Sunday Evening Thoughts +9 Weeks

Dear Clients and Friends,

Release the Hounds

Spring has sprung, spring-fever, cabin-fever, whatever you want to call it or however you spin it, States are starting to reopen.  Some seem to be moving slower than others, others fast, a few never shut down, and some still in lockdown.  We’ve heard proceed with caution, wear a mask, don’t wear a mask, move freely nothing to see here, shelter in place, flatten the curve, wait for a vaccine, don’t wait, and anything and everything in between.  Here’s a couple of observations from my desk.  People will only do what they feel comfortable doing.  If going out in public with a mask works for you, then do it.  If someone feels the need to stay home and have little-no public interaction, I respect that too.  We all need to respect one another’s decisions, personal space, and help those who can’t or shouldn’t go out.

This virus has been a game changer.  So, regardless of open, closed, phases 1-2-3-4… from a market standpoint we need to monitor how people return to daily normalcy.  Many businesses who have employees that can continue to work from home, most likely will.  There will be more Zoom calls and less business travel, new social distancing polices, re-opening playbooks, temperatures taken to enter events, hospitals will re-think how they accept incoming patients, it will be a different world for a while and some changes will be made permanent.  There will be many store fronts from local mom and pop shops to publicly traded names that fail, and we are only starting to see this.  It has forced business leaders to re-think and create a better business model, create customer interaction in different ways, and become more efficient.  We know unemployment has hit all-time highs and this second quarter GDP number is going to be an ugly one.  How we move forward to embrace and accept these changes will determine how fast and in what shape our economy recovers.  Go support a local restaurant with a carry out order, buy from a small improvement store on your next home project (if your household is like mine, my projects have been many during this pause), and let’s try to be kind to everyone.  Until we return to normal, we will monitor what this looks like and track its progress.  Here are numbers from Georgia, one of the first states to reopen.  This chart compares peoples’ time spent in various locations prior to shutdown vs. the reopening stage.

Paycheck Protection Program

No one said it would be easy.  There’s been talk of rule changes, limits, taxability, and clearly a general fogginess to the entire process.  Some banks favored larger loans vs. helping smaller main street owners.  Now there maybe a safe harbor provision and definitely more forms to complete.  Here’s the latest release over the weekend from the SBA which outlines the loan forgiveness application process.  See link below:

Operation Warp Speed

Another weekend development, the President announced, “Operation Warp Speed.”  There are now over 100 vaccines in the pipeline to put an end to COVID-19.  It’s estimated 1-15 are showing great signs of progress, although it is very early in the process.  Most likely the earliest approvals will come next year, but some drug companies are hoping to provide front-line workers with a treatment later this fall. Regardless of when, you have to admit the speed of which this innovation is taking place in labs all over the world is amazing. This never would have been possible even 20 years ago.

Live Sports and The Last Dance

It’s been a very long time since we’ve been able to watch a live sporting event broadcasted.  Last week was an empty arena UFC fight, this week was a private golf match with more to come, and other professional leagues struggle to look for answers.  Will the NBA and NHL seasons figure out a way to finish and when will we see the first MLB pitch or NFL kickoff.  All great questions that will be answered in due time.

High Frequency Data Changes

Data Set % Change year over year
Initial Jobless Claims, April 18th 1,273% year over year vs. 1,569% 2 weeks prior
Weekly Retail Sales, April 18th   -7.5%, vs. 2 weeks prior -8.1%
Box Office Receipts, April 10-16th -100% year over year, vs. 2 weeks prior -100%
Rail Car Traffic (cars), April 18th -22.1% year over year, vs. 2 weeks prior -22.4%
Steel Production (net tons)   -34% year over year, vs. 2 weeks prior -34%
Hotel Occupancy      -55.9% year over year, vs. 2 weeks prior -62.2%    
Hotel Revenue per Room Available -74.4% year over year, vs. 2 weeks prior -78.4%
Open Table Restaurant Reservations -95% month ago level, vs. 2 weeks prior -100%
TSA Checkpoint Data          -92.5% year over year, vs. 2 weeks prior -94.7%
Supply of Motor Gasoline in US       -19.1% year over year, vs. 2 weeks prior -36.5%

Data above would suggest a slight improvement in some economic areas.  I anticipate this to be a slow process, but small positive steps are a good sign. As always, if you have concerns about your own portfolio, give us a call. Where are here to help you through these challenging market conditions.  Don’t forget you can follow us on Twitter, Facebook, and LinkedIn for other important updates during the week. Our office is still doing virtual client reviews.  Call to schedule yours today, 815-577-9125 or 615-591-2490. Continue to be safe.

Source: First Trust Advisors, Department of Labor, Redbook Research, Box Office Mojo, Association of American Railroads, American Iron and Steel Institute, Hotel News Now, Opentable, Transportation Security Administration, Energy Information Administration

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