying the dip and keeping cash. Lots of it. Maybe 20 percent. Whatever you think you might need.
The takeaway for Newbies since Trump's election is that the Market has only the most perverse relationship with the state of the country. So we thought. But it turns out that smart investors are waiting until November to exhale, too.
The best we can hope for at this precise moment? Charles Pierce, Esquire columnist, captures it:
In this time of plague and madness, I have taken consolation in the words of Marcus Aurelius, a leader who was not crazy as a shithouse rat:
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.
The Dada Economist is a pseudonym.
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