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The Best of What They Said and I Read Week Ending 4/19/2020

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

The Wall Street Journal – April 17, 2020 – The Stock Market Is Ignoring the Economy – Gunjan Banerji

  • “The Dow Jones Industrial Average staged its best two-week performance since the 1930s, a dramatic rebound that has left many investors with a confounding reality: soaring share prices and a floundering economy. The explosive rally is a sign that many are positioning for the U.S. to make a speedy recovery when the coronavirus crisis eases. Investors have been encouraged in recent days by signs that several states will move to resume business, along with hopes that a viable treatment for Covid-19 could be near.”
  • “The blue-chip index rose 2.2% this week, extending its rally over the past two weeks to 15%—its best performance since 1938. The S&P 500 climbed 3% this week, while the Nasdaq Composite surged 6.1% as investors piled into highflying technology stocks. The Dow and S&P 500 are still down more than 10% for the year, while the Nasdaq’s losses have been cut to 3.6%”
  • “Many investors agree the most important driver of the rebound has been the Federal Reserve’s massive stimulus plan, combined with the efforts of the U.S. government, which sent a signal that both were willing to step in like never before to buoy the economy. U.S. stocks bottomed March 23, after the Fed cut rates to near-zero.”
  • “…Some investors are still anxious because the bond market is sending a more cautious signal. Investors have continued scooping up traditionally safe assets like government bonds and gold as stocks have rallied. The yield on the 10-year Treasury note has fallen to 0.655% from 1.26% in mid-March as bond prices have risen, while gold prices hit their highest level in more than seven years this week. The concurrent gains across traditionally risky and safe assets alike suggest that many remain concerned about an extended downturn.”

U. S. Global Investors – April 17, 2020 – Frank Holmes

  • “…Public pensions suffered a double blow from the coronavirus pandemic. Funding levels will be under stress because of the losses in the financial markets, and at the same time, governments may struggle to make up the difference as the economic shutdown to stem the outbreak slashes their income…The Fed is breaking precedent by lending states and municipalities $500 billion to help them weather the coronavirus storm.”
  • “…Without an effective therapy or a vaccine for the novel coronavirus, the U.S. economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again, Federal Reserve Bank of Minneapolis President Neel Kashkari said. “We’re looking around the world. As they relax the economic controls, the virus flares back up again,” Kashkari said Sunday on CBS.”
  • “…Some countries in Europe are slowly reopening their economies. On Tuesday, Italy, the epicenter of Europe’s crisis, reopened some bookshops and children’s clothing stores. Spain allowed workers to return to factories and construction sites. Austria allowed thousands of hardware and home improvement stores to reopen, on the condition that workers and customers wear masks. In Denmark, elementary school teachers readied classrooms for young children to return to school on Wednesday. The Czech Republic announced reopening of sports centers and some shops. Poland is preparing to open some shopping malls. Lastly, in Germany smaller shops will be reopened next week.”

The Kiplinger Letter – April 17, 2020 

  • “…Congress will eventually move to save the floundering U.S. Postal Service, on the verge of collapse after COVID-19 caused a steep drop in mail volume. USPS says it will run out of money by Sept. unless lawmakers come to the rescue. But the process won’t be pretty, with partisan bickering standing in the way of a solution. The agency is asking for $75 billion to help keep operations going. Democrats want to get the money USPS needs out the door ASAP. But Republicans, led by Trump, say the Postal Service is a money pit and has suffered financial woes for years, due in part to required pension payments. Still, the Postal Service is an enormous employer, with 650,000 workers and 31,600 retail locations nationwide, so don’t expect Congress to let it fail.” 

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