The perfect is the enemy of the good. Maybe I'm wrong in thinking this is the bottom, but I think it's the point of maximum uncertainty. If testing ramps up as quickly as claimed by those running it, it could change the virus from uncertainty into certainty - expose exactly who is infected, and allow everyone they contacted recently to be tested. If that becomes the case, the uncertainty evaporates. It just becomes which HFT can calculate the new stock values first.
I'll preface by saying we're all in the dark here so I certainly can't claim anything with authority, but what are you reading that makes you think this is the point of maximum uncertainty? Quite literally overnight the known US cases have nearly doubled and the projections have gone from "could be like this until the summer" to "could be like this for 18 months". I feel like we are not even at the foot of Mt. Uncertainty right now. The govt is proposing stimulus mechanisms that make some amount of sense for dealing with a shorter term crisis, but what in the world is $1000 going to do when you can't work for a year? And now we're seeing bond prices getting hit because (per the analysis anyway) the amount of US debt being discussed, combined with everything else, could actually make US Treasuries a suspect asset for the first time. It seems improbable - but not impossible - that a month from now we're thinking "well at least we know how this is going to play out, certainty is rising, etc"
Am I crazy?
It may surprise you to learn W.H.O. data on U.S. cases is not useful. Now you shouldn't believe that from me, so take a look at WHO's situational report from Sunday, March 15. Pay special attention to the column of "no new cases for the last N days"... it will show "2" days with zero new cases in the United States. Do you believe there were zero infections between Friday and Sunday in the U.S.? That's what the WHO data is claiming. Try comparing their data with several other sources, and hopefully you'll avoid using them for up to the date cases in the U.S.
I'm not sure how to capture all my thinking on this, I'll try to give some context and rough thesis.
Korea handled the crisis with testing and tracking, and is considered to have handled the virus well. Italians even ignored the lock down after it was in place, continuing to meet up. Italy's lock down was a mess. Both countries have universal health care. Now the U.S. gets hit, and Americans who are struggling will not only avoid visiting the doctor, they need the paycheck and will go to work. No universal health care, no prior experience.
On March 9 I predicted the U.S. would hit 10,000 cases roughly Mar 20-23, and sold investments owing to my conviction I knew the virus better than the media and markets. That's risky, but the infectious disease experts were with me - even more pessimistic than me. So Mar 9 I sold stock, and then again when the market rebounded a couple times later that week.
I planned to sell treasuries after the Fed dropped rates... in a surprise move, they did so on Sunday, instead of waiting 3 days to their usual meeting. They also unveiled other measures, the sum total of which revealed the Fed was preparing for an event similar to the 2008 crisis. Markets went limit down (-7%). I did a little bit of selling treasuries and buying stocks. Fear ripped into the markets again, with Congress unable to agree on a relief package. Testing remained inadequate, which hides the true number of cases.
This week, during one press conference, Dr. Deborah Birx talked about testing platforms. The old platforms tested maybe 10/day, and new ones (in whole? each?) will test millions. I don't think the company was trying very hard before, but now they don't want to be blamed for a lack of testing. If they really could test millions a day, that turns a situation like Italy into a situation like Korea. If you know for certain everyone who is infected, you no longer have uncertainty.
I consider President Trump a troll who baits the media. But he also uses "wishful thinking" to make a claim, which is really an order for people to carry out. So when he says "everyone will get tested who wants to get tested", he sounds like a combination of Oprah (You get a car! You get a car!) and Obama (if you like your doctor you keep your doctor). He wants it to be true... and his re-election is definitely on the line. So he's very motivated, and he's focused on testing. I don't trust what he says, but I trust he will fight to get re-elected, and that means testing.
All told, I think everyone will focus on faster testing, and more of it. In the past ~100 years, the U.S. never had to roll out epidemic testing kits urgently across the whole country. It will be messy and have glitches. But if testing can be scaled up to unheard of speeds, then uncertainty will be replaced by certainty.
Do you know when a vaccine was found for SARS? They're still working on it, 18 years after SARS. I don't think epidemics end with cures - I think they end with quarantine. The key is knowing who to quarantine, which means testing each patient, and everyone they contacted. With too few tests, the virus spreads faster than testing can keep up. With excessive testing, the virus gets stopped whenever it finds someone new - them and all their contacts get tested.
So there could be more damage and even bankrupcies ahead. But I think testing is about to ramp up fast, and turn uncertainty into certainty. I have to call the bottom before that happens, or markets will take off before I can buy in. After all, I'm competing with HFT firms at millisecond speeds, so I have to guess earlier than than later. We'll see...
