Coronavirus: It’s Not Over Till It’s Over. And That May Not Be Soon

By now, readers have internalized the coronavirus pandemic and the economic collapse.

Questions abound on the economic impact. How long will the new depression last? How deep will the depression be? With the economy bounce back quickly in a “V” shape or will there be a drop followed by slow growth in a “U” or even an “L” pattern?

Other economists ask if the losses in the initial stages of the collapse will be temporary (like a delay in buying a new car) or permanent (such as a skipped night in a restaurant). Yet less attention is being paid to the virus itself.

Yes, the infections continue to grow and the fatalities are tragically high. Still, most observers assume that through quarantine, social distancing, improved testing and greater availability of medical equipment that we’ll be able to get through this.

Above all is the view that warm spring weather will cause the virus to die out on its own, as typically happens with cold or seasonal flu viruses. Maybe.

But there’s another possibility, as described in this article.

White House adviser and infectious disease expert Dr. Anthony Fauci is warning about a “second cycle” of infections. This could arise because the virus survives the summer and reemerges next winter. This could mean an even earlier surge of infections in the Southern Hemisphere, where the seasons are reversed from the north and the winter is just approaching now.

Another cause for a surge is the fact that China and perhaps soon the U.S. are trying to normalize and “get back to work” before the disease is completely eradicated. That may make sense from economic and even public health perspectives, but it could be the source of an increase in infections after monumental efforts to get the virus under control.

Markets have had a difficult enough time repricing for the initial wave of the virus and the economic collapse. Markets have not even begun to think about a “second cycle.” That’s one more reason why the bear market is not over and why hopes of a sustainable bull market are still premature.

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