What if the pandemic isn’t finished with you – or your money – yet?

It’s day four of my Covid quarantine. And I can’t help wondering whether Covid isn’t finished with financial markets yet, either.

I started writing this article as the symptoms began to tickle the back of my throat. I think that was a coincidence. But, as you read this, you won’t be so sure. The irony is too clear…

In fact, in the week it took me to finish this edition of Fortune & Freedom, the pandemic went from being “over” to reaching near record cases in a long list of countries, including the UK.

Restrictions are staging a comeback, too. Austria is imposing them, China has locked down entire cities, and so on.

All this has made something of a mockery of my plans to ask you the big question I wanted to focus on: what if the pandemic isn’t over yet?

It’s not, despite all the Freedom Days, vaccination targets met and re-openings around the world.

So, let’s modify the question a little: what if the financial markets are being lined up for another Covid rout?

Consider, for example, the JETS ETF, which holds airline stocks. It plunged from $30 to $11 during the pandemic’s initial stock-market crash. Then it recovered all the way to $28. But, at the beginning of March, it had trended back down to $17…

So, the recovery certainly isn’t going according to plan in financial markets, either. But that’s not what I really mean.

What if things get worse? What if another variant emerges, or governments panic again? What if we get a proper Covid crash or crisis again?

Right now, many of the world’s leaders are trying as hard to pretend there’s no pandemic as they had been trying to scare us.

The World Health Organisation is getting worried about this. It claimed that several European countries had lifted restrictions too “brutally”! Yes, the lifting of restrictions was too brutal…

I went on a narrowboat holiday with the in-laws – the ones who now leave plates of food outside my bedroom door – in July of 2020. The pandemic appeared to be back then, too. But since that holiday, the UK has seen two more waves of the pandemic, or three if we include the current one.

Why would it all be over now? Why would we presume this? Should investors assume it?

Martin McKee, professor of public health at the London School of Hygiene and Tropical Medicine, said to Bloomberg: “It does seem very courageous, and indeed risky, to assume that the pandemic is over”.

Voices during the pandemic warned us about this, claiming that new variants would emerge and the virus would come back in waves. After all, how many pandemics do you know of that only lasted two weeks before the curve flattened?

Those voices are still warning away. Not over what we’re experiencing now, but the risk that it will all get worse.

Many claim that people just won’t put up with another round of lockdowns. I’m not so sure. It depends on the variant.

And a government-imposed lockdown is not the only type of lockdown. When a pandemic is no longer within the Overton Window, is it no longer real?

Perhaps we’ve moved on to more important things, such as war. Wouldn’t that be familiar for those who know their pandemic history?

But, if you ask me, the risk of a Covid comeback is higher on the list of things to worry about for investors.

The good news is that the vaccines will stop infection… contagion… hospitalisation… death… among the vaccinated… right?

Well, as the saying goes, “If the first two don’t succeed, jab, jab again.” Or create a new vaccine.

And all the unvaccinated have already died in the “winter of severe illness and death” which President Biden warned us about.

So perhaps the worst is behind us after all.

There’s another interesting angle to this – a more obviously financial one. If we know that the pandemic causes inflation (and not a deflationary crisis), where does this leave central bankers’ response to another bad wave of Covid?

I’m sure you’re sick of hearing about central bankers from me by now. But they really are pulling the strings behind everything in financial markets right at present.

If they see Covid as an inflationary threat, they may actually tighten monetary policy.

In a world where investors are used to central bankers rescuing them, they may find the rug pulled out from under their feet instead.

But what’s the point of today’s Fortune & Freedom? It’s not very helpful to ask ominous questions.

Or is it?

It might help you to prepare for something worth getting ready for.

So, ask yourself what you would have done differently as the pandemic gripped financial markets last time around?

Would you have sold everything? Would you have bought into the market in the midst of the crash and be sitting on good gains now?

The lessons you were supposed to learn back then might just serve you much sooner than anyone expects. Be prepared.

Nick Hubble
Editor, Fortune & Freedom

P.S. We had been hoping to release a video interview with investment guru John Butler in the next day or so. For technical reasons, this will be available later this week. As usual, there will also be an interview with Nigel Farage, in which we review the week’s events.