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The Best of What They Said and I Read Week Ending 4/5/2020

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 4, 2020 – The Dow Dropped 584 Points This Week.   Why That’s Good News. – Nicholas Jasinski

  • “ The Dow Jones Industrial Average fell nearly 3% this past week. We call that progress.  The first wave of the Covid-19 crisis saw investors selling anything that moves, with little regard for companies’ individual prospects. The threat of the virus to people’s health and the economy became very real, very fast—and gaining some liquidity seemed to be the overriding objective. Then monetary and fiscal stimulus and a dose of mean reversion swooped in to at least pause the bleeding. Some restored optimism boosted the Dow 21% in just three days two weeks ago.”
  •  “Now, investors seem to be moving on to the next stage of the coronavirus market: picking winners and losers. The correlation between stocks in the S&P 500 index has retreated from its recent near record-high levels, a sign that investors may be considering them more on their own merits. And day-to-day index volatility has fallen significantly since the Dow’s three-day surge.  Investors’ expectations for future moves have also declined. The Cboe Volatility Index, or VIX, tumbled 29% this past week, to finish below 50 for the first time since early March. That is still an elevated level, no doubt—but far from the string of closes in the 70s and 80s seen in recent weeks.”
  •  “Overall, the Dow fell 584.25 points, or 2.7%, to 21,052.53 this past week—its calmest week since the one ended March 6. The S&P 500 dropped 2.1%, to 2488.65, and the Nasdaq Composite declined 1.7%, to 7373.08. All were relatively small moves compared with what investors have faced since mid-February.”  

 

 U.S. Global Investors – April 4, 2020 – Frank Holmes

  •  “…Never in the history of our species “have so many experts in so many countries focused simultaneously on a single topic and with such urgency,” the New York Times wrote this week. “Nearly all other research has ground to a halt.”  I’m hopeful that this unprecedented scale of intellectual bandwidth will bring us answers and a solution. The world may be “closed” right now, but as I heard it put recently, the “grand reopening” is coming soon.”
  •  “…Goldman Sachs expects the economy to experience a far deeper slump than previously anticipated as the coronavirus pandemic hammers businesses, causing a wave of mass unemployment. The world’s largest economy will shrink an annualized 34 percent in the second quarter, compared with an earlier estimate of 24 percent contraction, economists led by Jan Hatzius wrote in a report. Unemployment will soar to 15 percent by mid-year, up from a previous forecast of 9 percent, they wrote.”
  •  “…CLSA research found that large developers in China reported a 95 percent work resumption rate of construction sites at the end of March and hope to see a 100 percent resumption by the end of April. The industry is growing positive as the Wuhan lockdown will be lifted on April 8. CLSA expects land sales to remain slow for several months, but new starts and completions to have strong rebounds starting in April. PMI data for March points to an improving Chinese economy. After plummeting in February, the PMI spiked back above the 50 level that separates growth from contraction.”

 The Wall Street Journal – April 2, 2020 – New York Is the Epicenter of the World – Peggy Noonan

  •  “…Everyone is fascinated that everything is closed but liquor stores remain open. This is because there isn’t a politician in the country stupid enough to prohibit alcohol in a national crisis. They may know on some level that no nation in the history of the world has closed both its churches and its liquor stores simultaneously and survived. Russia after the revolution closed the churches but did its best to keep vodka available because they wanted everyone drunk, which is the only way to get through communism. And how Russia did get through communism…The AP reports alcoholic-beverage sales rose 55% in the week ending March 21. Online liquor sales were up 243%. An executive with the Nielsen market-research firm speculated that people were stocking up for a prolonged stay at home.  Those Zoom meetings are going to get fabulous.”

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