It is interesting to see/hear the big divergence that has developed recently between the bullish and bearish opinions on the variants of the coronavirus. On the bullish side of things, we’re hear some health experts say that this the current “wave” of Covid will be the “last wave”…and comments like these are leading some market pundits to say that risk assets in general are going to rally significantly into the end of the year.
On the bearish side of the ledger, we have reports of big increases in cases in several parts of the U.S. We are also reading stories about Tokyo leaders saying that the “virus situation is out of control.” More importantly, China just partially shut down the third busiest container port in the world. This will further strain a global supply chain that has already been under considerable stress for a lot longer than most people had been thinking just six months ago. In fact, this newest development has taken things to the point where it could have a serious impact on the holiday selling season this year.
So, what’s it going to be? Is the Covid issue going to die down and enable the economy to continue to expand at a stronger rate…or are the variants going to cause enough restrictions around the globe to slow the rate of growth we’ve seen for the past several months?
Well, we’re not doctors or scientists (something a lot fewer people on Wall Street have been willing to admit in recent weeks), so it’s impossible for us to know for sure. However, we also have to consider one other possibility. We could see a situation where the variants do become a problem for an extended period of time, but the problems it causes in the supply chains creates higher ...
