On March 5 we said “America is Entering the Coronavirus J-Curve.”
The J-Curve concept is used in economics, geopolitics, and venture capital. The basic message of the curve is that “sometimes, things have to get worse before they get better.”
For a longer description with examples, you can .
We are revisiting that piece because, just over a month later, the J-Curve is now in full effect.
(When the original piece came out, there were 177 confirmed U.S. cases; as of this writing there are more than 550,000.)
As the situation unfolds, the U.S. is experiencing a rise of instability, confusion, and fear, as represented by point 2 in the J-Curve graphic below.
Unfortunately, simplistic messaging is making the J-Curve worse. This happens all too often in a crisis: Bad messaging leads to confusion, which intensifies anxiety and fear over time.
Right now the public doesn’t know what to believe, in part because of conflicting messages they have heard over the past two months.
- At first the coronavirus was supposedly like the flu — then it was far more deadly.
- At first citizens weren’t supposed to wear masks, which were supposed to be ineffective — until the Centers for Disease Control and Prevention (CDC) changed its guidance to recommend public mask-wearing.
- At first the coronavirus was supposed to be non-airborne — but now a CDC report suggests it can travel on the soles of shoes and move through the air as much as 13 feet.
- For a while there was hope of “opening the country” in April, and then by May 1 — but now a Federal Reserve official has said we could see “rolling shutdowns” that last for 18 months.
Part of the problem comes down to “simple” versus “simplistic.”
A “simple” explanation is streamlined and straightforward. It communicates in a useful way. If someone explains a situation in simple terms, they have helped you grasp the core of the issue.
“Simplistic” is different. The dictionary defines simplistic as”treating complex issues and problems as if they were much simpler than they really are.”
Whereas a simple answer is helpful, a simplistic answer leaves too much out.
And whereas a simple answer is illuminating, a simplistic answer creates an illusion of understanding (as opposed to providing the real thing).
Simplistic messaging — in which complex things are made to appear simple, even though they aren’t — can be so dangerous in a crisis that no messaging at all might be better. A simplistic message can be worse than silence; a simplistic approach can be worse than doing nothing.
In normal life, the general public is allergic to complexity. “Don’t make it complicated; make it simple” is practically a consumer slogan, and a mantra to live by for Silicon Valley product developers.
In a crisis, though, there is a toxic feedback loop between the public’s desire for simple answers and the government’s desire to keep people calm. As a result of this loop you get a stream of messages that are simplistic rather than simple.
Because the real-world complexity of a crisis can’t be wished away, the inevitable twists and turns of the situation then wind up invalidating the simplistic message.
This causes the crisis manager (in this case the government) to lose credibility, and the public to experience heightened frustration and anxiety.
A descent down the J-Curve then continues — simplistic answers ginning up false hopes, false hopes dashed with new information, rising anger, and confusion — until the public finally gets a true measure of the situation and comes to grips with it, or the crisis is resolved somehow, or a combination of both.
Simplistic thinking often shows up as a false choice between black-and-white alternatives. Oftentimes, and especially in a crisis, the real answer is neither black nor white. Instead it’s a shade of gray.
The table below gives an example of false choices between simplistic “black and white”-type messages — viewpoints that are overly simplified — in comparison to the more realistic “gray area” at right.
Again, part of the problem — which especially holds true in a crisis — is that the typical citizen wants “simple” answers that he or she can understand, but winds up with “simplistic” instead.
Government officials want to soothe emotions, and are also worried about what the populace can handle. This creates a kind of oversimplification feedback loop, which favors black-and-white over shades of gray.
In our view, the bottom of the J-Curve — the maximum point of instability, and thus confusion, anger, and fear — has not yet been reached.
This might seem confusing, given how often we’ve heard that “the peak” (in terms of COVID-19 death tolls and confirmed new cases) is almost upon us. Wouldn’t it be a strange thing for instability and fear and confusion to keep on increasing, even after “the peak” has come and gone?
Yes it would, and that is part of the point: “The peak” is a simplistic messaging failure in the first place.
When you convince the population that “the peak” is almost here, and you have made a habit of speaking to them in simplistic terms, what you are really saying — or what they are hearing, rather — is that “the war is almost over.”
It’s kind of crazy. The simplistic messaging that is supposed to reassure us — “We are almost at the peak, we are almost there, the challenge is almost over now” — would make sense if we really and truly were in the final stages of this fight.
But we’re nowhere near the final stages. , not a short one.
That is why, in the immediate aftermath of hopes for a near-term “re-opening of the economy” being quashed, the CDC is reporting alarming new possibilities — like the ability of the virus to move 13 feet through the air and travel on shoes — even as public officials mention “rolling shutdown” possibilities that could last 18 months.
Under normal circumstances, simplistic messages are mostly harmless.
But in the midst of a crisis, with an anxious public hanging on every word, all pronouncements and assurances risk a boomerang effect. When complex reality proves a simplistic message to be false, the public’s faith is eroded and the whole situation is made worse.
This is another reason among many as to why we’re pessimistic on the market. (By “market” we mean the Dow Jones Industrial Average and the S&P 500, not all parts of it.)
There should have been a full-shouldered effort to prepare the public for what’s ahead — not to make them think the fight is almost won. They’ll be upset when reality asserts itself again, and investors will, too.
In our view the S&P 500 probably won’t bottom out until the Coronavirus J-Curve bottoms out.
And given the current lack of test kits, and lack of supply-chain coordination, and lack of any comprehensive plan we see — coupled with the real possibility of “rolling shutdowns” or even domestic travel bans ahead — we just aren’t there yet.