Well, it’s official. The body responsible for maintaining a chronology of peaks and troughs in U.S. economic activity is the National Bureau of Economic Research (NBER). The NBER just announced that the expansion that began in June of 2009 officially peaked and ended in February of 2020. The U.S. is officially in recession. Continue reading “BREAKING: The NBER Officially Declares Recession Ending the Longest Expansion in History”
Deflation or Inflation?
A question I’ve received frequently the last couple months from many different people is about the potential for inflation given the unprecedented response to the Novel Coronavirus Pandemic. It is an important question because it impacts the best investment approach going forward as well as other personal finance decisions.
I understand the rationale behind the question. After all, trillions of dollars have been pledged between the Federal Reserve and the U.S. Treasury in the last few months in what essentially amounts to a “helicopter drop” of money on the economy. So, it is understandable that people are beginning to have concerns about the potential for inflation.
Ultimately, I believe we will get inflation mainly because the Federal Reserve will stop at almost nothing to make it happen, HOWEVER, we must allow for the possibility of getting deflation first. Continue reading “Deflation or Inflation?”
Prospective S&P 500 Returns Back Into Negative Territory
I hope you and your families are staying healthy and have been able to get outside to soak up some sunshine!
Yesterday, the S&P 500 crossed above the 3,000 threshold for the first time since early-March. Unfortunately, it wasn’t able to hold that level into the close (closed at 2,991) although it’s making another run at it today.
The S&P 500 has now rallied about 34% from the March 23rd closing low. That means it needs about another 13% to regain the all-time high of ~3,386 (February 19th). Continue reading “Prospective S&P 500 Returns Back Into Negative Territory”
A Quick Note on Unemployment and a Silver Lining?
Yesterday we received the worst employment report in history. But what does it portend for the future? Is there a silver lining? These are obviously unique circumstances relative to previous recessions. Continue reading “A Quick Note on Unemployment and a Silver Lining?”
A Light at the End of the Tunnel
First of all, I am very happy to see new data coming in these last few weeks indicating the Virus is far milder than initially believed. Although the World Health Organization initially indicated at least a 3.4% fatality rate, it appears the fatality rate may even end up closer to 0.05% – 0.4% roughly in the range of the flu even without a vaccine in place.
It appears the risk to young, healthy people is negligible while the older population is at greater risk especially if there are certain other pre-existing conditions present. A large portion of deaths, around 50% in some regions, are in nursing home populations. Lockdown policies around the nation should account for these facts and disparities.
We’re also starting to see COVID-19 hospitalizations waning. There were but a few overwhelmed hospitals, the nation has both excess ICU capacity and excess ventilators at this point contrary to the initial projections from the IHME and many States’ Governors’ offices. In fact, many hospitals around the nation are losing millions of dollars and furloughing staff.
In other words, the light at the end of the tunnel is coming into view. The market has been anticipating and rejoicing at this sight evident by the S&P 500’s ~30% rally from the March lows.
What’s Next? Continue reading “A Light at the End of the Tunnel”