GIULIETTA TALEVI: Covid’s moments of madness

Look around and you’ll see contradictions everywhere, moments of madness that don’t make a lot of sense.

They don’t come more baffling than the reversal last night by Nkosazana Dlamini-Zuma, minister of co-operative governance & traditional affairs, of President Cyril Ramaphosa’s earlier position that cigarette sales would be allowed during level 4 of the lockdown, which starts on Friday.

It gets sillier: Dlamini-Zuma announced that exercise will now be allowed, but only between 6am and 9am. Does she really believe that by forcing everyone to cluster together out on the streets within a tiny window period, you’ll limit the spread of Covid-19?

Asked about how flexible this rule is, her answer was confused and confusing. “They’re strict conditions because it may lead to the spread of the virus, as many people go out on the streets,” she says. Her solution: increase the odds that those on the streets will be sweating over each other.

But let’s turn to matters economic, and the contradictions we’re seeing in the markets.

It’s not just laymen who’re battling to reconcile how we can have an economy on its knees and a stock market that has recovered 30% since its March low. That’s exactly what is happening in the US, but it’s also happening in SA. Our stock exchange, the JSE, has now risen to a seven-week high – notwithstanding the fact that our economic prospects are getting grimmer by the day, with some experts reckoning 1,5-million people will lose their jobs.

As Robin Wigglesworth writes in the Financial Times: “The divergence between the flying stock market and the dying economy is so extreme it is leaving many analysts scrambling for explanations.”

There are some ways to reconcile this, though.

One reason for the discrepancy, for example, is that markets are always forward looking. We ran an opinion piece in last week’s FM by Deon Gouws in which he argues that news that looks ahead is far more important than what has already happened. 

It’s why a positive US trial of Gilead Sciences’ corona treatment remdesivir, as well as decent results out of Google parent Alphabet, is what market participants latched onto yesterday rather than the incredibly grim economic data. (The market also, presumably, ignored the rather more bleak results from China’s remdesivir trial.)

Perhaps the best advice is to not take it too personally when you analyse something as multi-faceted, emotionally indifferent and complex as the stock market and you end up calling it wrong.

So much for the government

Having said that, the inconsistencies of government support for businesses that have been forcibly shuttered by national lockdowns – in SA and abroad – is starting to gnaw at the populations of these countries. The initially positive support for national lockdowns is starting to turn sour.

But if you’re feeling apoplectic about the lack of material support from SA’s authorities, know that it’s by no means perfect elsewhere – even in the heartland of global capitalism, the USA.

The New York Times has written a cracking exposé about how large US firms muscled out struggling smaller businesses to secure federal loans – only to splash out that cash on fines, mergers and even fat CEO fees. 

If you’re feeling a trifle forlorn at how the lockdown has dragged on for five weeks in SA, consider the fact that elsewhere people are in a worst position than you are. And some are feeling far more cynical.

Take the idiosyncratic boss of US car company Ford, Jim Hackett. Read here how Hackett reckons, dismally, “there is no future”.

For those who saw Dlamini-Zuma’s woeful performance last night, you might be inclined to agree. The bright side is that this will be our first weekend in more than a month where we’ll be allowed to take a walk in the street, after level 5 lockdown has lifted. Just make sure you do it between 6am and 9am, along with everyone else in the country. To reduce infections, you understand.

*Talevi is the FM's Money & Investing editor.

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