August 31, 2020
As the country experiences the pain of the Covid-19 pandemic and the violence surrounding social unrest, the stock market has found love. Since the intra-day lows on March 23rd, the passion for stocks has burst during the summer months. Here are the stats, the Dow and S&P are up about 50% from their lows and the Nasdaq has incredibly risen over 60%. August 2020 looks to be the best August month since 1984, when Elon Musk was 13 years old and dreaming about rockets. Even with the economy rocking at the start of the year, investors would have been hard pressed to pick this type of love affair for equities. The advance in stocks is like wow man…
July 16, 2020
I have a friend, yeah that’s it, a friend, who was very grateful for the occasional pass-fail course in higher education that helped make that term. We are in the middle of what could be called the “Pass Fail” market. The stock market, with almost half of the S&P 500 now not offering earnings guidance, is in a sort of financial no-man’s land. With the cover of sales and revenue unknowns combined with the universal blame of Covid-19, the coming quarterly reports will feel more like a beauty pageant than a fundamental deep dive. Hold on, because the markets might be heading on a road trip to volatility.
July 1, 2020
It is halftime for 2020, as we just finished one of the most volatile 2 quarters in history. From hugging out all-time highs in February to a devastating 30% drop in March as investors shunned stocks and each other, we have now rebounded in the second quarter to get back much of those losses. As a result of the pandemic, trends that took years or decades just happened in a matter of weeks. Think about it, since March half of all Americans employed are now working remotely and we viewed over 6 billion hours of Netflix in April alone. Companies that adapt to the new normal could be the long-term winners from a very bad situation. According to Goldman Sachs, we all still need to do our part, as their research shows that wearing masks could substitute for some of the potential closings from Covid-19, and prevent a 5% hit to GDP, or one trillion dollars just from covering your face.
May 29, 2020
The markets have staged quite a strong rally from the lows of mid-March. While 25% of the work force still remain out of work and the economy begins to open up, investors seem to be amazed at the strength of this rebound from the depths of the pandemic induced financial crisis. One just has to look at the M3 money supply curve in comparison to other recessions to see how and why this market can bounce and in a big way in the short term. Long term, who cares? We have an election to worry about.
May 22, 2020
As we begin the summer season, and the country begins to get out of the house and back to work, the headlines continue to address the record unemployment level which now stands at around 38 million. The nature of this financial crisis appears to be different than in the past though. Looking at the bright side, many of those unemployed are actually furloughed, which means the jobs are not gone forever à la 2008. In addition, many of those on unemployment are strangely making more than when they were working. Finally, there are still 130 million people working, with extra Cares Act money in their pocket. Once again, the key to whether our recovery looks like a V or a Nike swoosh is how quickly and safely we open the economy back up. Enjoy your dogs this weekend and then we get back to work.