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The Best of What They Said and I Read Week Ending 4/12/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice.

  Barron’s – April 10, 2020 – Stocks Just Had Their Best Week in Decades.  An “Economi Coma” Could Still Lie Ahead. – Al Root

  • “…Take this past week’s market action. The S&P 500 index rose 12%, to 2789.82—its best week since 1974—and finished 25% off its March low. The corresponding gain for the Dow Jones Industrial Average was 13%, up 27.8% from its low. The Nasdaq Composite jumped 10.6%, raising it 23% off its low.  All these gains came after the S&P 500 had fallen 34% from its high in just 33 days. That kind of speed is unprecedented. During the financial crisis, it took roughly 10 months for the market to drop 20%. It rallied for six weeks off the bottom before selling off again and retesting its November 2008 lows. Compared with the Covid-19 whirlwind, the action back then looks positively pedestrian.  Still, just as in 2008, investors should expect a retest of the 2020 lows, likely at an accelerated rate.” 
  •  “The recent bounce isn’t exactly misguided. The Federal Reserve has backstopped the market in a big way, while investor fears about Covid-19 peaked recently, as did the Cboe Volatility Index, or VIX, which topped out on March 18.  No one knows the extent of the damage done to the economy by Covid-19. The recovery could be V-shaped, swoosh-shaped, U-shaped—many letters are being debated. The worst-case scenario is L-shaped, in which the economy doesn’t bounce back at all. As the numbers start coming in, investors should get more answers—and they might not like what they see.”

Barron’s – April 10, 2020 – Get Ready for a Post Coronavirus World.   The Economy Will Never Be the Same. – Reshma Kapadia

  • “…Already, the pandemic is reshaping consumer, corporate, and government behavior. Long-held assumptions have been discarded. Deficit hawks have barely made a peep as policy makers spend trillions of dollars to stabilize the economy. Universal health care and social safety nets, once deemed too radical, are getting more mainstream attention…and shortages of crucial ingredients for drugs and medical supplies are testing the long-held merits of global diversification.”
  •  “The coronavirus is truly a black swan in the sense of being both unpredictable and an event of massive consequence,” says Justin Leverenz…“Black swans determine history because it is the only time when states, societies, and individuals are so up against the wall that they have to fundamentally change. It changes everything, including the nature of the relationship between the state and the market and what is called public goods—like health care and education.”
  • “The strong will probably emerge stronger , as robust balance sheets and positioning let them take market share and improve profitability…Rising labor costs in China and the trade war had already pushed companies to rejigger supply chains, and that will accelerate.  Executives are now talking about regionalization and hubs to produce goods in one area rather than globalization. As companies move more production back to North America, where the labor pool is older, UBS’ Kane sees a catalyst for shares of automation, robotics, and digital-tool companies that can make manufacturers more efficient.”

 The Wall Street Journal – April 11, 2020 – Here’s How Apple and Google Plan to Track the Coronavirus Through Your Phone – Sam Schechner and Rolfe Winkler

  • “Do Apple and Google hold the key for tracking the spread of Covid-19 and possibly reopening the global economy?  The tech giants on Friday said they will release tools for software developers to create so-called contact-tracing apps that record when smartphones come into close contact with each other. Such apps could warn users if they were nearby someone later diagnosed as positive for Covid-19.  The plan, which could potentially cover most of the world’s smartphones, is ambitious and almost surely will be controversial in certain quarters for privacy and other reasons.”
  •  “To work, it requires widespread adoption, as well as broad testing of potentially infected people, and it isn’t yet clear whether government and public-health officials will get behind the idea…Apple and Google’s plan “appears to mitigate the worst privacy and centralization risks,” Jennifer Granick, surveillance and cybersecurity counsel at the American Civil Liberties Union, said in a statement released Friday. Among other things, she said, the organization hopes to make sure the data collection remains voluntary and that it is used only for public-health purposes.”

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