20 May JEFF SPICOLLI AND THE STIMULUS BILL
An ad hoc opening of the economy has commenced. Unfortunately, the reopening is riddled with politics. Many have been eviscerated or worse when questioning whether the lockdown was worse than the disease itself.
Saturday’s WSJ wrote “in April 30% more Americans died than was typical in the same period of previous years.” The article does not provide the exact number of deaths from Covid-19 but does state “the pandemic’s mortality effects are emerging at higher rate than the disease itself.”
Last week I noted April’s calls to the National Suicide Prevention Hotline increased by 40%.
Several times I have commented the government has done perhaps a too effective of job scaring the populace into submission. Did government go too far??
Government data indicates the chances of being infected with the virus is 0.23%, approximately half the odds as having a stroke of heart attack (0.43%). The chance of dying from the virus is 0.01% versus 0.18% from heart disease. The chances of dying increases if one gets infected, rises to 5.3% but still far from 22.5% on average who will die with a year of having heart attack or stroke.
[Note: It is widely accepted the corona infection rate is considerably higher which would subsequently lower the percentage death rate. For example, based upon antibodies tests and statistical modeling, over 27% or 2.3 million of NYC residents may have already been infected. The actual number of cases reported is 197,000 and 15,170 deaths.]
Radically changing topics, the horrific data flow is continuing as housing starts plummeted by the most in April since the 1955 inception of this data point. The statistics were worse than expected however that was then as May’s home building confidence increased by an amount greater than expected.
Some are declaring another stimulus bill is needed. The $3 trillion bill that was just passed by the House is considered “dead on arrival” in the Senate. The rationale is quite simplistic.
House Speaker Pelosi stated last week “the House will not be cavalier about granting legal protections as the health of all workers must be protected.”
Moreover, and according to Newsweek the word Cannabis was referenced three times more than Jobs.
I guess this places Jeff Spicolli’s line in Fast Times at Ridgemont High “What are you high” into a different perspective.
I always thought that jobs and economic activity were more important in winning elections.
Commenting about yesterday’s market activity, the Dow declined about 1.60% on questions over a potential vaccine. Moreover, several major retailers withdrew their outlooks because of the pandemic. The NASDAQ declined about 0.54%. Crude was up about 1%.
Last week I noted the disparity between growth and value. This disparity increased even more over the past five days. Growth companies are up about 55% for the last three years while values is down about1%. This disparity is increasing beyond record proportions.
It is now almost written in earnest that this environment will never change. When such dogmatic statements are penned, a massive change is all but a certainty.
What will happen today?
Last night the foreign markets were mixed. London was up 0.08%, Paris down 0.60% and Frankfurt up 0.15%. China was down 0.51%, Japan up 0.79% and Hang Sang up 0.05%.
The Dow should open nominally higher on conflicting news regarding a possible vaccine and on the news on the continual unlocking of the global economies. The 10-year is unchanged at 0.692%.