Recovery, Fast or Slow?
We are now over 3 months from the beginning of our economic shut down! Those who are allowed to and ventured out, certainly spent money in May, as retail sales increased far more than expected. There is very little doubt that consumer spending is going to continue increasing, as more states and industries open back to the public. Hey, it’s pretty simple to have large increases from a 0 number! Hoping this continues!
So what’s going to happen next? Virus numbers are now climbing higher… with the debate now being: is this increase because we are doing far more Coronavirus testing, or are people not being as cautious when they venture out?! My guess is probably a combination of the two! As long as new cases continue to increase, the pace of the economic recovery has to be in question, as many Baby Boomers and older folks are being more cautious than others.
Will the recovery be as fast as suggested by parts of the equity markets, or will it end up being much slower?! A vaccine could certainly assist to answer this question!!
I certainly ponder the potential collateral damage that may need to be dealt with, such as Commercial Real Estate. Many small and large companies now have significantly less revenue and will have difficulty paying rent, and may begin to re-think their office rental needs. The possible trickle-down could be significant to employment and other areas. Certainly, worth keeping a thumb to the pulse on this issue.
Markets Higher Last Week
A combination of better than expected retail sales and the Federal Reserve announcing an expansion of their Secondary Market Corporate Facility that will begin purchasing INDIVIDUAL CORPORATE BONDS in the secondary markets, pushed most indexes north for the week!
The Dow Jones increased 1.07%, the S&P 500 1.88% and the small cap Russell 2000 rose 2.25%.
International equities rose as well with the developed market EAFE rising 2.06% and the Emerging Market stock index up 1.55%.
US Treasuries remain range bond for now with the 10 year finishing the week with a yield of .70%. Every time I type the current rate, I can’t help but scratch my head…..
I am so fortunate each Father’s Day, as my daughter wines and dines me beyond expectations. Truth be told, I look forward to dining with her, however I just enjoy the private time for the two of us. A father/daughter relationship is truly special.
This year started out normal as we drove to a great restaurant in Haddonfield. Vanessa made reservations at the “Little Hen.” She is great at finding a restaurant I haven’t tried yet! The waitress opened our bottle of wine, we reviewed the very interesting menu, and placed our order. By the time are appetizers arrived, which was only after a few minutes, the skies opened with the light rain becoming a torrential downpour. The table did have an umbrella that provided little shelter. We stayed for the entire meal, about 2 hours, had an amazing time, however absolutely drenched from head to toe. Believe it or not, the other 5 tables outside were also occupied with everyone laughing, having a great time!
Certainly, a Father’s Day I’ll remember for a life-time.