The Long & Short of It for those who literally have 30 seconds – (AKA Carey’s Corner)

The stock market has already priced in no real business getting done for 2 to 3 months (technical speak: the economy is contracting & creating a negative Gross Domestic Product – GDP).  IF the estimated duration (or the expected time of a 2 to 3 month shutdown) is accurate, we’re fine.  And there will be a pretty quick return to growth and an upward swing in pricing. The talking heads call it A Deep V Recovery – historically fast price drops on the way down and quick increases in stock prices as we return to our normal lives.  

I remain positive because:

1. The Fed has been so aggressive in supporting the world economy
2. Private companies are getting into the testing game & stand to make serious cash if they get it right
3. Private companies stand to make even more money if they break the code and find drugs that kill the virus
4. Prior to this health crisis, the administration had already relaxed some of the testing protocols making it easier for private companies to do just what we need them to do in 2) & 3)*.

*(My intention above is not to pass judgement on the efficacy of the administration’s policies in a normal environment, only to say there are much needed waivers in place for this crisis when hours matter in saving lives & our economy.)

Remember – #BeTheCalm #Leadership!!!!

In the Weeds –

We are now seeing data from a number of sources which economists and traders can geek out on rather than creating “What If Scenarios” and imaging the worst!  Thank You Lord!!!

• Insights from China & South Korea – With significantly reduced #s of new cases coming out of these countries and normalcy trying to return to their economies, the # crunchers have an idea of just how bad it got and for how long. (A proxy for the contraction and validation of a duration.)
• Unemployment Data – This week’s news was filled with headlines about the companies that have cash reserves that CAN keep employees on the payroll and those that can’t.  Our first peek into unemployment #s.
• The Fed’s Bazooka Unleashed – As Economist Brian Wesbury reminded us this week, former Treasury Secretary Hank Paulson wanted a “bazooka” in dealing with parts of the financial crisis in ’08. The Fed dusted it off, added some new artillery, and launched most of what they got to buoy both domestic and international markets. (Yesterday’s blog talked more about it.)
• Federal Stimulus – Congress and the White House seem to be getting there on a # of measures to support everyone in the economy from us as consumers to smalls business (the backbone of our economy) to big business like the airlines, banks, etc.
• The Underlying Economy Going Into The Shutdown was Strong – February #s and revisions to January #s are now showing a stronger economy pre-Covid-19 than really appreciated. Yes, there was tons of grumbling about high levels of debt or borrowing by businesses and consumers, but despite that things seemed pretty good.
• Most Importantly – There are all sorts of reports out about existing drugs that can help combat Covid-19 and major breakthroughs in understanding the virus. I am immensely grateful for the Private U.S. Healthcare Industry which is the Best in the World!  With the wartime powers the President has been granted, he has booze distilleries and car manufacturers jumping in to help make medical supplies.  (Never fear, there is no shortage of cocktail beverages for us through this nuttiness!)

Final note: Just because there is now data, it doesn’t mean that everyone interprets the data the same way so the market will continue to see crazy swings or volatility until we’re through this mess!  (A day trader’s paradise) Stay calm & don’t let the doomsday preppers get to you!

The above blog was in response to a specific request I received last night. So my next blog will look at what the White House & the Legislative Branch are doing to calm the waters and sure up the markets and where folks can seek financial support in this mess. 

As always, what can we do?

Stay healthy first and foremost, be prudent about how you choose to spend your money right now, and take the long view on the market. Please help those in need within your community, get outdoors to relieve some of the stress, and be your amazing selves!

We will lead our families, our communities, and our teams calmly through this event!  #BeTheCalm #Leadership!!!

If you have any questions or topics of interest, please send them in!

Stay Healthy! Susie