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Recessionary Impacts: ‘Down The Road’

When JPMorganChase reported earnings in mid-July, CEO Jamie Dimon quipped: “This is not a normal recession… the recessionary part of this you’re going to see down the road.” This observation is spot on. Dimon was observing that, while government had shut down much of the “nonessential” (i.e., 80%) economy, they also transferred $2.1 trillion to private households which more than made up for the $720+ billion of lost wages. We have seen many …Read More

The Recovery: With Reversed State Openings, Expect A Flattening

The “Shape of the Recovery” graph that I drew a couple of months ago appears to be playing out almost exactly as forecasted (guessed!). The outlook for Q2, just ended, is now congregating around that -40% mark. We will see the first pass at Q2 GDP at month’s end. Stay tuned! April was the bottom of the Recession, that’s for sure. It looks like May and part of June had the sharp upward pop, …Read More

The Opposite: The Market Takes A Cue From Seinfeld

The Opposite In one of the 1990s Seinfeld episodes known as “The Opposite,” George Costanza decides to make decisions opposite of what his “normal” instincts would tell him to do. The results of his “opposite” actions were a beautiful girlfriend, a standing ovation, and a job with the N.Y. Yankees! Today’s equity market seems to be behaving similar to George, choosing to do the “opposite” of what one would normally expect from …Read More

Good News! The Re-Opening

The Unemployment Picture The equity markets continued their uptrend the week ended May 30th with the S&P 500 gaining 3.0% for the week (and 4.5% for the month). Similarly, the DJIA gained 3.8% this past week and 4.3% for the month. Markets moved higher on vaccine speculation, and on less negative sequential data as all 50 states were in full or partial re-opening mode. The markets seem to believe that the Recovery will be …Read More

A Commonsense View Of The Shape Of The Recovery

Because economies are reopening or partially opening in the U.S., the likely bottom of the Pandemic Recession will be this quarter. The debate is now over the shape of the Recovery. Letters have been used to describe what authors/economists/investment houses believe. “V” shaped is clearly what the equity bulls believe. Some describe it as a “U.” A “W” would occur if we had a second virus wave. Still others believe we will have an “L” shaped …Read More

The Shape Of Things To Come: ‘V’ Or ‘L’ Recovery

What do -38%, -34%, -30%, and -25% have in common? If you guessed that these are the Q2 real GDP forecasts from the major financial houses (Morgan Stanley, Goldman Sachs, Bank of America, JPMorgan), you would be correct. Incredible as it may seem, we are likely headed for a drop in Q2 real GDP in that magnitude, and the just passed Q1 quarter looks to be somewhere near high negative single digits. …Read More