MARCH WITH ALL YOUR FORCES

Optimism in the Face of a Pessimistic Chorus

Wynton Marsalis is one of the country’s most renowned Jazz musicians and is currently the director of Jazz at Lincoln Center in New York. During his illustrious career, Marsalis has won nine Grammys and was the first Jazz musician to win a Pulitzer Prize. This past week though, he was in the news for a very different reason. His father, a highly regarded jazz musician in his own right, died of COVID-19. In light of his father’s passing, Marsalis was asked how he was handling the loss and what he’s telling his team at Lincoln Center during these difficult times. He responded, 

“We are in a bad position. We are not going to get out of it overnight. So, let’s work on the trust we’ve built up all these years. Let’s go out and make stuff happen that we want to make happen. We have to move very fast, but we have to be even more process-oriented and deliberate. And that’s how you master a moment of chaos. That’s also the strength of Jazz. March with all your forces. Be ready to meet the demand of that moment.”

“Move fast, but with more process and deliberation”...“Master the moment during times of chaos.” Jazz may be a niche part of the broader American ecosystem, but those sentiments are reverberating today across industries, geographies, and communities nationwide. After getting their feet under them, people are starting to rise to the challenge -- not only to combat this virus, but by finding ways to emerge stronger in its aftermath. 

Marsalis also illustrates why being pessimistic is so unrewarding. While you can look brilliant in the moment, pessimism is fleeting. Why? Because after taking our blows and digesting the initial shock, Americans have repeatedly risen to the occasion. I am betting this time will be no different.  

LEADERS

If you read just one thing each weekend, make it the opinion section of the Wall Street Journal, specifically Peggy Noonan’s weekly Op-Ed. On April 2nd, this was as true as ever in “New York is the Epicenter of the World” where she highlighted the hidden gifts in this pandemic. One being that,   

“Our governor (Andrew Cuomo) has become a folk hero. He prioritizes problems, has command of the subject matter, is human, eloquent, tireless. By rising to the moment he has become a unifying force. Looking back, maybe we’ll see some of the nation’s governors the way we speak of generals at Gettysburg— ‘And then there was Hogan of Maryland, who wouldn’t budge, and DeWine comes up the hill with the Ohio volunteers.’ Senators have never been so useless, or governors so valuable.” 

Governors act and lead, while Senators and Congressmen vote. Today, we are seeing this first hand. After ceding the stage to politicians in Washington for the better part of a decade, the COVID-19 has reintroduced today’s governors to the American public. Don’t be surprised if we see these names at the top of the ballot in four years. 

Leaders are emerging in many other places as well, both big and small. From bourbon distilleries transforming overnight into hand sanitizer producers, custom tailors eschewing making $3,000 suits in order to stitch face masks, and retail design firms transforming into face shield manufacturers. To doctors and nurses entering hot zones day after day knowing it might cost them their lives. To religious leaders keeping communities together. To the garbage men still waving and smiling to my kids every Monday morning and the checkout people serving customers at grocery stores. To General Motors and Ford transforming their auto assembly lines into ventilator lines, financial institutions increasing their flexibility with borrowers, and CEO’s like Marriott’s Arne Sorensen showing what true leadership looks like. To people like Bill Gates pivoting his $50 billion Foundation to focus on combating the virus. Or the Pope speaking about a “contagion of hope” on Easter and Queen Elizabeth addressing her nation for just the fifth time in her 68 years as queen in a poignant speech. Or Dr. Anthony Fauci. Where would things be without the nearly 80 year old doctor who has dedicated his career to fighting infectious diseases? Most importantly, Fauci has served as a voice of reason and has handled a political situation fraught with landmines as adeptly as even the savviest Washington insider. 

Pessimists out there, add to your shorts. I'll bet on these folks. 

MOBILIZATION

“March with all your forces” sounds more like something you would hear from a general than a jazz musician, but the image is powerful no matter the backdrop. Either way, the U.S. is well versed in mobilizing. 

When Pearl Harbor was attacked in 1941, the U.S. had manufactured just 38,000 rifles, 900 tanks, 1,400 combat aircraft, and 544 naval vessels in the trailing twelve months. In the aftermath of the attack, countless pessimists doubted America’s ability to respond. They doubted American’s resolve. Yet, in the year following the attack, the U.S. produced 1.5 million rifles, 27,000 tanks, 25,000 combat aircraft, and 1,850 major naval vessels. In response to an existential threat, the U.S. turned on a dime and ramped up production by a factor of 25x in some cases. By the end of the war, the U.S. had produced 12 million rifles, 100 thousand tanks, 192 thousand combat aircraft, and close to 9 thousand major naval vessels (link).  

To those who doubt we can come up with therapeutics, ramp up testing capacity, establish preventative measures, and develop an effective vaccine, talk to Gilead and Alexion about their advances to treat infected patients, Google and Apple about teaming up to pursue contact tracing, Abbott Labs regarding their pursuit for mass testing, companies pursuing nearly 70 vaccines or Johnson & Johnson about their efforts to produce 1 billion vaccines. Talk to the 40% of Americans who experts believed would defy the social distancing rules. We are in a modern day mobilization, only instead of building tanks and planes, we are developing medical advances and modifying behavior. Has it been perfect? Clearly not, but this does not change the fact that the progress to date has come in a matter of weeks.

Once again, I’ll bet on these folks. 

AMERICAN RESOLVE

Lastly, to those forecasting that this virus will keep Americans out of restaurants, movie theatres, stadiums, social settings, and Marsalis’s Jazz at Lincoln Center performances once the virus has subsided and into the foreseeable future, I leave you with this story from Fortune Magazine writer, Ben Carlson.

“Between 1940 and 1941, the German Air Force dropped tens of thousands of bombs on London and killed forty thousand people, while injuring another forty-six thousand. Countless buildings were damaged or destroyed. Entire neighborhoods were decimated. More than a million people lost their homes. The British government had set up psychiatric hospitals outside of the city in preparation for the toll these bombings would take on their citizens. They sat empty. In the face of a war that was literally brought to their doorsteps, the majority of the people in London never panicked. Why? Because as Malcolm Gladwell explained in his book David and Goliath, ‘Because forty thousand deaths and forty-six thousand injuries—spread across a metropolitan area of more than eight million people—means that there were many more ‘remote misses’ (people who heard or saw the bombings, but were not impacted directly) who were emboldened by the experience of being bombed than there were ‘near misses’ (people who saw the bombings firsthand, but lived to talk about it) who were traumatized by it’.”

This virus will undoubtedly leave quite a few “near misses” in its wake, but there will be many, many more “remote misses”. In the process, the vast majority of Americans will be as emboldened as ever.

I’ll bet on these emboldened Americans. 

ACTION PLAN

No matter what the markets do in the coming days, weeks, and months, my suggestion is simple -- follow Marsalis's advice. Move fast, but be even more process-oriented. When equity markets get to levels where your upside/downside is favorable, buy equities (or commit more capital to your highest conviction managers), even if it’s a modest amount. Don’t get too cute and don’t second guess yourself based on a negative headline or a hedge fund claiming to be massively bearish. Just do it and commit to doing it again if markets fall further. Think of it as a series of “public market capital calls”.

We have been here before and will be here again. For the pessimists reading this and shaking their heads, I ask you this. If not this time, then when?