Staying partially locked down for two years would be economic disaster greater than Great Depression: Wealth Manager

Rebecca Walser, Walser Wealth Management President joins the On the Move panel to discuss the impact of COVID-19 on the markets.

Video Transcript

JULIE HYMAN: So one of the things that has been helping stocks today is some news from Moderna. That's one of the now, many companies that is trying to develop a vaccine for coronavirus. Some details about the first human study of its experimental vaccine came out, which basically said that it worked in all of the 45 people who were evaluated. So another promising step here.

That's something that helped markets this morning, but now we're seeing a little bit of a fall back. I want to get some more perspective on what's happening in markets. Rebecca Walser is joining us now. She is Walser Wealth Management president. She's joining us from Tampa, Florida.

Rebecca, thank you for joining us. So we have seen markets pretty responsive when we get these various vaccine headlines. Today didn't quite stick. How important do you think a continuation or extension of the rally is going to be? How vital is vaccine news going to be for that?

REBECCA WALSER: I think it depends on where we go as a country. What I see, Julie, is kind of a divergence with two groups of people. And take the politics out of it because we know it's become politicized a little bit. But a lot of people are starting to think that we might be getting to some kind of herd immunity and a vaccine won't be necessary. Other people, I think, all the business community really wants to see that there is going to be some kind of medical protocol intervention, that we can get back to business as normal as fast as possible.

So I think that it is important that we have strides towards some kind of protocol that allow people to feel like they can go out and return to some level of normalized life. Otherwise, a lot of people are going to be afraid for a long time to resume normal activity.

ADAM SHAPIRO: Rebecca, this may be mixing apples and oranges. But given the perhaps, positive momentum for a return to economic normalcy, how do you disregard what the banks are doing with their loan loss reserves as we still fight through this pandemic, and the potential for the market rally to stall?

REBECCA WALSER: Yeah, it's exactly what you're saying, Adam. The thing is we started to get a really strong momentum coming into May. As you guys know, the market was really rebounding quite substantially. Even Trump went into, I think, the rose garden, and was talking about it. And then you started to see the virus cases spike and businesses start to retrench back based on really, what local mayors, some governors have done.

And so that's the problem. There's uncertainty. If we could we turn back to a normalcy level-- whatever that is right now-- quickly, then I don't think you'd see the banks doing such a large reserve set aside. But what they're seeing is a reopening and then a reclosing. And so, potentially until-- to Julie's point-- until we get some kind of medical protocol or people really get on board and accept the fact that this is just going to spread throughout the country, unless you're really at a high risk of comorbidity or really serious complications, it's just going to be a highly spread virus. And we're going to have to accept it as that is the case.

Until we get one of those two things happening, I think that the banks are going to be worried. And anyone is going to be worried about this back and forth volatility that we're going to have until then.

JULIE HYMAN: So either one of those scenarios doesn't sound like-- in a normal world, it would be great for the markets. In other words, where you get something spreading, killing however many people, hospitalizing a number of people, and taxing hospitals-- on the one hand. On the other hand, a vaccine is still going to take a little time. So what do you do in terms of the broad market? You said you expect volatility. But how do you then position yourself?

REBECCA WALSER: Great question. That's the million dollar question. Right, Julie? How do we make money in a period of volatility? So obviously, our short-term trades, we can make-- like, obviously, the vaccine trials this morning starting July 27 for the new-- I don't want to pronounce it incorrectly-- Moderna-- I can't pronounce it exactly right-- it's up over 12% today. It's up 345% since this year. So that's, potentially if you had bought that earlier this year, you would be running into a really big upswing on a short-term basis.

Long-term, I think the pharma stocks on vaccines is going to be speculative. Because one of them potentially is going to be the winner and some of them are going to be losers. Or maybe we'll have some prophylactic stuff and we'll, obviously, also hopefully, eventually have a vaccine. The fastest vaccine I've ever known to be developed took four years.

So I think that this is great. I think that it's wonderful that we have these successful trials that the phase one/ but it's a ways until actual approval and rolling it out-- like you said, Julie. And the fact is, is that let's just say that we can truncate the four years to two years. We can't stay locked down, even partially locked down for two more years. That is an economic disaster. I think a depression bigger than the Great Depression.

So we have got to figure out a way that we can feel comfortable and people cannot be afraid to resume some level of normalcy without a vaccine. If we wait for a vaccine, I'm afraid this is going to be a really big economic problem.

RICK NEWMAN: Hey, Rebecca. Rick Newman, here. Just observationally, the way to get back to normal is for everybody to wear a mask. That's not really a question, it's just an observation.

Let me ask you about small businesses and medium-sized businesses. We're going to lose a lot of businesses by the time this is over. That's what those loan loss reserves at the banks are all about-- businesses and consumers defaulting.

Can the stock market remain contained from that damage? Or is it them going to spread into the tradable sector?

REBECCA WALSER: I think that it's going to spread. I mean, I don't see-- the small businesses, medium-sized business are the engine of our economic growth. We know that the tech stocks have carried us this year so far and even, potentially a lot of last year. But the fact is, is that small businesses are where people get jobs. Medium-sized businesses are where people get jobs in their communities.

And if we lose all of these businesses, there is no doubt, Rick, it is going to have a ripple effect throughout the economy. Which is why it's so important for people to, OK, if masks are the answer, then wear a mask, and actually go out to your restaurant. Go out to your shopping mall. Go to your local business and actually spend money there.

But if people are going to be afraid and we're going to lock down, again-- because if masks are the answer, why is the governor of California shutting everything back down? Or shutting the malls back down, for example? Shutting theaters back down? Shutting bars back down?

So that's the question. If it is-- that's the answer, which I can accept it on, but where can we-- if that's the answer, where can we then not stop shutting down. Shutting down is going to have a tremendous ripple effect. And there's so many examples, as you all know, of businesses that have already been basically said irrevocably never going to open, again, and they're done.

We just can't keep that-- that breaks my heart. I cry. I literally cry when businesses close, especially over something like a virus.

- Well, Rebecca, of course, our hearts are all breaking when we see our local businesses. Many of them our family members, our peer set, our friends who, unfortunately, do have to shut down. But would you rather there be a virus infestation in the establishment? I mean, I actually am based in LA normally, and I do agree with your point that it is, kind of, this whiplash scenario. But if you don't even have masks at all in the equation, then what is the right way to go about opening businesses in a sustainable way?

REBECCA WALSER: You know, Julie, I'll be just direct and very blunt on this. I think that we need to really look at the impact of this virus. Lets just say that we don't get a vaccine for two years-- hypothetically. Let's just say that we can get it as fast as two years. And a lot of people think masks are the solution, and maybe they're the solution.

But what's happening is there's so much fear in people because they just turn on the news, and they don't put things into context, and they think that this virus-- there was just a study yesterday that said that people have a really wrong perception of how subject to potential death they are. The studies show that this death rate, if you are under 60, is very low.

Now I'm not suggesting let's all go back and act like normal, and let's all just get it. I'm not suggesting anything like that. So don't mis-hear me. I'm just saying if we are going to really be able to return to a level of normalcy, and get businesses back, and stop other businesses from failing, then we need to accept and put into context these cases that are spreading. Whether the hospitalization utilizations are actually going down or if they're just normalized based on what they usually are. And the death rates, which I still see the death rates coming down a lot.

One of the studies I've looked at is Florida, Texas, Georgia-- all of these numbers spiking. Yet, their death rate as a percentage of the cases is much, much lower than it was in New York and New Jersey at the height in March and April. So if we put things into context and we start to feel like, OK, I am under 60, I don't have comorbidities, I can go back out--

- [INAUDIBLE]

JULIE HYMAN: Sorry about that, Rebecca.

REBECCA WALSER: That's OK.

JULIE HYMAN: Thank you so much. Appreciate it.

REBECCA WALSER: Thank you [INAUDIBLE].

JULIE HYMAN: Rebecca Walser from Walser Wealth Management. Thanks so much.

REBECCA WALSER: Thank you.