06-29-2020: And the Good News Must be...

This morning, a little after 6:00 am my time, I was watching CNBC as I put the finishing touches on this week's Client Letter when one of the sharpest knives in the drawer, Dr. Scott Gottlieb was interviewed. I put a lot of stock (no pun intended) in what Dr. Gottlieb has to say. He is totally (seemingly) non-political and has his pulse on the COVID-19 virus, the pandemic, the trends and the projections of both the timing of a vaccine and the rate of infection.


I found the interview fascinating and strongly suggest you go to YouTube and look it up. It will be worth your time.


What blew me away was his expectation that before we have a deliverable vaccine (sometime in early 2021, he expects), fully 50% of the entire US population will be infected with the COVID-19 virus. That is a staggering statistic if it proves out to be true.


At this writing, it is estimated that 2.5 million people in the US are or have been infected with the virus. There are 328 million people living in the US. That means, by roughly the end of this year, if Gottlieb's expectations are accurate, 164 million people will be infected. That's 60+ times more infections than we have now. Then, you add to that, the typical flu season, which infects over 40 million and it looks like there will be a massive number of very sick people between now and 'early 2021'.


Right now, many states are dialing back their opening schedules because of the uptick in COVID-19 new cases. But, Gottlieb says even with the cautions that States and communities are taking, we can still expect 50% of the population will get the virus.


So... inquiring minds want to know... if the economy is going to be, effectively, shut down for 6 months or more due to the rapid and massive increase in infections, how are we going to see a "V-Shaped" recovery as the White House is stating?


Even more curious is the reaction in the stock market... It boomed higher today and, obviously, totally discounts Gottlieb's expectations... right?


Maybe not.


Assuming Gottlieb is even close to right, the Treasury/Fed/Congress/Trump money machine will have to dump (more) trillions upon trillions of dollars into this economy while we wait for herd immunity to kick in. This means the long, long line of semi's loaded with sugar from Uncle Sugar will continue for the rest of this year. And that may be why the market boomed higher today.


But, as they say... that's just a WAG on my part. The market boomed higher today because it boomed higher today. We really don't need to know why, but we do need to know what this move today did to the trend data. The answer is, "Very little."


As I opined in my Client Letter this morning, there are now far more bearish trends in play than bullish. That could all change tomorrow or this week or not.


All I did today was buy a little gold in our Tactical Growth model. The data are strongly supporting some nibbling on some inverse ETFs, but only in the Aggressive Growth model. Still... all it will take is Mnuchin to get in front of a hot mic and announce another load of sugar is on the way and this market could really boom higher. When risk is this high, the better course of action is to keep your powder dry and wait for more trend confirmation one way or the other. For now, I am waiting... mostly.