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%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.