What Normal Could Look Like

The economy of the future will feature more consumer savings, and business balance sheet repair (more cash, more cost, lower profits, and deferred capital expenditures).  After an initial spike up likely starting in June and continuing into Q3, growth will be difficult.  Unemployment, after spiking to the mid-20% range, will come down slowly, remaining in […]

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 […]

On Reopening: We’ve Just Seen The Iceberg’s Tip

New Data Should Accelerate Re-Opening When the pandemic started, the only data available was the number of new cases, existing cases, and deaths. The original models, perhaps based on prior pandemics like the Spanish Flu of 1918, forecast significant deaths, up to as many as 2 million in the U.S., and, of course, mass infections. Based on […]

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, […]

Coronavirus: The Black Swan

  Black Swan taking off (Cygnus atratus) South Island, New Zealand (Photo by: VWPics/Universal Images … [+]VWPICS/UNIVERSAL IMAGES GROUP VIA GETTY IMAGES   The equity market finally had a reaction to the effects of the coronavirus (Covid-19) last week, and it was significant with the S&P 500 falling 252 points (7.4%) from its record high close […]

Fed Drives S&P 500 To Record Levels, Economic Fundamentals Still Soft

Holiday sales look flat. While online sales were up, sales at traditional retailers were lackluster. Penney’s, Kohl’s, L Brands, Macy’s, Urban Outfitters, Bed Bath & Beyond, all reported lower sales vs. a year ago. Meanwhile, in what looks to be a “frugality” or “trade down” movement on the part of the consumer, same store sales at Walmart, Costco, […]