It's all about the mask!
Yes, there's a major change at the White House and the shift is on, out of the Cramer Covid-19 index and into stocks that benefit from a reopening. That's how the stodgy Dow and the slightly more with it S&P 500 could rally, but the Nasdaq takes a breather, if not a bad day. Yep, the mask is on, and the scourge could be on the run.
If you think this reasoning is wrong, you do not know how this culture war among the wear/no wear factions has kept us from beating this scourge and how the no-wear side may have just run up the white flag.
How did it happen?
This rally today is about a single tweet and I will quote it, a tweet from the president of the United States, the Real Donald Trump, which featured the president, in stark black and white, wearing a face mask and the following commentary:
"We are united in our efforts to defeat the invisible China virus and many people say that it is patriotic to wear a face mask when you can't social distance. There is nobody more patriotic than me, your favorite president."
We are United in our effort to defeat the Invisible China Virus, and many people say that it is Patriotic to wear a face mask when you can't socially distance. There is nobody more Patriotic than me, your favorite President! pic.twitter.com/iQOd1whktN— Donald J. Trump (@realDonaldTrump) July 20, 2020
Now let's go over this conversion. The president has eschewed wearing a mask in public. He has therefore emboldened the non-mask wearers to make ridiculous stands that invoke the First Amendment and freedom of speech.
The rebellion against masks took all sorts of forms. It seems that bar hoppers in Florida couldn't resist being close enough to share the easily spread disease from one to another. When Costco (COST) announced at the beginning of May that it would require masks the reaction was swift.
A fellow named Eric Torres, captured the zeitgeist with this tweet: "@Costco you have hit a new low. You are an American corporation, with an obligation to support our American values, dictating face mask for your workers is one thing but forcing this on your loyal members who paid for a membership is a complete abuse of power. #boycottcostco."
It gets worse. Ashley Smith, who happens to be a very important in "reopen North Carolina," called for a boycott of both Costco and Whole Foods, and was quoted in the USA Today as saying: "We cannot let them normalize the fear -- it allows them to drag out the closures and restrictions and will make it easier for them to do this to the country every flu season moving forward."
Yes, somehow masks became part of an ideological war. This is despite the fact that Costco's policy was based on backing the Centers for Disease Control and Prevention's decision to suggest face coverings to help block transmission of the disease. It got pretty vociferous when we got the tidal wave of "Karens": surreal videos of women refusing to wear masks at all sorts of stores. We also had the "Florida Man" who expressed the frustrations of so many who demanded to live free of masks.
The war reached its zenith last week when the lenient -- at least when it comes to the mask -- Georgia Gov. Brian Kemp sued Atlanta Mayor Keisha Lance Bottoms for having implemented a mandatory mask law, saying that "her disastrous policies threaten the lives and livelihood of our citizens," according to the New York Times. The mayor, like Costco, defended her position as being sync with the federal government's health care experts.
But Kemp, sounding like a throwback to the old states' rights politicians of the past, clearly felt that Washington was impinging on freedom, which is a precious thing to lose, except this time the battle wasn't about separate but equal, but something much more prosaic, distilled as "give me convenience or give me death."
A funny thing happened on the way to the outrage.
First, Costco reported 11% comparable store numbers, not bad, despite the supposed boycott. It looks like, despite the "live free of a mask or die" contingent, more people liked shopping in safety than dying for the right to buy toilet paper without a mask.
Then, once companies saw that they could risk ordering patrons to wear masks without losing customers, particularly to the online horror that is Amazon (AMZN) , they all caved: Walmart (WMT) , Walgreens (WBA) , Target (TGT) , Kohl's (KSS) , CVS (CVS) , you name it.
The move is so pronounced that Southeastern Grocers -- including the Winn-Dixie chain -- announced an easy mask policy and then reversed it Monday by putting in a policy that reads like all of its competitors' policies.
How could it not?
It turns out that the areas where the battle rages over masks have had the highest spikes of Covid cases. More Covid cases means a reversal of the freedom that, of course, people do want, and, more importantly, a loss of jobs that comes from a re-lockdown. Things are at the point where we might have to shutter a third of the country.
It turns out that the areas where the battle rages over masks have had the highest spikes of Covid cases.
And that's where the president comes in. To equate wearing a mask to being patriotic cuts into the very heart of the anti-maskers' arguments. The president has, subtly, switched sides. Suddenly, if you don't wear a mask, you are on the wrong side of the president of the United States. The anti-maskers tend to be supporters of the president, to put it mildly. I doubt that the Karens or Florida Man are going all the way for Joe Biden.
The result? Using masks, our country might be able to bridge to the vaccine the way that Taiwan, Japan, China, Vietnam and South Korea have, countries that have returned to relative normalcy because of mask wearing and really nothing but mask wearing.
As Marc Benioff, CEO of Salesforce.com (CRM) , told us when he helped unveil a contest for youths to develop the most wearable mask for $1 million in prize money: If we all wear masks, everyone, we can crush Covid in three weeks. Now perhaps Marc, according to some, is arguing with hyperbole, but there are plenty of informed health officials who agree. Twenty-one days and we can get things under control.
I think that the president's tweet cuts the legs out from under the anti-maskers. That, plus the fact that we now have so many good masks available, from Hanes (HBI) briefs -- comfortable as all get out, to light K-95s to Eagles masks, unless you are Cowboy fan.
Those, plus the possibility that we could have some stimulus coming soon, are coalescing to create a continuation of last week's rally, mostly of the two-thirds of the S&P that are still down for the year.
That's how you get the laggard retailers to rally. It's how you get the increase in oil, aided by a weaker dollar. Oil's move over $40 coupled with Chevron's (CVX) purchase of Noble Energy (NBL) for a ridiculously low amount has put a bottom in that group for now. It's how you see the stocks of the banks, which need a stronger economy to prevent escalating loan charges, charge ahead. And the two ultimate no-Covid stocks, Disney (DIS) and Starbucks (SBUX) soared. People took heart that Coca Cola's (KO) numbers this morning improved as the quarter went on as America reopened and China went positive. That moved Pepsico (PEP) , too. Even the lowly worm stock Foot Locker's FL moving up in sync with VF Corp (VFC) , Nike (NKE) and PVH (PVH) .
Now, how long can this non-tech rally continue? I think that if the president presses his pro-mask bet, then the anti-maskers will wither on the vine and the Benioff vision wins. What's incredible is that we will not have to hang on every word from the Journal of the American Medical Association or Lancet about some phase one test that doesn't give us anything to cheer about or a preliminary phase three test that might be a lot of help.
When this whole thing started, I went all-in on masks, getting a stack of masks by just going on Amazon, when they were all from the taking. I didn't feel rather lonely when I started wearing them everywhere. Masks are funny, they can protect you, but they really protect those you are near. Now that my mask wearing turns out to be patriotic, and there is nobody more patriotic than Trump, I think we have a chance to flatten the national curve and open the economy before we get a vaccine, if we ever get one.