Morning Jog

The Curve

The fastest bear market on record, followed by the best* quarter in 20 years, and a decade’s worth of economic and societal change, compressed into a just few months.  We’re half way through the year, and what a remarkable and surreal ride it has been.

We’ve certainly come a long way from the depth of the health crisis and the standstill in economic activity in April, but in some respects, the ritual is the same. The country and state names have changed, but we are still looking at Covid case curves to gauge the pace of the collective recovery.

The sharp increase in infection rates across the Sun Belt states is front and center now. Infection cases are rising, but so is the availability of testing. And, clearly what matters most, is the chain of higher test positivity rates leading to increased hospitalizations and deaths. Thankfully for now, the nationwide death toll numbers are continuing to trend lower.  It may simply be that we are too early to see any change in the death numbers yet. Or it is a more permanent shift towards younger people accounting for a larger share of new cases (most of them not requiring treatment), and hospitals being better equipped to provide care to those that do.  We will know a lot more in the coming weeks.

What we do know from some high frequency small business data, is that the deteriorating virus trends are starting to impact consumer behavior and slow the pace of the economic recovery. The faltering recovery, particularly in states with increasing infection trends, is a function of state and local policy action to pause or roll back reopening measures, and consumers simply retrenching as the health picture gets gloomier.

So yes, the case curves are worth watching. But the fundamental one that has, and will continue to shape our ability to successfully manage this crisis (at least until a vaccine provides a permanent fix), is this one:


This cognitive bias, is a tendency of the most incompetent people, to grossly overestimate their own abilities.  They simply lack the self-awareness and intellectual ability to recognize their own incompetence,  something Messrs. Dunning and Kruger aptly called the “dual burden” of incompetence.

I’ve climbed “Mount Stupid” before (and made camp there for the first two years out of college!), but that peak is crowded like Mt. Everest now.

The slow and inadequate health policy response at the onset of this pandemic, with bungled testing and nurses having to wear garbage bags for PPE, was a colossal and tragic failure of preparedness and leadership. But five months into this crisis, with real data to help drive our decisions, our leaders contorted the simple act of wearing a face mask into a grand political statement.  Politicians are debating the merits of containing the pandemic or boosting the economy, as if the two are separate and mutually exclusive issues. And kids are busy doing whatever this is.

It seems so basic, that with proper public health policy and investment in testing and contact tracing, we can at least manage the pandemic and keep the economic recovery on track.  Encouragingly, some governors are starting to press the brakes on the Let ‘Er Rip! approach,  perhaps swayed by the economic data. We may yet bend the curve.

Have a wonderful long weekend and be well.


*Source: FactSet

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