AppearancesMarch 4, 2020 -
Categorized in: IAG News
The coronavirus COVID-19 has created some scary headlines.
It is scary to the general public, some of whom are now stockpiling supplies and rations to survive a quarantine.
It is even scarier to government organizations. In these circumstances people expect their government to competently implement measures to restore health and calm. If governments appear to be incompetent they may soon be removed from power and replaced with a government that makes better promises.
Thus, appearances become everything. Governments are widely adopting both effective and ineffective strategies to slow the coronavirus’ spread and visually assuring the people that government is doing everything within its power to combat this viral scourge.
Quarantines make great headlines and instill confidence of containment, but they may not be effective due to an unknown incubation period. Providing surgical masks are a tangible way of showing the government cares, but they do little to actually prevent infection. Keeping reported cases lower makes for good headlines and can be accomplished by limiting the number of tests performed.
The broad adoption of these and unknown future questionable strategies makes the coronavirus scary to short-term traders in financial markets. The extent to which governments will go to prove they are competent has no end. In the end, the impact of the government’s reaction could cause more economic damage than having employees who must stay home sick for a week to recover from a virus.
We fully expect that the coronavirus will continue to cause additional market volatility in the coming months –positive on good appearance days, negative on bad appearance days. As we discussed in last week’s blog, we believe there is a high likelihood that the coronavirus COVID-19 will be a distant memory by 2028.
Quote of the week: George Washington: “Government is not reason, it is not eloquence, it is force. Like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action.”
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