Suddenly Taking It Seriously

You know there’s a problem when Sean Hannity gently advises Fox viewers to “please take COVID seriously.”

“Enough people have died. We don’t need any more death,” Hannity said Monday night. “I believe in science,” he added. And then, for clarification: “I believe in the science of vaccination.”

That likely came across as somewhat incongruous to the network’s audience, who’ve been inundated recently with programming that many blame for increasing vaccine hesitancy at a perilous juncture. Although Hannity included a slew of pseudo-caveats, the message was as clear as it could possibly be considering the source. “It absolutely makes sense for many Americans to get vaccinated,” he said.

In all likelihood, Fox is concerned that pushing the envelope much further might be bad for business, if not from a viewership perspective, than at least to the extent nobody wants to be directly implicated in the event some worst-case scenario finds the Delta strain or another variant triggering a wave of new fatalities.

I bring up Hannity’s remarks because shifts in Fox’s rhetoric typically only occur when somebody is concerned enough about a given situation to compel the anchors to dial down the propaganda. (It’s not as if Hannity just decided, of his own accord, to speak highly of vaccination science.)

That, in turn, says a lot about the perceived peril associated with falling vaccinations and the spread of the Delta variant. The Daily Beast noted that “Hannity hasn’t been nearly as hostile to vaccination efforts as his primetime Fox colleagues,” so it’s not a complete one-eighty. And the same linked article observed that although “many Fox News anchors and hosts seemed to make a concerted effort on Monday to push viewers to get vaccinated, others like Brian Kilmeade and Tucker Carlson continued to [raise questions] over the safety and efficacy of the shots.” But it’s obvious that shoulders are being tapped, as it were.

This comes just days after Joe Biden accused social media of indirectly “killing people” by allowing vaccine misinformation to proliferate across platforms, an accusation Facebook vociferously denied. Amy Klobuchar didn’t mince words. “There’s absolutely no reason they shouldn’t be able to… take this crap off of their platforms,” she said, of social media and vaccine misinformation.

Early this week, analysts and market participants suggested the same kind of “Hmmm, this seems to be getting serious” realization likely contributed to Monday’s dramatic declines on Wall Street. Bloomberg quoted one strategist as follows: “The broad public is waking up to the change in the COVID trends, especially the Delta variant. It’s hitting home and has become more high-profile.” The linked article contains a bevy of similar soundbites.

There’s now no question that market participants are in the process of re-appraising the growth outlook as a result of the Delta variant. The problem: We’d already passed peak growth prior to everyone (including, now, Sean Hannity fans) “waking up.” That means market participants’ already less ebullient appraisals are likely being mentally revised even lower.

Recall that in the July edition of BofA’s popular Global Fund Manager survey, the net percentage of respondents expecting global profits to improve over the next 12 months fell to the lowest in a year, while inflation expectations plummeted alongside those expecting a stronger economy (figures, from BofA, below). Yield curve expectations similarly cratered.

This is what you’re seeing across bonds, and as yields fall, it puts further pressure on any remaining shorts, which only exacerbates the situation.

Although Treasurys eventually cheapened Tuesday as equities rallied, the 2s10s breached 100bps this week for the first time in months (figure below).

Meanwhile, Goldman said the Delta variant could hold back global demand for crude. The spread of the more transmissible strain might curb demand by as much as 1 million barrels per day for the next two months, the bank said.

Goldman is still constructive on oil, by the way. The point is just to underscore the extent to which the virus is infecting (sorry) forecasts both official and back-of-the-envelope — both quantitative and qualitative — pretty much across the board.

Perhaps this will all prove fleeting. One thing that would help when it comes to growth expectations is some sign that partisan rancor inside the Beltway might yield to the gravity of the challenge at hand. Of course, that’s a pipe dream. Republicans are still dead set against robust, demand-side stimulus. That position is untenable and will become even more so in the event worries about the trajectory of growth turn out to have some merit after all.


Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.

14 thoughts on “Suddenly Taking It Seriously

  1. I’m not the first and won’t be the last to say it, but Murdoch and Fox News are an ongoing threat to American democracy.

    1. Not just to democracy but to the mental health of their millions of viewers. There are numerous op-eds that have been written over the years about “how I lost my … ” insert relative here to Fox News.

  2. Clearly section 230 regarding internet regulation needs to be revisited. So does the fairness doctrine for broadcasting media. It is not realistic to expect profit making enterprises to be able to regulate themselves adequately to help democracy. In the meantime the R0 of Delta is much higher than other variants. We are going to be living with covid19 for many years. The narrative that happy days are here again is clearly damaged. JP Morgan can say the fear is overblown, but I do not think any of them have robust backgrounds in public health or virology. The virus should make investors and traders widen the range of possible outcomes. And by the way, that is not doom and gloom- things could indeed could work out well in the next 3 years. It is just that overconfidence in this idea is misplaced.

    1. One issue, though, is that there’s an entire universe of online commentators who have spent the past dozen years (i.e., both post-GFC and post-pandemic) making eminently plausible arguments about the “scarring effect” (that’s obviously not a new concept), the perils of policy largesse, debt time bombs and “inevitable” reckonings of one kind or another. The bottom line is that when it comes right down to it, policymakers who are determined to drive asset prices to the moon can do just that. So it depends on what’s implied by “right” and “wrong.” A lot of folks who were ultimately right about the trajectory of the pandemic (e.g., calling for a brutal second wave late last year), were totally wrong about equities. Clearly, what matters for humanity is preventing human suffering and death. But when it comes to asset prices, the bottom line is that extrapolating from (mostly correct) predictions about the pandemic to what those (bad) public health outcomes “should” mean for stocks has been one of the most disastrously wrong calls in history. US equities rose 96% from the pandemic trough. Over that time period, hundreds of thousands of people died, untold lives were ruined economically and tens of thousands of businesses closed. But someone who put $100k in a simple S&P index fund on March 23, 2020 and went to sleep for 14 months, woke up with ~$200k. Similarly, anyone who spent the decade from 2009 to 2019 investing based on pundits, bloggers and newsletter writers who sounded smart while parroting dour narrative after dour narrative, are now so far behind financially that they’ll likely never catch up to some layperson who just bought an index fund in 2009. I always come back to the same thing: Stocks, bonds and money aren’t real. They’ll do whatever we decide they’ll do precisely because they don’t exist without us. So, if policymakers want stocks higher and bond yields lower, that’s what will happen, come hell or high pestilence.

      1. a.k.a “don’t fight the Fed”.

        In that regard, though, it’d interesting to me, as someone who sometimes got caught up in dour narratives (the Euro debt crisis of 2012/2013 and the stock market selloffs of 2015/2016 notably), to hear what you, H, think of the European situation.

        Had you invested in the Eurostoxx in 2009 and woken up in 2019, you’d have been pretty disappointed. Only the COVID crisis seems to have truly helped Euro stocks out of their funk. Yet, it’d be hard to make the case that the ECB was less accommodating than the Fed… Certainly not when it comes to negative yields…

        So – In your opinion, why were Euro stocks so unimpressive?

      2. “So, if policymakers want stocks higher and bond yields lower, that’s what will happen, come hell or high pestilence”

        Oooo, we love it when you talk dirty . . . 🙂

    1. I actually went through the morbid exercise of calculating whether differential vaccination and thus Covid rates between Democrats and Republicans could tip the electoral scales in a hypothetical swing state of 40% R, 40% D, 20% I. The answer is that the most extreme but still barely credible assumptions for exposure rate, attack rate, case fatality rate, vaccination rates, vaccine efficacy leads to only about a 0.2% to 0.3% shift.

  3. As I read this it occurs to me to remember two sets of rules never enforced in the US. First, all broadcasters on the airwaves must be licensed by the FCC and renewed regularly. Furthermore, violating FCC rules can result in a broadcaster’s license being revoked. The rule is there, we just don’t really seem to care if these guys follow the rules or not.

    One of the most coveted perks in the religious community is being exempt from taxation. However, this exemption is governed by certain rules and can be revoked for rules violations, a key one of which is that churches are technically barred from transmitting political positions to their parishioners.

    Be interesting if we started to get tough about this. Doesn’t require Congress to act.

    1. Lucky One – the shareholders of Fox etc would thank you forever if anyone in DC listened to your suggestion. Imagine the hysterical outrage on those media outlets against this new step in the “War on Christianity”.

NEWSROOM crewneck & prints