Data from the Federal Reserve states more companies are scared today than 2008. The Fed also writes the level of uncertainty is at a record, vastly eclipsing all other times. Moreover, almost every firm has declared the economy must begin reopening in the immediacy or irreversible damage may occur. Additionally, this same report indicates fears of coronavirus litigation are rising exponentially, fears that could potentially inhibit reopening and subsequent rehiring.


The WSJ writes a major issue facing government are the models utilized to make decisions, all of which offer differing conclusions based on differing assumptions. Unfortunately, the virus is now extremely political with the blogosphere filled with sensationalized headiness that have little validity. Any type of perspective, pragmatism, or context is entirely missing.

Several times I have commented as the reopening commences the economy may experience inflationary growth, the result of monetary and fiscal policy, specifically flooding the economy with trillions amplified by workers choosing to remain unemployed via generous jobless benefits.

Economic historian and John Maynard Keynes expert Robert Skidelsky has coined the next possible era as an “Inflationary Depression,” partially based upon the fears I outlined above. Skidelsky commented tomorrow will be similar to the stagflation years of the late 1970s but on steroids, the steroids are the damaged supply lines as production and transportation of goods are greatly disrupted.

All know the axiom “The trend is your friend.” As I noted yesterday, the trend of the last six weeks is the improbable constantly occurring. What are the odds inflationary growth will occur, one that shatters monetary policy assumptions?

Tomorrow the BLS will release April’s labor report. For those who are like me that save newspaper headlines, the headlines will be one to be saved. Never would I ever imagine the economy could lose over 21,250,000 jobs in one month. This number is unfathomable.

What will happen today?

Last night the foreign markets were mixed. London was up 0.87%, Paris up 0.92% and Frankfurt up 0.91%. China was down 0.23%, Japan up 0.28% and Hang Sang down 0.65%.

The Dow should open nominally higher on optimism the economy will continue to reopen. Oil is surging as Saudi Arabia increased pricing for most of its grades for shipments in June. Weekly jobless claims are released at 8:30, a real time economic indicator that may offer guidance to the strength of the recovery. Analysts expecting a loss of 3 million jobs, the fewest jobs lost in seven weeks.

The 10-year is unchanged 0.71%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. 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. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.