WASHINGTON – Lately, it seems that every time Mr Market gets ready to blast off to the upside, a barrage of uniformly negative headlines hits the wires. The inevitable result? A potential rally gets nipped in the bud, dulling or driving down the averages for another trading day. All due to the relentless barrage of endlessly hyped negative news.
Wednesday’s trifecta of negative news begins
Case in point: Futures were up all night and Wednesday morning. But after a positive opening flourish, stocks went down almost across the board. They remain essentially flat early Wednesday afternoon. Why? From the opening beat, the media began to hype that latest negative coronavirus “story.” More negative news for the masses.
This morning’s negative news chapter trumpeted a “study” by the Los Alamos Lab and other international entities that, like magic, the coronavirus had significantly morphed into a new one. So, according to frantic reports, we’re back to square one. We shouldn’t be opening the nation back up. And, of course, like last time, “we’re all going to die,” the most endlessly hyped meme since that fateful November of 2016.
First of all, when did New Mexico’s Los Alamos Lab morph from its founding mission as the research center for the Manhattan Project and its evolution into other areas of energy research into medical research and disease control? Mission creep, more than likely, another reason why the government spends too much money. Disease research is hardly the primary mission of this National Lab.
More to the point, this “study” is merely in its preliminary stages. It hasn’t been vetted, and it hasn’t undergone any peer review at all. So why the release now? Why did this unproven negative news get endlessly hyped this morning as if it were the truth?
A “study”? Or a leak?
Or maybe “leak” is a better word for what happened. This likely deliberate leak has the effect of questioning the policies of both the Federal government (read “the Trump Administration) and a growing number of states to get Americans back to work. Back to resuming normal lives. And, as a result, getting our economy, phenomenally robust as recently as February, back into gear before the social distance fans destroy it beyond repair. Which, in and of itself, is an issue as cosmic as health.
But above all, the leaking of what’s clearly an un-vetted and unproven theory, someone obviously hopes, might put another nail into President Trump’s 2020 electoral coffin. Which is almost certainly why it was leaked and endlessly hyped at this precise time. And, as far as stocks were concerned, it worked. Funny thing about negative news, if you can get enough outlets to repeat it uncricitally.
Gottlieb tries to set the record straight
But at least one respected scientist / commentator tried to set the record straight mid-Wednesday morning. Check it out here before the media sends this down the memory hole.
“Dr. Scott Gottlieb stressed to CNBC the need for caution around a new study that suggests a new strain of the coronavirus could be more contagious than the original strain that emerged in Wuhan, China. ‘It doesn’t prove that this new strain is in fact more infectious,’ Gottlieb said of the study, which was published by researchers at Los Alamos National Laboratory.
“Gottlieb argued that more work needs to be done beyond the initial study, which has not yet been peer-reviewed. He said it’s only based on computational analysis and ‘we don’t have any other data to support it, including cell culture data.’”
In other words, this totally scary “news” hits the mark, right in between “totally fake” and “deliberately misleading.”
But wait! There’s more!
Hitting on top of this “computational analysis,” word just came in from ADP that the latest unemployment numbers will show the most gigantic increase in that number IN ALL RECORDED HISTORY!! Gosh, who knew? If the coronavirus mess stopped dead today, those numbers would likely increase for at least a couple weeks more before continuing to decline.
This fresh crop of unemployment horror stories, of course, fails to mention that the ADP report, while somewhat useful, nearly always proves way off base. The correction comes via the widely respected Federal employment report, which usually shows up on Friday. But the ADP report became important and authoritative Wednesday because it provided a nifty tranch of negative news that hit close to home. To what extent it proves accurate, nobody knows.
So we endured a one-two punch Wednesday of, if not exactly fake news, very misleading negative news at best.
There’s even more scary, negative news from those reliable people at WHO!
But even better, the highly respected (by Communist China) World Health Organization (WHO) continued its full court press of damage-control activities.
In Q1, WHO proved itself useless when it came to warning the world of the extent of Communist China’s deliberate malfeasance in reporting the huge initial outbreak (and spread) of the Wuhan coronavirus. Today, WHO, and its bought and paid-for Fearless Leader, Chief China Toady and Director-General “Dr.” Tedros Adhanom Ghebreyesus continued to preach the preventative gospel to the two or three countries that still believe in this bogus UN organization.
They’re likely trying to pressure President Trump into giving them back the money US taxpayers were wasting on this confederacy of dunces. Undeterred, however, Tedros and his equally culpable, pro-left associates continue in their attempt to get all those horses back into the barn they’d fled some two months ago.
WHO (falsely) opines
“The World Health Organization warned world leaders Wednesday that there can be ‘no going back to business as usual’ following the coronavirus pandemic, which has upended economies and wreaked havoc on nearly every country across the globe…
“‘This virus likes to find opportunities to spread and if these lockdown measures are lifted too quickly, the virus can take off,’ Dr. Maria Van Kerkhove, the WHO’s lead scientist on Covid-19, said during a press conference at the agency’s Geneva headquarters.…
“WHO Director-General Dr. Tedros Adhanom Ghebreyesus said countries cannot ‘let preparedness go by the wayside. As we work on responding to this pandemic, we must also work harder to prepare for the next one. Now is an opportunity to lay the foundations for resilient health systems around the world, which has been ignored for long.’”
In other words, let’s scrap these capitalist systems that failed because we and our Chi-com masters withheld key information from them. We need “resilient” and certainly “socialist” health systems that will prevent this kind of pandemic in the future. Health systems like Communist China’s, no doubt.
Once again, stocks today trade mostly on (often fake) headlines, not close analysis
While all this may seem off topic, it’s not. This amazing confluence of endlessly hyped negative news stories cut off an impending move to the plus side in US and international stock markets Wednesday. It’s as if someone, somewhere just can’t stomach the idea that the US and Western economic system might recover quickly, get back to life as usual, AND come up with a coronavirus vaccine. Or at least a series of already known, semi-effective drugs that can blunt the effect of the current coronavirus attack until scientists come up with something better.
We must constantly keep in mind that perhaps a majority of the national and international negative news we encounter is either fake or exaggerated. Then endlessly hyped until the rubes (you and me) start thinking it’s the truth.
As we conclude this piece, the Dow, badly damaged by the continuing weakness of Boeing and related industrials, is up 0.08% and barely treading water. The broader-based S&P 500 is doing marginally better, up 0.25% at the moment (2 p.m. ET).
But happily, the seemingly indefatigable, mostly high-tech NASDAQ continues to do much better, up 1.3% thus far. Although, as the Negative Nellies preach, that’s once again largely due to the usual suspects, like Apple (trading symbol AAPL), Google / Alphabet (GOOGL), Amazon (AMZN) and Facebook (FB).
Investors will happily continue to invest in these tech behemoths anyway. As long as they work, and until they don’t. This might also provide a reason why so many other stocks continue to tread water. Nobody trades there anymore.