The stock market bounced back on Friday after the major indexes suffered their worst month of the year in September amid rising fears of inflation, slowing growth and rising rates – the Dow Jones was down 4.3%, the S&P 500 fell 4.8%, and the Nasdaq Composite was off 5.3%. In the plethora of concerns lies one elephant in the room – Covid. All the other uncertainties – interest rates, inflation, unemployment and corporate earnings are tied to this one disease that has now mutated to the delta variant and has pushed the reopening of the world economy beyond 2021. 

Pfizer recently announced that those who are vaccinated would have to get a booster shot. Else, after six months the efficacy of the vaccine drops rendering the vaccinated population susceptible. Moderna and Johnson and Johnson have echoed similar concerns. The question is – Will Covid ever be eradicated or is this something that we will all have to deal with every year or every six months? And what happens to the grand “reopening trade”? Is this one that will never materialize ‘coz we will never really return to “normal” as we knew it?

Future Wealth’s View

The notion that Covid could be eradicated has come under intense scrutiny given the damage it has caused globally. But, unlike smallpox, which has been eradicated, experts point out that Covid has properties that make it extremely hard to eradicate – overlapping symptoms with other diseases (smallpox had distinctive signs and symptoms), prolonged period of infectiousness (smallpox sickness was very short) and propensity to spread variants from asymptomatic carriers  (smallpox vaccine assured lifelong immunity).

What this research tells us is that Covid is not going to disappear – not in 2021 and not in 2022 either. All the talk of “life the way we knew it” is moot. We will likely be wearing masks for years to come and in the meantime – inflation, interest rates, gas prices, housing prices etc. will continue to climb and the stock market will begin to start reflecting this “new normal”. If the last week was any indication, the shake ups have just begun.

And while we are sweating the details, the Chinese are laughing behind our backs in the dining rooms at the Forbidden City over a nice roast of Peking Duck.