Tag: finance

Authored by Daniel Payne via JustTheNews.com,

New York officials issue a report this week concluding that the high number of coronavirus deaths in state care facilities was the result of infected workers, not sick residents, spreading the contagion.

New York has face sharp criticism over the past several months for its policy of allowing COVID-19-positive patients to return to nursing homes before they were declared free of the virus.

Democratic Gov. Andrew Cuomo said the state policy of allowing residents to return to elderly-care facilities was in line with guidance from the Centers for Disease Control and Prevention. However, PolitiFact in May rated that claim “mostly false,” pointing out the state appeared to pressure nursing homes to take COVID-19 patients regardless of whether they could properly house them.

The report by the New York Department of Health states that “an analysis of the timing between known nursing home staff infections and nursing home fatalities indicates that they are correlated.” It also states that “the peak number of nursing home staff reporting COVID-19 symptoms occurred 23 days prior to the date of the peak nursing home fatalities.”

The data “does not support [the] assertion” that infected patients were the spreaders of the disease, the department argues. 

“Nursing home resident fatalities peaked on April 8, 2020,” the paper states.

“The peak of nursing home admissions from hospitals did not occur until April 14, 2020, a week after peak nursing home fatalities – suggesting the policy was not the cause.”

The report also argues that “most patients readmitted to nursing homes were likely not infectious,” claiming that they would likely have spent enough time in the hospital to have entered a non-infectious stage of the disease. 

Data also “do not show a consistent relationship between admissions and increased mortality,” the report says, adding that “there were cases where nursing homes did not admit any COVID-positive patients, yet still had a high number of COVID-related deaths.”

The report states that any staff who spread the disease did so “through no fault of their own,” insofar as they would have been unaware they were infectious while working.

There is no question in our mind that consumer behaviors will be drastically reshaped in a post-corona world – one where a fearful and frugal consumer might result in a much slower economic recovery. 

For more color on the evolving consumer, one that has been severely damaged by the virus-related recession, Bloomberg recently conducted a survey (of 2,200 adults) that found there is “waning interest in public events and material things, like appliances and clothes, and a new austerity, expressed through pantry stockpiling and delayed big-ticket purchases.” 

The survey, polled between June 26-28, doesn’t account for the latest surge in coronavirus cases, and a stalled recovery with more than 40% of the country pausing or reversing reopenings. Shifting consumer trends, sort of like what happened in the Great Depression, is the government’s and Federal Reserve’s worst nightmare because declining consumption will result in no V-shaped recovery this year. 

“People are generally expressing that they’ll do certain things less, or at home, on their own,” said Victoria Sakal, managing director of brand intelligence at Morning Consult, Bloomberg’s partner on the survey that was conducted on the last weekend of June. “There’s also a health component to how safe, comfortable and protected people feel.”

The survey first revealed that nearly half of the respondents aren’t ready to return to shopping malls. 

Americans—often stereotyped around the world as confident to the point of arrogance—have developed a fear of enclosed retail spaces. While about three-quarters of U.S. adults feel okay shopping inside grocery stores or small businesses, more than half don’t feel safe inside a shopping center, the data show. This is only adding to the woes of malls. – Bloomberg 

Readers may recall, commercial real estate is an absolute disaster as retailers are failing to make rent payments; this is a byproduct of a consumer ditching malls for e-commerce stores. 

Another sign the recovery could be painful and prolonged is the survey found America’s love affair with bars has abruptly died in the age of pandemic. Half of the respondents said they’re “not at all” looking forward to drinking at bars – but rather continue drinking at home. 

Respondents were less nervous about restaurants – though most said they would feel more comfortable if eateries adopted social distancing guidelines and new cleaning protocols.

The survey reveals respondents have become more frugal – the day of putting everything on the credit card(s) are over. 

These cautious attitudes mark a stark change for a country that is both admired and derided for its at-times extravagant consumer culture. America invented the shopping mall and the movie theater, and has eight of the world’s ten biggest sports stadiums. But the coronavirus lockdowns have given rise to a new attitude: If you reopen it, they might not come. 

Some of the hesitance is economic. Americans became more frugal during the pandemic, the survey shows. Over the past three months, 23% of respondents purchased more generic items, 28% increased bulk purchases and 41% chose to save money more often by forgoing a purchase. People also increased price comparing, while putting luxury and expensive purchases on hold at a higher rate.

This thriftiness could be here to stay, permanently shifting the makeup of the average American consumer—not unlike the Great Depression’s impact on spending habits 90 years ago. More than three-quarters of consumers say they expect to increase their savings rate and financial conservatism after economies fully reopen.- Bloomberg 

Gen Z and millennial respondents appear to be the first generations looking forward to normalizing their social life – however, the percentages are still at very low levels. 

Tens of millions unemployed, nearly three million jobs eliminated, those who were just rehired and now being fired, and states pausing and or reversing reopenings because virus cases are surging once more, this all suggests consumers are entering an age of thriftiness – bad news for anyone betting on the consumer. 

Via Monty Pelerin’s World blog,

The madness of political correctness is mocked in this e-mail sent to Clarence Page of the Chicago Tribune after an article he published concerning a name change for the Washington Redskins.

The author is unknown but perceptive, clever and sarcastic:

Dear Mr. Page:

I agree with our Native American population. I am highly jilted by the racially charged name of the Washington Redskins.  One might argue that to name a professional football team after Native Americans would exalt them as fine warriors, but nay, nay. We must be careful not to offend, and in the spirit of political correctness and courtesy, we must move forward.

Let’s ditch the Kansas City Chiefs, the Atlanta Braves and the Cleveland Indians. If your shorts are in a wad because of the reference the name Redskins makes to skin color, then we need to get rid of the Cleveland Browns. The Carolina Panthers obviously were named to keep the memory of militant Blacks from the 60’s alive. Gone. It’s offensive to us white folk.

The New York Yankees offend the Southern population. Do you see a team named for the Confederacy? No! There is no room for any reference to that tragic war that cost this country so many young men’s lives. I am also offended by the blatant references to the Catholic religion among our sports team names. Totally inappropriate to have the New Orleans Saints, the Los Angeles Angels or the San Diego Padres.

Then there are the team names that glorify criminals who raped and pillaged. We are talking about the horrible Oakland Raiders, the Minnesota Vikings, the Tampa Bay Buccaneers and the Pittsburgh Pirates!

Now, let us address those teams that clearly send the wrong message to our children. The San Diego Chargers promote irresponsible fighting or even spending habits. Wrong message to our children.

The New York Giants and the San Francisco Giants promote obesity, a growing childhood epidemic. Wrong message to our children. The Cincinnati Reds promote downers/barbiturates. Wrong message to our children. The Milwaukee Brewers. Well that goes without saying. Wrong message to our children.

So, there you go. We need to support any legislation that comes out to rectify this travesty, because the government will likely become involved with this issue, as they should. Just the kind of thing the do-nothing Congress loves.

As a die-hard Oregon State fan, my wife and I, with all of this in mind, suggest it might also make some sense to change the name of the Oregon State women’s athletic teams to something other than “the Beavers” (especially when they play Southern California). Do we really want the Trojans sticking it to the Beavers?

I always love your articles and I generally agree with them. As for the Redskins name, I would suggest they change the name to the “Foreskins” to better represent their community, paying tribute to the dick heads in Washington DC.

One wonders whether Mr. Page grasped the madness of political correctness after this communication. Perhaps.

While admitting that there are many pushing back against the idea, Bloomberg is reporting that the Trump administration is escalating its plans to hold China accountable for its recent global pandemic chaos and Hong Kong freedom oppression.

Secretary of State Pompeo told Fox News earlier in the day that the US was mulling the possibility of banning social media app TikTok in the US, but tonight Bloomberg reports that some top advisors have suggested the Washington should undermine the Hong Kong dollar’s peg to the US dollar.

According to people familiar with the matter, Bloomberg reports that the idea of striking against the Hong Kong dollar peg – perhaps by limiting the ability of Hong Kong banks to buy U.S. dollars – has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo but hasn’t been elevated to the senior levels of the White House, suggesting that it hasn’t gained serious traction yet.

As a reminder, we suggested that one major reason for China’s recent push for everyone and their pet rabbit to buy stocks (sending Chinese markets exploding higher) was dramatic investment outflows from China.

China-dedicated equity funds saw an 11th consecutive week of net outflows.

Taking a page of the Robinhood playbook, China is desperate to halt and reverse the massive equity outflows as it urgently needs the flow of US Dollars to reverse into Chinese markets, instead of away from. To do that, it needs to create an initial upward momentum in prices which halts the selling/outflows and prompts a reappraisal of Chinese asset values. Ideally, it will also capture the euphoria of US daytraders who will buy Chinese, not US stocks.

This potential ‘strawman’ to break the HKD peg comes a day after we noted the simple maths that if 500,000 Hong Kongers were to leave the city and take USD1m equivalent with them then ceteris paribus, the HKD peg would surely have to go as all FX reserves evaporated.

In recent weeks we have seen the HK authorities publicly state they will not impose capital controls – which as a key global financial center should always be unthinkable. Yesterday, after a Chinese official response strongly opposing the UK government making clear it will offer 2.9m Hong Kongers a path to citizenship, the HK authorities had to publicly disavow rumours of a travel ban on its citizens.

Yes, that’s where we stand.

What does monetary policy have to offer here?

Not much, because it is The Fed’s ZIRP policy (relative to HIBOR) that is forcing carry traders’ flow to buy Hong Kong Dollars (and lend them) against cheaply-funded USDollars.

As the chart above attempts to show, the relative spread between USD funding and HKD funding implies a stronger HKD which would ‘break’ the peg band (green dotted line) and thus Hong Kong Monetary Authority had to intervene to maintain that upper peg band.

The proposal reportedly faces strong push back from others in the administration who worry such a move would only hurt Hong Kong banks and the U.S., not China.

But the very fact that this serious monetary threat has been raised (or leaked) implies two things: 1) US authorities appear to want to punish banks based in Hong Kong (especially HSBC after Pompeo singled out HSBC’s “show of fealty”); and 2) it will force a response (or pre-response) from China, which could also ripple through becalmed markets and ruin the glorious gains in Nasdaq for retail bagholders everywhere.

As Pompeo said earlier in the week: “We’d love to preserve the freedom in Hong Kong; but if we can’t, we’re going to hold the Chinese Communist Party accountable.”

Update (2130ET): In a stunning update, the Martinez couple caught on video painting over the “approved” Black Lives Matter mural on July 4th…

…are being charged with a hate crime.

*  *  *

Authored by Mark Glennon via Wirepoints.org,

Are Black Lives Matter supporters free to paint those words and its slogans on public streets? Do others have a right to put up contradictory views or cancel out BLM messages?

Those questions should be trending, given recent headlines, but they are yet to be discussed in the press. Perhaps that’s because answers are unclear, at least as far as I can tell.

Removing “Black Lives Matter” in Martinez, CA

“From Cleveland to Montpelier, Vt., BLM street slogans have been defaced,” says The Washington Post in a Monday story about two people in Martinez, California who painted over “Black Lives Matter” that had been painted on a public street. Major streets in New York and Washington, D.C. have been amond thosee painted with Black Lives Matter.

Locally, the words Black Lives Matter and Defund EPD, which had been painted on Evanston streets, were splattered with white paint this past weekend in what appears to be an attempt to deface the words, according to various news reports.

Who has what rights to paint public streets?

The starting point is what’s called the public forum doctrine. That doctrine, which courts have recognized under the First Amendment for over 80 years, requires “viewpoint neutrality” when government creates a public forum for speech. Under that doctrine, when government excludes a speaker from a public forum – such as a park or a podium at a government meeting – doing so may violate the speaker’s First Amendment rights if the exclusion is based on the content of the speech or the speaker’s viewpoint.

It’s under that doctrine that courts have denied government officials, including President Trump, the right to block critics on social media. Officeholders are obviously free to say what they want. But if they choose to go on a public forum like Twitter that allows responses, those officeholders cannot block reactions they don’t like.

By letting people paint messages on public streets, cities probably would be deemed to have created a forum, so it might seem that neutrality demands that competing messages be allowed. Or since contesting messages might make a mess of the streets, perhaps dissenters would defend erasing them by claiming neutrality can be preserved that way.

But not so fast.

Courts also recognize something called the government speech doctrine, which basically says the government itself can express whatever viewpoint it chooses. So, if the BLM messaging is the city’s own or the city blessed it, it’s probably protected.

If you are confused, you should be. The conflict between the public forum and government speech doctrines has been variously described as either a contradiction or a paradox. A Boston College legal journal put it this way:

[T]he government must show that it is not discriminating against a viewpoint. And yet if the government shows that it is condemning or supporting a viewpoint, it may be able to invoke the government speech defense and thereby avoid constitutional scrutiny altogether. Government speech doctrine therefore rewards what the rest of the First Amendment forbids: viewpoint discrimination against private speech.

Making things still murkier in Martinez and Evanston are the facts about whether the government was itself speaking. If it was private citizens and not the government, the government speech defense would not apply.

In Martinez, community members reportedly did the original Black Lives Matter painting though they had a city permit to do so.

“Defund EPD.” Source: Daily Northwestern.

In Evanston, it appears the city supported the Black Lives Matter painting but not the Defund EPD message, according to the Daily Northwestern, and those who painted the latter may face charges.

I’ll leave it there on how courts would deal with these cases and let First Amendment experts speculate further.

As a matter of policy, however, it certainly seems the government should stay away from divisive messaging unless they deliver it in forums where debate can be robust. Painting streets is no such forum.

Many will say, of course, that there is nothing divisive in BLM messaging and that dissenting views should be disregarded. Much of the press will go along with that, reporting the dissenters as vandals or racists. The San Francisco Chronicle headline on the Martinez incident was “Black Lives Matter mural in Martinez vandalized in ‘hateful and senseless’ act.”  And in The Washington Post, the headline was, “Calling racism a ‘leftist lie,’ white vandals target California Black Lives Matter slogan.”

But the division BLM inflames is real and will grow. BLM Chicago recently retweeted a video of Fred Hampton with the message, “we not gon fight capitalism with black capitalism, we gon fight it with socialism… we’re going to fight their reactions when all us people get together and have an international proletariat revolution!” Hampton was a Black Panther leader killed in a 1969 police raid in Chicago.

And over the weekend BLM Chicago promoted training sessions on abolishing the entire police and prison system, which included “black only” sections.   

We wrote more about them and the national BLM organization’s extremism earlier. Their supporters have their legal rights, but the facts are coming out.

Race relations are being set back by fifty years and BLM is part of the reason why.

A former warden at the jail holding Ghislaine Maxwell says the accused Jeffrey Epstein accomplice should be on suicide watch – as her case is ‘too explosive to risk her killing herself behind bars,’ reports the New York Post.

“She allegedly knows a great deal of information about a multitude of potential co-defendants in the actions against Jeffrey Epstein,” said Cameron Lindsay, who served as the warden of the Metropolitan Detention Center for three years, adding that he wouldn’t risk the possibility of her suicide.

“This is just such a sensitive case, it’s absolutely imperative that the government get it right,” added Lindsay. “Why take any chances? Just put her on suicide watch and keep her there until she’s out the door. I would just not risk it.“

At the jail, an inmate is placed on suicide watch at the discretion of the warden and the chief psychologist at the facility.

Once on inmate is on suicide watch, a staff member or fellow inmate who has been trained by the psychologist, sits outside their cell and stares at them constantly to ensure they don’t attempt to kill themselves. –New York Post

Maxwell will likely be placed in a cell by herself due to her status as a high-profile suspect which could make her a target for other inmates, according to the report.

“To take someone out like that, that would be a badge of honor in the subculture of prisons,” he added. “Anytime an inmate with wide publicity of a very sensitive nature like this, they become a target.”

Maxwell, who arrived at the Sunset Park jail Monday, was likely transported to the facility in “full restraints,” which includes leg irons, a belly chain and handcuffs. After entering, she would’ve been stripped searched and cavity searched and given a medical examination.

She’ll likely ride out her time at the jail in “administrative lockdown status,” Lindsay added, which would keep her locked down in a cell 23 hours a day. She’d be given one hour of recreation time at a small outdoor area after being escorted from her cell in shackles under the lockdown status. –New York Post

Maxwell’s death would also be incredibly convenient for a host of high-profile individuals suspected of participating in Epstein’s underage sex trafficking ring. She was charged with four counts of sex trafficking and two counts of perjury, and will be held at the Metropolitan Detention Center at least until her bail hearing, tentatively scheduled for the 14th of July.

After his arrest on charges of sex-trafficking dozens of teenage girls, Jeffrey Epstein was found dead in his cell last August at New York’s Metropolitan Correctional Center (MCC) in lower Manhattan. While ruled a suicide, many have speculated that the combination of broken security cameras and ‘sleepy guards’ at the exact moment he allegedly hanged himself suggests he was ‘suicided’ before he could spill the beans on his high-profile friends and clients.

Submitted by Adam Andrzejewski, first published in Forbes

Yesterday, the Small Business Administration released data on which businesses received forgivable loans under the Paycheck Protection Program (PPP) in amounts between $150,000 and $10 million.

So, who received how much taxpayer money through the program? Our auditors at OpenTheBooks.com mapped the big loans – the nearly 83,000 loans between $1 million and $10 million. These businesses are located in 13,700 zip codes across the country.

Now, you can find out yourself, zip code by zip code, with an interactive tool we’ve built on our government transparency website.

This mapping tool allows users to quickly review every PPP transaction exceeding $1 million. Just click a pin (zip code) and scroll down to see the results that will appear in the chart beneath the map.

The overall subsidies are quite breathtaking.

Kanye West, who just declared for president and claims a net worth of $1.3 billion, took between $2 million and $5 million for his clothing and sneaker company, Yeezy LLC.

Robert Redford’s Sundance Institute received between $2 million and $5 million in lending. The non-profit’s latest IRS 990 lists $55.4 million in assets (FY2018).

Then, there is Francis Ford Coppola the legendary filmmaker of the Godfather and other movies.

Coppola is also a renowned wine maker and two of his affiliated companies received PPP funding including Francis Ford Coppola Presents LLC ($5 million to $10 million);and Niebaum Coppola Estate Winery, LP ($1 million – $2 million).

A spokesperson responded to our request for comment:

“Francis Ford Coppola Winery and Niebaum Coppola Estate Winery, LP applied for the PPP loans based on business necessity and are using the entirety of the loans on wages and benefits to save the employment of its wineries, hospitality, and restaurant workforce during these uncertain times. 

We are family-owned wine businesses, and the PPP loans have enabled us to bring back over two hundred of our Direct to Consumer employees, even though we may not have work for all them for the foreseeable future.”

However, Coppola’s winery wasn’t alone as 601 wineries across America received at least $192 million in PPP lending.

Here is just a sample of our findings from the overall database:

• 43,815 restaurants across America received between $13.6 billion and $32.7 billion.
• 31,559 dentists and physician offices received between $9.9 billion to $24.3 billion. The world’s most famous cosmetic dentist – Dr. Bill (William) Dorfman – affectionately known as “America’s dentist” and featured dentist on ABC’s Extreme Makeover, and author of best-selling books – received up to $350,000.
• 14,306 law offices received between $5.3 and $12.8 billion including the prominent firm of Boies, Schiller and Flexner in Washington, D.C. who received $5 million to $10 million.
• 12,694 new car dealerships received between $7 billion and $16.7 billion including the Land Rover and Ferrari dealerships in Hinsdale, Illinois – each received between $350,000 to $1 million.
• 10,684 religious organizations received between $3 billion and $7.5 billion. Located in Notre Dame, Indiana, the Sisters of the Holy Cross received up to $5 million; Holy Cross College received up to $1 million; and the Corporation of St. Mary’s College Notre Dame received up to $10 million. (Colleges already received $12 billion in bailout money through the CARES Act.)

The large ranges (above) are the result of a transparency gap in the data.

The Trump administration did not release the known loan amounts. Instead, the amounts were disclosed within bands: $150,000 to $350,000; $350,000 to $1 million; $1 million to $2 million; $2 million to $5 million; and $5 million to $10 million.

Not surprisingly, many firms and non-profit organizations who signed up for a PPP loan will argue that the subsidies helped keep people employed when federal, state, and local government literally closed down the economy. And, in fact, these businesses employed 31.5 million people.

However, critics contend that many businesses legally gamed the system.

For example, Citizens Against Government Waste (CAGW) – a conservative Washington, D.C. oversight group founded to help President Reagan cut pork – publishes the annual “Congressional Pig Book.” Yet, they took up to $350,000 despite listing $4.2 million in assets on their recent IRS 990 (FY2018).

CAGW responded to our request for comment saying, “… COVID-19 had a significant impact on our funding sources and threatened our ability to provide continued employment to our staff.”

Media Matters For America – a Soros-funded progressive group – had $5.3 million in assets on their latest available IRS 990 (FY2018) and received up to $2 million in PPP lending.

“R” Street Institute, a self-described conservative and libertarian free market group based in Washington, D.C. and dedicated to limiting government, took between $1 million and $2 million.

In San Francisco, Apple co-founder Steve Wozniak co-founded the Electronic Frontier Foundation and they received between $1 million and $2 million even though they have assets of $40.3 million on their latest IRS 990.

Using the interactive map, citizens will find countless examples of businesses, churches, and non-profit organizations right in their own neighborhoods that received massive PPP subsidies.

As you search the federal PPP loan portfolio, keep in mind that taxpayers will pay for most of these “loans.” The loans are forgivable – treated as a grant – as long as the businesses retain their employees and don’t cut their paychecks.

What will you find in your own backyard? Whatever it is, let Washington know.

Note: Our watchdog organization at OpenTheBooks.com does not take government funding under any circumstances. Furthermore, we reached out to every entity mentioned and will update the piece if they respond.

The United Nations released the results of an investigation into the January 3rd US drone strike on Iran’s top IRGC general Qasem Soleimani calling the killing  “unlawful” on Tuesday.

The report by Agnes Callamard, UN special rapporteur on extrajudicial, summary or arbitrary executions, further concluded it violated the UN charter and deemed it an “arbitrary killing” — especially given, according to her findings, there exists no evidence that Soleimani was planning an imminent attack on the United States or its personnel. 

In the days and weeks after the targeted assassination which set the region on war footing, and which shocked the world, the Trump administration and especially Mike Pompeo and Pentagon leadership cited precisely that US soldiers in the Middle East were facing “imminent” attack under orders from Gen. Soleimani.

The UN report highlighted that never before has a member nation claimed ‘right to self-defense’ as rationale for killing a state official in a third country.

Some of the UN report highlights, which will be presented before a UN Human Rights session (a UN body that the US pulled out of two years ago) on Thursday, are as follows: 

Arbitrary killing: 

“In light of the evidence that the US has provided to date, the targeting of General Soleimani, and the deaths of those accompanying him, constitute an arbitrary killing for which, under IHRL (international human rights law), the US is responsible.”

Violated UN charter, given there was— 

“insufficient evidence provided of an ongoing or imminent attack,” Callamard wrote.

No evidence of imminent attack plotted on the US:

“No evidence has been provided that General Soleimani specifically was planning an imminent attack against US interests, particularly in Iraq, for which immediate action was necessary and would have been justified.”

Strike “unnecessary” and “unlawful”:

“No evidence has been provided that a drone strike in a third country was necessary or that the harm caused to that country was proportionate to the harm allegedly averted.

“Soleimani was in charge of Iran’s military strategy, and actions, in Syria and Iraq. But absent an actual imminent threat to life, the course of action taken by the US was unlawful.”

* * *

Of course, any potential punitive recommendations against Washington will only ever be merely symbolic. Iran will, however, make much of it in its media as well as in any potential unlawful killing international lawsuit against the US and decision-makers in the Trump administration. Tehran has already demanded massive compensation for the killing from the US.

The US has taken issue from the start over Soleimani being considered by many European countries as a ‘state official’. Washington has instead deemed he and the elite Islamic Revolutionary Guard Corps (IRGC) as terrorists, and thus legitimate targets of US military action.

Managing editor Ed Harrison joins Dan Russo, CMT, chief market strategist at Chaikin Analytics, to discuss the latest developments and trends in markets. With his blend of technical and fundamental analysis, Russo shares where he’s seeing relative strength in equities and explains why understanding the macro picture and the interconnected relationships of various asset classes is important for equity traders. Russo and Harrison also dive into currencies, bonds, and the macro trends, especially as it pertains to inflation. In the intro, Peter Cooper talks about remittance and why it’s a critical piece of puzzle for the global economic recovery.

Authored by Robert Shiller via Project Syndicate,

The worse economic fundamentals and forecasts become, the more mysterious stock-market outcomes in the US appear. At a time when genuine news suggests that equity prices should be tanking, not hitting record highs, explanations based on crowd psychology, the virality of ideas, and the dynamics of narrative epidemics can shed some light.

The performance of stock markets, especially in the United States, during the coronavirus pandemic seems to defy logic. With cratering demand dragging down investment and employment, what could possibly be keeping share prices afloat?

The more economic fundamentals and market outcomes diverge, the deeper the mystery becomes, until one considers possible explanations based on crowd psychology, the virality of ideas, and the dynamics of narrative epidemics. After all, stock-market movements are driven largely by investors’ assessments of other investors’ evolving reaction to the news, rather than the news itself.

That is because most people have no way to evaluate the significance of economic or scientific news. Especially when mistrust of news media is high, they tend to rely on how people they know respond to news. This process of evaluation takes time, which is why stock markets do not respond to news suddenly and completely, as conventional theory would suggest. The news starts a new trend in markets, but it is sufficiently ambiguous that most smart money has difficulty profiting from it.

Of course, it is hard to know what drives the stock market, but we can at least conjecture ex post, based on available information.

There are three separate phases of the puzzle in the US:

• the 3.1% rise in the S&P 500 from the beginning of the coronavirus crisis, on January 30, to February 19;

• the 34% drop from that date until March 23;

• and the 40% upswing from March 23 to the present.

Each of these phases reveals a puzzling association with the news, as the lagged market reaction is filtered through investor reactions and stories.

The first phase started when the World Health Organization declared the new coronavirus “a public health emergency of international concern” on January 30. For the next 20 days, the S&P 500 rose by 3.1%, hitting an all-time record high on February 19. Why would investors give shares their highest valuation ever right after the announcement of a possible global tragedy? Interest rates did not fall over this period. Why didn’t the stock market “predict” the coming recession by declining before the downturn started?

One conjecture is that a pandemic wasn’t a familiar event, and most investors in early February just weren’t convinced that other investors and consumers paid any attention to such things, until they saw a bigger reaction to the news and in market prices. Their lack of past experience since the 1918-20 influenza pandemic meant that there was no statistical analysis of such events’ market impact. The beginnings of lockdowns in late January in China received scant attention in the world press. The disease caused by the new coronavirus didn’t even have a name until February 11, when the WHO christened it COVID-19.

In the weeks before February 19, public attention to longstanding problems such as global warming, secular stagnation, or debt overhangs were fading. President Donald Trump’s impeachment trial, which ended February 5, still dominated talk in the US, and many politicians apparently still found it counterproductive to raise alarms about a hypothetical new enormous tragedy looming.

The second phase began when the S&P 500 plummeted 34% from February 19 to March 23, a drop akin to the 1929 stock market crash. Yet, as of February 19, there had been only a handful of reported COVID-19 deaths outside of China. What changed investors’ thinking over that interval was not just one narrative, but a constellation of related narratives.

Some of the new news was nonsense. On February 17, a run on toilet paper in Hong Kong was mentioned for the first time, and became a highly contagious story as a sort of joke. Of course, the news about the spread of the disease was becoming more international. The WHO dubbed it a pandemic on March 11. Internet searches for “pandemic” peaked in the week of March 8-14, and searches for “coronavirus” peaked in the week of March 15-21.

It appears that in this second phase, people were trying to learn the basics about this strange event. Most people couldn’t get a handle on it immediately, let alone imagine that others who might influence market prices were doing so.

As the stock-market downturn proceeded, vivid stories appeared of hardship and business disruption caused by the lockdown. For example, some people in locked-down China reportedly were reduced to searching for minnows and ragworms to eat. In Italy, there were stories of medical workers in overwhelmed hospitals being forced to choose which patients would receive treatment. Narratives about the Great Depression of the 1930s flourished.

The beginning of the third phase, when the S&P 500 market began its 40% rise, was marked by some genuine news about both fiscal and monetary policy. On March 23, after interest rates had already been cut to virtually zero, the US Federal Reserve announced an aggressive program to establish innovative credit facilities. Four days later, Trump signed the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, promising aggressive fiscal stimulus.

Both of these measures, and similar actions in other countries, were described as resembling the actions taken to counter the 2008-09 Great Recession, which was followed by a gradual but ultimately huge increase in stock prices. The S&P 500 increased fivefold from its bottom on March 09, 2009, to February 19, 2020. Most people have no idea what’s in the Fed plan or the CARES Act, but investors did know of one recent example when such measures apparently worked.

Stories of smaller but still significant stock-market collapses and strong recoveries, a couple of them from 2018, were widely recalled. Talk of regrets about not buying at the bottom then, or in 2009, may have left the impression that the market had fallen enough in 2020. At that point, FOMO (fear of missing out) took hold, reinforcing investors’ belief that it was safe to go back in.

In all three phases of the COVID-19 stock market, the effects of genuine news are apparent. But price movements are not necessarily a prompt, logical response to it. In fact, they rarely are.