MORE ENCOURAGING NEWS FROM NEW YORK AND NEW JERSEY

Encouraging news from both New York and New Jersey initially boosted equities. At this juncture it appears cases and deaths may not be as bad as feared, perhaps the result of social distancing and other policies that have shuttered society and the economy.

I rhetorically ask how will history judge today’s actions? Will it be viewed as apocalyptic group think, decisions based on the lack of data focusing only on the worst-case scenario and false assumptions under the guise of “abundance of caution?”

The obvious answer will depend on the ultimate outcome. Yesterday a Pew Study indicate 63% think health issues are greater than economic issues, down from 84% two weeks ago. Is this result that everyone knows someone who has lost a job? Perhaps.

Speaking of society, according to Reuters society is coping with today’s shutdown by drinking more, eating more chocolate, smoking more marijuana and cigarettes and watching more porn.

California, Colorado, Alaska and Oregon have reported a 50% increase in pot sales. According to the market research firm Nielsen, online US booze sales surged 243% in the last two weeks of March. British binge buying of alcohol surged 22% during the same time period. Nestle reports great difficulties in keeping shelves stocked.

Reuters states leading adult websites saw a 12% increase in global traffic from February 24-March 17. [Note: Pre-corona, porn was about 55% of web traffic] Sex toy sales are up 27% during the same period according to “specialty retailers.”

Some are suggesting that while the vast majority of society will survive Covid-19, society may emerge with more porn addictions, more liver/respiratory damage and greater obesity, imposing a longer-term challenge for health systems battered by the virus.

As noted several times it appears those with preexisting renal and respiratory issues, those that are overweight, are most at risk of succumbing to coronavirus. I ask will society emerge weaker and more at risk to battle future pandemics and other health scares?

What will happen today?

Last night the foreign markets were down. London was down 1.08%, Paris down 1.36% and Frankfurt down 0.74%. China was down 0.19%, Japan up 2.13% and Hang Sang down 1.17%.

The Dow should open nominally higher as the economic realization of the shutdown is now starting to become evident. For example, France’s economy contracted the most in the first quarter since WWII. Was this yesterday’s data and such was already factored into prices? At this juncture I will say yes. The next several weeks will be pivotal. If cases have peaked as the data is suggesting, the data should soon be improving as the economies reopen.

The 10-year is off 11/32 to yield 0.76%.

 

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.