Did we just get our Battle of Midway, the first big win against the Japanese in World War Two? This Covid-19 has run the table against us, a brilliant enemy that invades our bodies and robs us of our resilience. It has had us on our heels the whole way, attacking the fundament of our civilization, the unalienable rights, enshrined by the Declaration of Independence to life, liberty and the pursuit of happiness, the latter of which means the right to carouse, hang, watch March Madness, grab a beer, even see Cirque de Soleil, all of which are now gone. The founding fathers had game, but until today, Covid-19 had their number. I'm surprised that it can't chisel at the darned Mt. Rushmore while it pulverizes everything else we've got going.
Until today. Today Covid may have at last underestimated our nation's resolve and it's represented in the third straight up day, producing some eye-popping returns for big cap stocks, a near double in Boeing (BA) , big runs in all things, tech, and even a rally in the much hated financials.
It wasn't coordinated. Like our initial attempts to hold the line in both the Pacific and Atlantic theaters, we were overwhelmed by a superior enemy. Nothing's ever coordinated when you are attacked by an enemy with a pincer move armed with biological and financial weapons.
But, like the lucky gritty win at Midway- google it, watch the movie, or even the remake - we can see that one of these pincers can be blunted and the other's not immune.
It all started with a shockingly bi-partisan $2 trillion Covid rescue bill that goes far toward tiding the working person over while we defeat the biological terror. Congress has learned the errors of the 2008 rescue packages. Instead of the Fed and the Treasury Secretary continually underestimating the problem, our leaders this time went big, as big as I have ever seen, and put the money not in the hands of the big companies but in the hands of those who most need it, the workers who, through no fault of their own, are sitting at home waiting for the eviction notice while they try to figure out what they can put on the dinner table.
All workers, including the independent contractors, the gig economy workers who I thought might be left out, get money. Meanwhile, there are no bailouts, no bankers who get rich at our expense, in part because the bankers, in this movie, aren't the gangsters of old.
Maybe it takes an unseeable notorious killer to unite everyone.
Then the Fed chief came on the Today show and did something reminiscent of what Ben Bernanke said on 60 Minutes after almost the entire banking system went kerflooey. Powell basically said, enough is enough, the Fed will do whatever's necessary to unfreeze all these levered assets that the various masters of the hedge fund universe have been telling us are cold as ice. He didn't even make any judgments. He didn't' want to punish, he wanted to uplift.
You know how I know it worked? Because even though we had the most atrocious weekly unemployment claim I can ever recall, 3.2 million souls not reporting for duty, because there's no duty to report to, the market didn't blink. In fact, the pre-market looked terrible, the pajama traders banging stocks lower like the chowderheads I used to call them before I became Jimmy Chill. But we got a whoosh up led, again, by Boeing, which got good news, not in the form of corporate welfare, but a break to pay its workers. The airlines didn't get a bailout either, they, too, got the right to pay their workers until we destroy the dastardly disease.
Sure, the Nasdaq got a boost from a surprisingly strong Micron (MU) report that rippled through all of the cloud -- but it was the dive-bombing policy response that ignited all sectors and kept the momentum going.
Don't underestimate the power of the pledge, either. The bill, which I expect to pass putting checks in the mail by mid-April -- gives a lifeline, a form of business interruption insurance to the employer to pay the employees on the house, the house being the government in the form of loans you can walk away from. You just have to keep people on the payroll. The big dogs, though, the 15% of the economy where the CEOs make oodles, are coalescing to take pledges to keep people on staff even when there's nothing to do, kind of the exact reverse of a country where firing seemed to be encouraged so companies can buy back shares with the excess funds.
But how about the scourge itself? I saw some green shoots there, for the first, time, too. The fight's an ugly one, where only the toughest of measures seems to suppress. The total lockdown in San Francisco is working , flattening the curve for all our eyes to see. While the haphazard approach of New York City is proving to be too much for even the Army to handle, let alone the brave public health people who are ripping through n95 masks like they're lace on the face. Shameful to see scenes in a public hospital that seems more like a Wuhan institution than one we expect from in the richest nation on Earth.
But we have seen now when you put the hammer to the darned thing in the form of a National Guard quarantine in Westchester, it works. The curve can be bent at least for a bit, there was another flare-up today. It's not so invincible after all. Okay we've taken out only one of Covid's air craft carriers but its a start to see the rate of gains blunted and the number of sick go down.
As usual a bunch of wise guys came in to me and my Twitter feed saying don't trust the rally it is time to go short. I come back and reiterate that it's never good to short in a still oversold market. Sure if you own some Boeing, bought on a brilliant Goldman Sachs (GS) upgrade at around $90, I would take some off at $180 and play with the house's money after a two day win.
But I want to be a little more constructive here. You know why? Because I think our scientists, our medical minds, are working on an atomic bomb that can nuke Covid before it invades us. There are several trials going on right now that seem like spaghetti thrown at the wall and I expect many of them to produce suboptimal results or we wouldn't see a mobile morgue truck on the lower east side of New York.
However, I think Regeneron (REGN) , which we had on just last week, has something, a promising monoclonal antibody cocktail that can treat this coronavirus if you have it and fend it off if you don't. I know, sounds too good to be true, but so did the medicines Regeneron delivered against similar diseases including the incredibly toxic ebola.
After Midway the U.S. took its share of losses. There were days you didn't want to bet on the U.S. then either, as my dad would constantly remind me when he was a young sergeant trying to get his men on the beach in one piece. One day, though, instead of Zeroes, you saw B-29s. Another day, though you would ready for Operation Downfall, preparing to invade Honshu, first wave with the 6th Army, knowing you were going to die for your country. Then you heard about a weapon, an explosion and then another, and the next thing you know you are stationed in the imperial city of Kyoto, the one we didn't bomb.
Seemed fanciful then.
Seems fanciful now.
But in the last 24 hours we got something we haven't felt or seen in a long time.
Hope. And while there's no joy, and there wasn't back in '42, at least we know a victory could be had, and the stock market showed it with a third day of an astounding rally from the depths of the abyss.