Dr. Fauci, head of the National Institute of Allergy and Infectious Diseases said it may be time to begin to “seriously” look at reopening in a cautious way.  Fauci further stated “I don’t want people to think that staying locked down for a prolonged period of time is the way to go as remaining closed will cause irreparable damage and unintended consequences.”

Fauci discussed the absence of preventative medicine that may exacerbate chronic illnesses and the possible mental health issues of a prolonged shutdown, all of which could lead to greater deaths and lower life expectancy.

As the economy reopens an immediate problem may be finding employees.  On the surface this comment is ludicrous given 39 million jobs have been lost in two months.  The issue at hand is generous unemployment insurance offered via the passage of the CARES Act that lowers the incentive for people to work.

According to a government working paper referenced in the WSJ, 68% of laid off workers are now making more unemployed by an average amount by 134%.  Wow!  These generous provisions are set to expire July 31 but Democrats are pushing to extend it through January in the next stimulus bill that was just passed in the House.

The pandemic is entering into the next phase.  As written many times I believe the government has been perhaps to effective scaring society into submission.  How will society respond?  Will it vent its angst at the voting booth?  Will one party totally dominate the other?  Political punditry can fill libraries.

My simple assessment the success of the reopening will be based upon hospitalizations and deaths.  Cases will probably rise, the result of greater testing.  However, such could be viewed as positive for if more people had the disease, the odds of a proverbial second wave falls.

Moreover, as widely documented, 19.9% or 1.7 million of NYC residents have been tested positive for antibodies.  Officially there are 356,000 NYC cases and 23,000 deaths.  The death rate drops exponentially from 6.4% to 1.3% if the 19.9% figure is used to determine the death rate.

The economy, the society is in unchartered territory.  There are no guide posts. It will prove to be exciting and perhaps daunting.

What will happen this week?

Tomorrow, Elon Musk is attempting the first private space launch.  It is also the first time in over 10 years a launch into space will occur in the US.

Will Musk’s launch be viewed in a similar manner as the US hockey team winning the gold medal in the 1980 Olympics which symbolically re-energized America’s can-do spirit?  (To quote the infamous line in Miracleyes it is more than just a hockey game.”)

In my view there is only upside to the launch.  Society has already been demoralized and even if SpaceX does not reach orbit, it is symbolic of America’s appetite to take risk, its can do attitude, something that some in government are attempting to legislate against.  It is risk takers that made this country great and is part of our national psychic, a psychic that I believe is absent in many of our leaders.

Last night the foreign markets were up.   London was up 1.21%, Paris up 1.02% and Frankfurt up 0.69%.  China was up 1.88%, Japan 2.55% and Hang Sang up 1.88%.

The Dow should open moderately higher as further moves to ease lockdowns in major economies outweighed concerns over escalating geopolitical tensions.  There is also confidence a vaccine will shortly be available.    The 10-year is off 9/32 to yield 0.70%.


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.