By now, it is clear that U.S. financial markets care about only two things: the Coronavirus vaccine and the Federal Reserve. Everything outside these two crucial elements is just noise that has little bearing on the New York Stock Exchange. The proof is in the recent 900-point pudding, as well as the 30% rally since bottoming out at the end of March. And yet, like a morose college student who has just finished reading Soren Kierkegaard, the World Health Organization (WHO) is imposing itself on investors and telling the world how bad everything is. If it were up to the WHO, the entire planet would be under lockdown and hiding in the basements until a vaccine is developed. Thankfully, the WHO is not in charge, and nobody is really paying attention anymore to the quintessential Karen.
The Comeback Kid
On May 18, the Dow Jones Industrial Average had its best trading day in more than a month, surging 911 points to 24,597. Ditto for the S&P 500, which soared 3.15% to a two-and-a-half-month high of 2,954. Nasdaq continued its upward trend for the year, adding another 220 points to its below-the-radar resurgence. If the leading U.S. stock indexes have days like these, it could only be a matter of time before they recuperate their losses and return to record levels before the coronapocalypse.
In other areas of the market, June West Texas Intermediate (WTI) crude oil climbed above $32 for the first time since February. The benchmark 10-year Treasury note held steady at around 0.7%, while gold prices eased off their latest highs on bullish sentiment.
So, what happened? Speaking on CBS’ 60 Minutes, Federal Reserve Chair Jerome Powell warned that a full economic recovery would not take place until a remedy is developed. A day later, Moderna reported positive data and promising results from its early-stage Coronavirus vaccine trial. Although the company’s findings are still early and U.S. officials say the development could take at least 12 months, any good news on the treatment front is enough for investors to hit the buy button.
Powell also left the door open to additional monetary stimulus. He repeated his doom and gloom from the previous week, noting that the U.S. economy will not rebound until sometime in 2021. However, he confirmed that the central bank has yet to run out of ammunition, which gave markets a nod and a wink that the Eccles Building is ready to unleash additional support measures. Once again, Powell urged Congress to wield more fiscal tools to support growth.
The WHO has been trying to get the attention of everyone, but it turns out that the public has become indifferent to what the international institution has to say -- and with good reason. Still, that has not prevented the organization from wagging its fingers at countries beginning to reopen their economies gradually and predicting devastation.
Says WHO?
After dropping the ball on the Coronavirus in the early stages of the outbreak, the WHO has tried to rectify the situation by fearmongering and complaining about everything.
WHO emergencies director Dr. Mike Ryan warned at a recent virtual press briefing that COVID-19 might never go away.
“It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” he said. “HIV has not gone away -- but we have come to terms with the virus.”
Dr. Tedros Adhanom Ghebreyesus, the Director-General of WHO, sounded the alarm about a second wave upon easing lockdown restrictions, adding that there is a “lengthy road to journey” for everyone. At the same time, he noted that most nations have reported that 10% to 20% of their populations have contracted the virus. Did the WHO overreact after underreacting? Tedros said lessons would be learned, but that does not help the millions of Americans who have lost their jobs.
“All of us have classes to be taught from the pandemic. Each nation and each group should study its response and be taught from its expertise,” Tedros stated.
With WHO’s dubious track record in this public health crisis, President Donald Trump sent a scathing letter to the international body and threatened to cut funding and withdraw its membership permanently. He wrote:
“It is clear the repeated missteps by you and your organization in responding to the pandemic have been extremely costly for the world. The only way forward for the World Health Organization is if it can actually demonstrate independence from China. My administration has already started discussions with you on how to reform the organization. But action is needed quickly. We do not have time to waste. That is why it is my duty, as President of the United States, to inform you that, if the World Health Organization does not commit to major substantive improvements within the next 30 days, I will make my temporary freeze of United States funding to the World Health Organization permanent and reconsider our membership in the organization. I cannot allow American taxpayer dollars to continue to finance an organization that, in its present state, is so clearly not serving America’s interests.”
This is opposite to what South Korean President Moon Jae-in recently recommended by “increasing them with binding authorized power” to combat rising illnesses sooner or later.
A Pre-Pandemic Economy
Unless the WHO suddenly declares that the Coronavirus has mutated and is as serious as the Nipah virus, everything Dr. Tedros and his gang pontificate will have little impact on equities, bonds, and commodities moving forward. It is “damn the torpedoes and full steam ahead!” for investors regarding vaccines and Fed money-printing. Even as the United States enters a deep recession, markets are optimistic that the world’s largest economy will emerge from the doldrums and return to its pre-pandemic state -- with or without the World Health Organization.
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Read more from Andrew Moran.
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