Denial, Seems It Had to Come
I warned you it was coming. I warned you it’d be bad.
Relied on me to say it all. (Any Sevendust fans out there? No? Oh well…)
Weekly jobless claims arrived today, and they were record-breaking. The U.S. Department of Labor reported that 3.28 million Americans filed for unemployment benefits last week.
That’s 15 times the number of people who filed two weeks ago … and five times the previous record of 695,000 claims set in 1982. It was more than the peak number of claims during both the Great Recession and the Great Depression.
3.28 million Americans out of work — all because of the coronavirus (or the panic along with it).
The situation is so bad — How bad is it? — that Federal Reserve Chairman Jerome Powell appeared on the Today show to reassure Americans that the U.S. central bank is on our side.
“The Federal Reserve is working hard to support you now and our policies will be very important when the recovery does come,” Powell said.
Let’s think about the situation for a minute.
The head of the U.S. Federal Reserve — the guy who’s responsible for the country’s most powerful financial institution — felt it was necessary to reassure the American people on a popular morning show.
On one hand, that’s somewhat comforting … Powell taking time out of his busy day to tell everyone that it’ll all be OK.
On the other, it shows just how badly the situation has deteriorated. We now have the head of the Fed offering reassurance, not some lackey.
Oh, and those 3.28 million jobless claims? The market shrugged them off.
It seems that most of Wall Street believes that the worst is now behind us. Peter Boockvar, chief investment officer at Bleakley Advisory Group, summed up the Street’s opinion pretty well:
So close to getting past the worst of the spread?
The U.S. is about a month behind Italy in terms of COVID-19’s spread, and Italy hasn’t even peaked yet. We’re three months behind China, and it’s just now seeing the end of community spread. Both countries went into complete lockdown. While individual states have gone this route, the U.S. as a whole has not.
As hopeful as I want to be … as hopeful as Wall Street wants to be … we aren’t close to getting past the worst of the spread.
As the nation’s top infectious disease expert, Dr. Anthony Fauci, put it: “You don’t make the timeline, the virus makes the timeline.”
But … but the $2 trillion coronavirus rescue bill!
Yes, I hear you out there … protesting my negativity again. The Senate’s bill will blunt the impact, to be sure. But it can’t stop what’s already happening. Despite reassurances that everything will just bounce back … that this isn’t really a long-term economic problem in the U.S. … let me tell you now: It is.
What? You think the U.S. economy could just hire back those 3.28 million out-of-work Americans tomorrow if the coronavirus magically disappeared? Nope. It doesn’t work like that.
But, while the U.S. economy is going down, down in an early round, sugar we’re going down swinging. And Great Stuff will be your No. 1 with a bullet. A loaded market complex … cock it and pull it.
Now, here’s the thing — and listen up, all ye positivity seekers!
Just as the virus chooses the timeline for this whole crazy shebang…
Only you choose your investing timeline. Only you decide if you keep hanging in there.
If you ask expert Charles Mizrahi, the situation is crystal clear. You could either:
- Capture peak gains like 300%, 500% and 600%.
- Or let the market turmoil and the virus’s impact eat away your financial future.
Gains like those? In this kind of market?!
Yes, dear reader — there’s potential in any market. See, according to Charles: “What you do in this current meltdown will make all the difference on what your net worth will be in the next five years.”
So, while other folks around you join the fleeing fearful, you have a chance to gain a leg up. In fact, Charles Mizrahi thinks this moment is so crucial he recorded a special video presentation on how to leave all this market panic behind.
The Good: Remote Connections
Investors are falling in love with Micron Technology Inc. (Nasdaq: MU) in a hopeless place today.
The flash memory maker beat Wall Street’s second-quarter earnings and revenue estimates and issued solid third-quarter guidance.
In fact, Micron appears to benefit from COVID-19 lockdowns around the world. In its post-earnings conference call, the company highlighted rising demand for PCs, notebooks and other devices as more people work and study from home.
Furthermore, Micron noted additional demand in the data center market, as companies push to beef up cloud computing storage and performance amid spiking remote demand.
While now is clearly the time to be cautious about buying anything in the market, Micron is one company to keep on your short list of potential winners in this brave new world.
The Bad: 1 Bourbon, 1 Scotch, 1 Beer
Wanna tell you a story about the Cheesecake Factory Inc. (Nasdaq: CAKE) blues…
I read the headlines one particular Thursday and saw that Cheesecake Factory had lost its jobs. But that don’t confront me, long as I get my money next Thursday. Next Thursday come, and they didn’t have the rent … and out the door I went.
Seriously though, the Cheesecake Factory just sent a letter to its landlords that it won’t pay rent in April due to the coronavirus. Here’s an excerpt from a letter to landlords from CEO David Overton:
And it’s not just Cheesecake Factory acting kinda funny … everybody funny … now you funny too. Retailers, from clothier H&M to fast-foodie Subway, are all struggling to make rent.
If anything reinforces the idea that the COVID-19 situation is far from over, it’s retailers not paying rent. I don’t know about you, but I think it’s time for a few drinks.
The Ugly: Old Junker
Growing up in rural Kentucky, I lived through the great Ford versus Chevy wars and endured many a heated argument on the topic. “Ford Don’t Make Junk” was among the many stickers plastered on the windows and tailgates of F-150s for as far as the eye could see.
Turns out, those bumper stickers weren’t quite accurate. Today, S&P Global Ratings cut Ford Motor Co.’s (NYSE: F) bonds to junk status. The ratings firm lowered Ford’s credit rating to BB+ (junk status) and said that it may lower its rating further as the coronavirus’s impact spreads.
S&P isn’t alone in its “junk” rating on Ford, however. Moody’s Investors Service cut its credit rating on the Big Blue Oval twice in the past month, citing a “credit shock” for automakers across the board.
But Ford has an answer … it plans on reopening production at key plants in April, including its Dearborn, Michigan, and Kentucky truck plants, its Kansas City Assembly Plant’s transit line and its Ohio Assembly Plant.
That’s all fine and dandy, but I’m pretty sure the United Auto Workers Union will have something to say about this. And it won’t be pretty.
You Marco, I Polo … it’s Reader Feedback time!
Let me just say, you guys have been busy … or maybe you’re just bored after being locked in your homes for days on end.
In the past week, Great Stuff received a veritable flood of comments with two common themes: You absolutely despise bailouts (especially for airlines) and you don’t think the market rout is over.
Let’s dive right into your comments:
The Unfriendly Skies
NO BAILOUT TO THOSE WHO BOUGHT BACK STOCK
— Stan B.
Airline bailout NOT. Only if that Airline assists our American citizens stuck away from their respective residents need to get home. Not for anyone just traveling. Bailout? Why do they need it as they have gouged the travelers for transporting their necessary luggage to the tune of millions of dollars of profit while still collecting their usual air fares. Why should we bail out these huge corporations. Use that money to help the smaller companies to keep their doors open. I personally am sick of seeing billions bailing out these high corporations that only turn around and use that money for the top management so called golden parachutes. Stop this madness of government bailouts.
— Peggy B.
Pigs to the trough, as usual. And, why should it shock you that R’s have no problems throwing tons of money at pillars of industry? Well, not exactly industry. Finance! That’s the magic word The Graduate should have been told. Not “plastics,” “finance”.
— Joe S.
Let them go under.
— Tony C.
Wow … the sheer vitriol dripping from your comments is … honestly, it’s a bit impressive. I don’t know whether to be proud of you or to start locking my doors.
As I’ve said several times here in Great Stuff, I don’t like stock buybacks — at all. It’s a company telling me they have nothing better to do with their money … nothing to invest or reinvest in. No new ideas to grow.
And now, those companies are paying the price. Well, somewhat of a price. A lot of them just got bailed out by the government … again.
It’s Not Over
Still doesn’t feel like the bottom.
I don’t see enough anger / despair that would mark the point at which all the buyers are exhausted.
Love your work – thanks!
— Gary W.
I believe it’s not over till people go back to work… I am a supplier to GM, laid off until the 13th… even then I could be laid off longer depending on how orders rise or fall… at the time of the layoff orders were down 15% before the virus hit…
— Timothy C.
Most of your subscribers, I’m sure, want rosy pictures. Most investors do. They want to catch the bottom of the V. This time it’s an L, though.
By end of May most airlines in the world will go bankrupt. Restaurants, bars, gyms, taxis. Hotels, travel agencies, tourist attractions. Shops, malls, import/export companies. Trucking, railways, bus liners. Cinemas, museums, stadiums…
Investment banks with derivatives exposure, ETF spinners, trading houses, oil companies, automakers and aerospace are in trouble. Possibly miners too. And schools.
But investors want to believe that the FED is going to fix it all. Thing is, we should hope the FED doesn’t try. If they do, we’re all going to wake up with 1000s of $ in our pockets, and nothing to spend it on.
The ONLY moneys (FED or fiscal) that should be spent is on buying test kits from Russia, respirators from Elon Musk, hospital beds and walls. The ONE thing we need is a victory against the virus. Nothing else.
— Dan W.
Dan the man, you hit the nose on the head … or something like that. And Timothy, you are absolutely right.
This is what Great Stuff has said for a while. You can pass a $2 trillion spending bill to help things along, but it won’t magically rehire 3.28 million workers filing for unemployment. It won’t stop the virus from spreading.
Hunker down, dear readers. It’s going to be a rough ride. But, if you stay tuned in to Great Stuff and BanyanHill.com, I promise to keep telling you like it is and help guide you through the storm.
Finally, a shoutout to Angela O., Christine P., Phil G. and the others who have offered Great Stuff support for telling you the truth. Sticks and stones … you know. Thank you all!
Have you written in yet? What’s stopping you? Drop me a line at GreatStuffToday@banyanhill.com and let me know how you’re doing out there in this crazy market.
Until next time, good trading!
Editor, Great Stuff