Will the U.S. Credit Market Stir from its Slumber?

In the year of my birth, 1970, Tora! Tora! Tora! was released to luke-warm audiences disappointed in the plodding plot. Pilots held the film in higher esteem for its vivid action scenes made all the more realistic with special effects, sound and cinematography – three of five categories for which the film garnered Oscar nominations. And American film critic James Berardinelli lauded the war epic given it was, “rare for a feature film to attain the trifecta of entertaining, informing and educating.” He was on to something. In 1994, a survey conducted at the USS Arizona Memorial in Honolulu found that for Americans, it wasn’t history books, but rather the film that was the most common source of popular knowledge about the Pearl Harbor attack.

The movie cast is unique in that it was the first English-speaking film for many famous Japanese actors of the day. After two waves of the attack were launched, Vice-Admiral Chūichi Nagumo refuses to release the third given their main target – U.S. aircraft carriers – were not at Pearl Harbor, having previously departed in search of Japanese vessels. The vexation at the objective lost combined with the fury ignited on the part of the Americans who immediately declared war prompted Admiral Isoruoku Yamamoto to question the wisdom of the attack, saying, “I fear all we have done is awaken a sleeping giant and fill him with a terrible resolve.”

Was this line ever spoken by the orchestrator of the attack?  At the time he would have voiced the warning, he was on a warship in the Pacific, far from the Hawaiian Islands. The iconic line was almost certainly born of Hollywood screenwriting. Nonetheless, it is known that Yamamoto was reticent about launching the attack my own grandfather survived. Historically accurate or not, so apropos was the term, “sleeping giant,” it will forever be ingrained into Pearl Harbor history.

A different breed of sleeping giant is threatening to stir out of his slumber on America’s mainland. It’s been six weeks since the Coronavirus made its way into the United States, population 327.2 million. Since then, only about 500 people in the country have been tested. Direct conversations with Seattle-based epidemiologists and health care professionals suggest countless, untested Coronavirus cases have filled intensive care units up and down the western seaboard. The Centers for Disease Control and Prevention (CDC) hopes to have 75,000 fresh tests in the hands of local authorities by the end of this week and is working with a private firm that can have one million tests ready “soon.”

You may be thinking of other countries where the virus has been free to roam unfettered. That inconvenient truth was surely on the mind of one Jerome Powell as he executed the first emergency rate cut since the heat of the financial crisis. While certainly buttressing the economy for the shock to come, Federal Reserve Chair Powell is also desperate to keep the sleeping giant of the U.S. credit markets in a safe state of deep slumber.