Normalcy bias can be a nasty killer, especially at a time like this. According to conventional thinking, the coronavirus will eventually stabilize and fade, just like SARS did nearly two decades ago. Thus, the insanity that we’re seeing in the financial markets is well justified. Life will go on.
Don’t get me wrong: I’m not suggesting that it won’t. Nor am I implying that one should take extreme measures to respond to the coronavirus. Although the scope of the epidemic presents substantial worries, I’m not sure if investing in an underground bunker represents a wise expenditure of funds.
At the same time, I think society at large is a little too comfortable with this viral outbreak. For one thing, the infection rate keeps rising, even though the Chinese government suggested that the situation is stabilizing. According to the latest stats at time of writing, the coronavirus has infected over 45,000 people and killed over 1,100.
Further, from day one, experts and analysts have predicted that the situation was far worse than official statistics implied. And one by one, the hard facts proved that they were not fear mongers but truth tellers.
Therefore, I’m having a difficult time believing the present rally in the markets. The Dow Jones hit a record high at a time when people should consider taking this outbreak more seriously.
Worrying Developments over the Coronavirus
Of course, if it was just me fretting over the health crisis, my opinion wouldn’t matter much. However, I found it alarming that one of the top officials from the Centers for Disease Control and Prevention suggested that the virus could “take a foothold in the U.S.” According to a CNBC report:
“At some point, we are likely to see community spread in the U.S. or in other countries,” Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, told reporters on a conference call. “This will trigger a change in our response strategy.”
Forgive me for what sounds like elementary and therefore patronizing logical deduction. But if the epidemic is stabilizing – and clearly, the markets believe that’s the case – why the CDC’s warning? Honestly, I feel like I’m living in the Twilight Zone as so many “normals” consider this crisis as just another SARS.
Furthermore, the CDC disclosed that coronavirus testing kits sent to various states and countries are flawed. This raises the risk that health authorities have misdiagnosed patients. Even worse, this situation already happened in the U.S.
Like I said above, I don’t think panic serves anyone’s interest. But pretending this crisis isn’t happening is just as bad.