Newsletter 05/22/2020
This is the week that marks the start of gradual reopening. The stock market seems to think the problem is solved most days. Every few days the stock market is reminding us of the economic problems in our midst; it’s been a bit of a bumpy ride. One noticeable change over time is that time seems to have been compressed. From one day to the next our heads are still spinning. The data says one thing and politicians say another reality. Never have I had so little visibility into what each week will bring.
Our strategy in this environment is patience, with a dab of keeping cash invested in relativity short term bonds. Unfortunately, the option of US T-Bills is gone as interest rates on these securities are .1%. The massive intervention by the Federal Reserve and Congress seems to have plugged an economic hole temporarily. An old Wall street expression is 'don’t fight the Fed,' yet yesterday, Secretary Mnuchin and Fed Chairman Powell painted different pictures of the economy. Powell stated that the economy needs more fiscal assistance from Congress and that GDP numbers will decline by over 30% in the 2nd quarter. Mnuchin saying much has been done already and we are on the way to recovery.
The next notable calendar date is Memorial Day, when normally beaches are jammed and the three day weekend marks the traditional ‘beginning of summer.' Summer: in the new normal. No traditional graduations, proms nor summer camp this year. In demonstration of how the American spirit adapts, social media has exploded with substitute performances and virtual gatherings marshaling our resources to do our best at bringing a different version of summer, still to be celebrated.
An interesting aspect of this shelter-in-place is that this pandemic has presented a fairly level playing field in that everyone is at home equally and has been asked to STAY HOME. Of course the safety, health and ability of each of us to do so is dependent on where we live, whether any of us are essential workers still reporting to work outside the home, or in a line of work that affords the ability to work from home. This crisis has heightened the visibility of inequalities that have existed and perhaps have become more exacerbated over the past 20-30 years.
Today Jaime Dimon, CEO of JP Morgan Chase provided the following insight:
- “The coronavirus crisis should be used to build an economy that offers opportunities for 'dramatically more people.'”
- “The last few months have laid bare the reality that, even before the pandemic hit, far too many people were living on the edge.”
Statements offering a challenge to America to become a better version of ourselves after surviving this national crisis together.
It will be eye opening to see how industries across the world will be shaped by this experience. On the one hand, we could see how this pandemic acts as a change agent in this regard, but on the other, it makes you wonder if part of these changes were destined and the pandemic is functioning as an accelerator of change that was already headed our direction. Only time will tell how all the pieces will land. We continue to stay abreast of the news, how the news dynamically affects the marketplace and what that means for our clients in their planning processes moving forward. Continue to lean on us as questions arise. We’re here for you!
Your SAS Team
