Given the recent gains in the stock market over the last month or so, it is clear that stock market participants believe that the country will be back on its feet in no time. Over in the fixed income space, it is another story entirely. The question is which market will be right? The betting in the bond market is that U.S. interest rates are not only going to zero, but there is a high probability that America, like Europe and Japan, will soon see negative rates, as early as next year. Six months ago, that was unthinkable. On Wednesday,…
Insights & Advice
A Few Dollars More
Gold, the bug, and you
If there was ever a time to flee to safety, the Pandemic of 2020 is a great excuse. Stocks tumbled, bounced back, tumbled again. The bond and credit markets have been in disarray. Yet, few have even mentioned the precious metals market as a place to be. Even writing about gold in this age of Zooming, digital breakthroughs, 5G technology, and the like, seems anarchistic. The precious metal has been relegated to an obscure corner along with conspiracy theories, old warnings, and a small group of goldbugs who trot out “end of the world” warnings on down days in the…
The stock market is not the economy
If ever one needed an example of the above saying, today’s market would prove that point. Today’s unemployment figure for the month of April revealed that 20.3 million Americans are out of work, bringing the unemployment rate to 14.7%. The stock market gained more than one percent on the news. While new cases of COVID-19 are reported and deaths multiply with no cure or vaccine in sight, the NASDAQ turned positive for the year. Corporate earnings have been abysmal and future guidance nonexistent for most companies, but their stocks went up anyway. How can this be, you might ask? As…
Workers face a serious dilemma
During the last week or two, the Federal government has done an about face concerning the impact of the ongoing coronavirus pandemic. From the nightly exhortations to social distance, work at home, and expect more deaths, the message has now switched to go back to work, re-open the economy and, oh, about those deaths, expect even more. The Trump White House has “officially” left it up to the governors of the states to set a timeline for reopening their economies, since it is illegal to do anything else. The guidelines advise that each state should monitor the number of new…
Earnings fail to support the stock market
Despite the expectation that earnings this quarter and next were going to be a disappointment, stocks have been gaining. That is because results have not been as low as some analysts have projected. However, when is better than bad not good enough for investors? It appears we have found out this week. It is a known fact that mega-cap, technology companies (the FANG stocks) have been leading the market throughout this rebound. This week, several of these companies reported and while the results, in some cases, have been stellar, (given the overwhelming economic negatives in the economy), others were simply…
If you are laid off, read this
As of the end of April, more than 30 million Americans have joined the ranks of the unemployed. Companies have closed, while the pandemic has forced many employees to remain at home. If you are one of the jobless victims of this pandemic, here is some advice on your next steps you might take. First off, do not panic. If there was ever a time for this to happen, it is now. The Federal government has provided you with a list of additional benefits that can help you through this unfortunate period. But the first things you want to know…
Economy craters as America attempts to reopen
As the economic and unemployment numbers reveal the devastating impact of the coronavirus, a struggle has developed between those who want to reopen the economy now, and others who fear the consequences of doing so. Is it truly a trade-off between economic life and additional deaths? No one knows, but plenty of people and red state politicians seem willing to take the chance. Those in blue states, which have been hit the hardest by COVID-19, along with the entire international medical community, want to take a more cautious approach. As far as the markets are concerned, the roller coaster ride…
When times get tough, call a woman
We have all seen the heartrending photos and videos. They are of nurses, mostly. As a large part of America’s frontline against COVID-19, the media has determined that nurses and other healthcare workers are now “newsworthy.” But there is a deeper story here. It is about American women in general. Actually, it was the “Gray Lady,” the venerable New York Times, that first focused my attention on the real unsung heroes of this pandemic—women. Underpaid, taken for granted, expected to work for less pay, raise the kids, take care of the parents, and when they have time, maybe sleep for…
Bulls are back in the saddle
A spate of good news helped stocks this week battle the overriding pessimism of the last month. A possible drug to combat the COVID-19 virus coupled with a flattening of the virus curve in some regions helped the markets to gain ground. Can it continue? It sure can, although a pause to catch our breath may be in order for next week. Gilead Sciences, the pharma/biotech company, has been working at breakneck speed to develop a drug to treat coronavirus patients. On Thursday, a report in a healthcare publication indicated that its experimental drug, Remdesivir, was having some success in…
Pandemic reveals weakness in the U.S. healthcare system
If it is not already apparent, our healthcare system needs a lot of work. There is nothing like a global pandemic to point that out. The question is, that after decades of arguments, tinkering and promises, are Americans finally willing to do something to change it? Now, I am not talking about how much a doctor is being paid, or what a pharmaceutical company can charge, or not charge, for a new wonder drug. Those are popular headlines that, time after time, distract us from the underlying weaknesses in the system. The main problem I have identified throughout this national…
Virus numbers help stocks
Stocks rose this week on the hope that the U.S. may be close to a peak in virus cases, at least in the country’s “hot spots.” Adding to the reduced case count, the government’s efforts to support the economy and the market have had a positive impact on most financial instruments. Some strategists have warned that the market’s gains will prove to be ephemeral, once the fallout from this pandemic begins to seep into the economic data. Some of that data is already showing up. For example, Thursday’s unemployment data revealed that another 6.6 million Americans filed for unemployment benefits…
Small business owners run into red tape
The $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act (has two programs that can help America’s business owners to weather the COVID-19 storm. The $349 billion, first-come, first-served loan programs have seen an overwhelming response from troubled small business owners nationwide. The job is to get the money into their hands quickly. The challenge will be to remove or amend a mountain of regulatory requirements that the Small Business Administration and the financial sector have had in place for decades. Adding to the confusion are the owners themselves, who are either not aware that there are actually two…
Don’t trade this market
Markets that go up or down several percentage points a day is the new norm. As COVID-19 begins to infect the U.S. heartland, more and more of the country is shutting down. Deaths and cases have still not peaked, so why should we expect the stock market to have bottomed out? The financial media, I believe, is providing investors a great disservice. Every day, some analyst, money manager, or company executive is either trying to pick a bottom, or telling you the bottom is already in, or arguing that it may be weeks or months away. Ignore them. My column…
How the Care Act changes the rules on tax-deferred accounts
Listen up, big changes have just occurred because of the newly passed Care Act. Aside from the “free money” that 90% of Americans are expecting, important changes to your retirement accounts have been passed. These changes can save you a bundle in taxes while providing instant cash relief, if you need it. Normally, if you need money from a retirement account, and you are under 59 ½ years old, you are required to pay a 10% penalty, plus the income tax owed on your withdrawal. There are some exceptions to the rule and the Care Act just added a big…
A bear market playbook
It was another week for the history books. Stocks gained almost 20% in four days. Employment dropped the most in history. The number of cases of the COVID-19 virus in America topped those of China. And President Trump is thinking of sending people back to work as early as Easter. If you stick with history, then technically, the Dow Jones Industrial Average had its fastest bear market on record. A dizzying 39 % decline (intraday) followed by a 20% gain in less than a week. However, I believe it is too early to call an “all clear” in the equity…
An economic game plan
Now that Congress and the Federal Reserve Bank have fired the first salvo of relief spending, investors are wondering how long the trillions of dollars in aid will take to actually do something to alleviate some of the losses to the economy. Administration officials believe that the cash payments to Americans should start arriving within the next three weeks. That said, most economists expect the country will fall into recession in the second quarter. That begins next week. No one knows how deep of a decline we will ultimately suffer, but suffice it to say, it will be a shock…