Brainless Markets, US vs. Asia COVID-19 Edition

Are US stock markets missing something, or is Trumpland going to be socked more by COVID-19 than Asian economies?

The legendary economist John Maynard Keynes is attributed for saying "the market can stay irrational longer than you can stay solvent." Well, if we are to evaluate countries by how hard hit they are by the coronavirus pandemic, the performance of American stock markets should be all the evidence you need that Keynes was right as it leads the rest of the world in rebounding from their March lows. The tech-heavy NASDAQ is somehow at record highs three months or so after stock markets worldwide imploded. Is it because the United States is doing so much better in coping with COVID-19 than anyone else? Heck no!

1. The Organization for Economic Cooperation and Development (OECD) predicts the US economy will shrink far more than Pacific Rim countries like Japan, India, Indonesia, China and Korea, and the disparity will be starker if there is no "second wave" of infections. (See the chart above.) For, the American economy is expected to suffer much the same GDP declines in either case than the aforementioned Asian economies. Yet, those Asian economies' stock markets are not doing anywhere near as well.

2. As China's stock market remains comparatively moribund, we are reminded that PRC fatalities are by now less than one-twentieth of the United States' despite being the country from which the virus originated. In fact, the US death rate is by now over 100 times greater than China's:

COVID-19 remains an ongoing threat and the U.S. has just reached a tragic milestone in the pandemic that may not get much attention. The COVID-19 death rate in the U.S. has now passed 340 per million residents, just over 100 times the rate in China. Let that sink in: The death rate from COVID-19 in the U.S. is 100 times greater than it is in China, where the virus first emerged in humans and where the Trump Administration claims the blame should lie for letting the pandemic get out of hand.

3. With 112,000 deaths and still rising, the United States has in no way slowed COVID-19 down unlike most European and East Asian countries. So, the Yanks' lead in this dubious statistic--coronavirus deaths--should become even more insurmountable in the coming weeks as they continue to climb without appreciable arrest. Its states have removed most restrictions on movement despite not having any noticeable improvements on a nationwide basis, so it's almost a given that things will get even worse Stateside. 
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In my humble opinion, those betting on US outperformance--whether in dealing with COVID-19 or its economic fallout--are as delusional as that country's leader.  It's the financial equivalent of wishful thinking that the country that is so far ahead of any other country in COVID-19 cases and deaths will also be the one to do the best economically. It's the financial equivalent of ingesting  hydroxychloroquine, Clorox, or whatever chemical Trump is fancying at the moment so that the virus will magically go away.

I've put my money where my mouth is at: I am long Asian stocks and short American ones. If equity valuations are still reality-based--on fundamentals--the relatively lesser economic consequences of the virus on Asian economies should ultimately result in their stocks outperforming American ones going forward.

6/11 UPDATE: US stock markets have been hammered right after this posting, with the Dow Jones Industrial Average  down 1,800+ points. To paraphrase Forrest Gump, brainless is as brainless does.