[Market Madness] Edition 0088
Easing Into the Weekend
Cool off this weekend
Well folks, we’ve been pretty high strung this week with everything that has been going on. It might be nice to sit back, enjoy a cold beverage of choice, and take a backseat to all the chaos this weekend. Tensions are still high across the globe, and COVID 19 fears continue to tremble the markets and our outlook on the future.
Even the markets are ready for the weekend. Today, we opened in the green, aiming to recover some of the losses posted yesterday. Overseas, the indices were mixed as has been the mood for the whole week. On the commodity front, crude oil is down and gold is up. Volatility has also ticked down.
COVID 19 continues to wrench the U.S., with yesterday setting a new record for one-day new cases (at a little over 77,000). Governors across different states continue to throw jabs at one another as some enforce mask mandates and others ban such mandates. Federally, we are still awaiting any movement on a federal mandate or stimulus rescue from Capitol Hill.
Maybe a relaxing stay-at-home weekend is just what the doctor orders.
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Fundamentals
Friday Close:
Dow Jones: -0.23%
S&P 500: +0.29%
NASDAQ: +0.28%
US 10 YR: 0.620%
Crude OIL: $40.61
Market Madness Portfolio: +0.35%
COVID 19 Global Cases: 13,921,699
Indices Overseas:
FTSE 100: +0.63%
Nikkei 225: -0.32%
Hang Seng: +0.47%
TEDRATE: 0.14
LIBOR (3 month): 0.27175%
Economic engine stalls
Yesterday’s unemployment claims report provided us with the 17th straight week of data above 1 million new claims. This outstanding chain of weeks suggests that the return to work emphasis is fading. Coupled with Google search data by internet users for assistance filing for unemployment, we are seeing the starting block of reverse in the trend.
The information above also presents the questions to Congress about continuing the additional unemployment benefits to help combat this ‘second wave.’
“It also comes as Congress considers whether to extend $600 a week federal unemployment benefits that around 25 million workers are receiving through the end of July as part of a coronavirus relief package. Many economists say the benefits—totaling about $15 billion a week—have helped offset the impact of the pandemic on the economy. Critics say the funds, which pay many lower-wage workers more than if they were on the job, is discouraging people from returning to work.” (excerpted from article)
Both sides do have validity, as there is two ways to look at the program. I think about it from the sense that there is a duty to provide some additional benefits to those in states where they are not safe to return to work due to increased spikes in the virus. As some states begin rolling back their opening phases, (and are closing more and more businesses) some people cannot go back to their job even if they want to. I’m not saying that, at this moment, there is a need for extended benefits for all claimants in all states, particularly if that state is not experiencing challenges related to COVID 19.
That being said, we really don’t know what the fate of any particular state will be in a week, a month, or 6 months from now. As long as there is no vaccine, and we are still learning about reinfection and spreading, there are too many uncertainties to be able to say anything with certainty. Challenges exist on both sides though, not just the consumers. Businesses are also entities that are struggling to make ends meet and to be able to see the other side of this virus. Just as there is a great deal of employment uncertainty, there is a great deal of business survival uncertainty as well (and even more so for small businesses with minimal access to funds like large public companies).
“It isn’t clear how many of the job losses during the pandemic will become permanent. Economists say consumers need to feel confident the virus is contained before economic activity can return to levels seen before the pandemic. Business owners and industry representatives say the longer the shutdowns drag on, the harder it will be for companies to survive.” (excerpted from article)
Ultimately, consumers are the driving force behind business success and failure. Consumers work and get cash in their pockets. They take that cash and go spend it at businesses for goods and services they want and need. Their spending of cash on goods and services puts cash in the hands of businesses that are used to keep the lights on and the employees paid. The cycle continues all across the economy.
Until consumers give the green light to spend at full capacity again, the economic recovery will continue to stutter and stall. As reopenings have begun, we have seen boosts in sales areas each month, but there is still a lot of room left to get back to January/February levels (old normal). Only time will tell, including all global conditions being factored in, how long this true recovery will take.
Quick Takes
U.S. shatters one-day new case record with over 77,000 new cases yesterday. (via CNBC)
Energy-efficient cooling systems could save trillions. (via CNBC)
Treasury Secretary Mnuchin suggests automatic forgiveness for smallest PPP loans. (via WSJ)
Google to ban ads on stories of debunked COVID 19 theories. (via CNBC)
More on the U.S. coin shortage. (via CNBC)
More on U.S. troop withdrawals overseas. (via WSJ)
California outlines strict school reopening processes. (via CNBC)
Reader’s Corner
The reader recommends another weekend read: Brighton by Michael Harvey.
Kevin Pearce—baseball star, honor student, the pride of Brighton—was fifteen when he left town in the back of his uncle’s cab. He and his buddy Bobby Scales had just committed heinous violence for what they thought were the best of reasons. Kevin didn’t want a pass, but he was getting it anyway. Bobby would stay and face the music; Kevin’s future would remain bright as ever. At least that was the way things were supposed to work, except in Brighton things never work the way they’re supposed to.
Twenty-six years later, Kevin is a Pulitzer Prize–winning journalist for the Boston Globe. He’s never been back to his old block, having avoided his family and, especially, Bobby Scales. Then he learns his old friend is the prime suspect in a string of local murders. Suddenly, Kevin’s headed home—to protect a friend and the secret they share. To report this story to the end and protect those he loves, he must face not only an elusive, slippery killer, but his own corrupted conscience.
A powerhouse of a thriller, Brighton is a riveting and elegiac exploration of promises broken, debts owed, and old wrongs made right . . . no matter what the cost.
Check it out here to read more and find it wherever you get your books/ebooks.
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Behind the Madness
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