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(Original link: businessinsider.com)
Famed investor and crypto crusader Michael Novogratz said on Friday that the reaction to the novel coronavirus is overblown. "I think we're going to look back and see this as one of the great panics of civilization," he said. Novo, as he's known on Wall Street, scoffed at billionaire Bill Ackman's "hell is coming" prediction on Wednesday, which sent already wobbly markets downward. Click here for more BI Prime stories. Michael Novogratz, the hedge fund manager and cryptocurrency evangelist, told Business Insider on Friday that people and markets were overreacting to the coronavirus pandemic, a strong counterpoint to another major investor's dire predictions just two days earlier.
"I think we're going to look back and see this as one of the great panics of civilization," Novogratz said. "When you look at it, this virus doesn't really kill that many people. Since this disease started — let's assume Dec. 15 — the earth has lost 13 million souls" and only 12,000 have been to the coronavirus, with the vast majority being all the other ways people die, Novogratz said.
Novogratz's take contrasts with that of billionaire investor Bill Ackman, who in an emotional interview on CNBC on Wednesday warned of large-scale casualties, cratering industries, and a deep recession if the US government doesn't impose a nationwide shutdown to stem the spread of COVID-19. Ackman's remarks, including that "hell is coming," sent already shaky markets tumbling further that day.
One area where Novogratz and Ackman agreed is that markets will suffer as long as social distancing continues with no light at the end of the tunnel. "The moment people go back to work, spending comes back," and if that's more than four weeks or so, "I think we're in big trouble marketwise." In fact, Ackman had proposed a similar timeline, arguing that a 30-day shutdown to put social distancing into effect would be much better than a rolling 18-month-long shutdown. Still, Novogratz added that the market has "already priced in some catastrophe."
A former Goldman Sachs partner and notable Democratic donor and fundraiser , Novogratz blamed President Donald Trump's lack of preparation for fueling fear and roiling markets. If Trump had said "'This is coming,' then we probably could have gotten through this thing with a normal curve," he said.
Novogratz added that he was concerned Trump's new posture as a "wartime president," including the vast sums being discussed for economic relief, could lead to more economic damage.
"Trump shows up every day in front of that podium with his generals and captains behind, and he very well could say that 100% of the workforce stays home," he said. As for the checks that the Treasury Department is gearing up to mail to Americans ($1,200 to individuals, $2,400 to married couples), Novogratz added, "at some point, someone's going to have say, we can't keep spending forever." (Trump addressed this in a tweet yesterday, stating that at the end of the 15-day period, which began March 16, his administration will reevaluate.)
While Novogratz described the reaction to the pandemic as a "panic," his personal situation is the same as many others during the crisis. He is working from home in Manhattan during the outbreak and he said he has a son at home in self-imposed isolation, because the son recently visited his girlfriend at Vanderbilt University and two of her friends have tested positive for the virus. Novogratz said he had called New York University doctors and asked if he himself should be tested, and was told no.
Despite trading from his home office and managing his cryptocurrency merchant bank, Galaxy Digital, from home, he said he's not entirely a fan of the work-at-home lifestyle that Wall Street is embracing during the crisis. "I find it very difficult to sense what is happening at a company when I don't see anyone. I have a [trading] floor that usually has 60 people; now it has four," he said, adding that employees not present were working remotely from home.
His biggest worry, he added, is the hit to output that COVID-19 is fueling.
"The preoccupation with being sick just kills productivity," he said. "The productivity loss in operating companies has got to be 50%."...