These last two weeks have passed reaaaally slowly, how about it?
Since the first of April, we’ve been declined by the state of Pennsylvania for a waiver to stay open as an essential business. You can buy donuts over the counter but not visit your wealth advisor to talk about finances during a market crisis. Hmmm.
We’ve also applied for the Paycheck Protection Program (“PPP”) forgivable small business payroll loan. It’s been a massive red-tape endeavor and I have waning confidence that we’ll see a nickel before Labor Day, if ever.
You should feel for your local banker who is now being put through the ringer as PPP loan processors; they are getting absolutely crushed with small business forgivable loan applications.
And we’ve been remotely counseling as many of our clients as we can, trying to provide some perspective about what’s going on in the economy and capital markets – without any precedent to reference.
We are encouraged by the fact that in the past, the uniquely American form of republican democracy and free-market capitalism has endured and will ultimately prevail in the COVID viral war.
As Bill Murray said eloquently in the movie Stripes: “We’re America, we’ve been kicking a%s for two-hundred years, we’re 10 and 1!” Funny.
As I sit sequestered from everyone but Carrie and two annoyed cats – we’re interrupting their day sleep cycle – I’ve been making it a point to think about positive possible outcomes, about new opportunities and about other things for which I’m grateful.
I’m hearing positive stories about how the quarantine is creating involuntary quality family time. Home projects are finally getting done, closets are getting organized and there are more family meal conversations, all good stuff.
Carrie and I even participated in our first virtual happy hour with friends last weekend; it was good fun and won’t be the last one.
I recently read a story that fit these times about the company that built the first golf course in India in the 1920s. The course immediately encountered a serious and unexpected local hazard: monkeys, who became immediately curious about the game of golf. The monkeys delighted in running onto the course after a shot to grab the golf ball and toss it all around.
The frustrated club management erected fences and walls around the course and tried other deterrents, all to no avail; the monkeys kept chasing and tossing golf balls. Eventually, the club waved the white flag and adopted a new permanent course rule: You must play your ball where it lands – even after the monkey tosses it.
The moral is that we must deal with our actual circumstances. You face the facts, adjust accordingly and then move forward, executing your new strategy from where the ball lies, not where it should be.
In the spirit of positivity, here’s some other developing silver linings as we sit in the pinnacle (depth?) of the COVID crisis.
• New viral cases appear to be crowning across the country as of this week, especially in the metropolitan hot zones and the fatality figures are much lower than we were told to expect.
• Signs are pointing towards a gradual, rolling re-opening of the US economy, starting sooner rather than later, with the caveat there’s an ample inventory of available test kits.
• Many economists are predicting a zesty rebound in the economy once the quarantine ends. However, we believe the recovery will look like a “check mark” rather than a V shape as it will take some time for consumer confidence to re-build.
• A bold, decisive Fed Reserve is fully exploiting the US’s safe haven status to print as many trillions of dollars as needed to stitch the US economy together through the crisis. Talking heads across the political / economic landscape give the Fed good marks for their massive financial intervention in the US economy to ride out the crisis.
• A robust stock market relief rally over the past couple weeks has been a welcome respite from the fastest onset stock bear market in US history. The problem is the market keeps setting speed records, both up and down.
The most recent market rally occurred despite two weeks of really bad unemployment data. The only plausible explanation is improving investor confidence stoked by the federal government and Fed Reserve’s huge rescue policy responses to the crises.
• Investment opportunities are developing across many asset classes. Market volatility will end its spring break soon enough, due to bad health and economic headlines, but pockets of undervalued sectors are forming for investors to keep watch, but don’t wade in just yet.
• Real U.S. interest rates have hit near zero percent, so loan refinancing opportunities are back once again. Low interest rates will certainly help foster a faster economic recovery.
• Air pollution is reportedly down all around the world. Satellite images show a large reduction in air pollution in China. In Venice, the famous canal water is clear for the first time in memory. In India, citizens can clearly see the Himalayan mountains peaks for the first time in decades.
The dual crises underscore the need to move earnestly to eliminate high-sulfur coal and low-grade crude oil commodity inputs from the global economy. Natural gas, renewables and high-grade crude oil represent the eco-energy future – it’s time for them to step up.
• The health crisis opens the door to repatriate many critical industries like prescription drugs (!) and manufacturing jobs back from China to the US. Due to higher labor costs and the physical lack of workers in the US, new manufacturing processes will be built around robotics technology with relatively few employees.
Many jobs will be lost permanently due to the COVID crisis, but many new good paying jobs may be created at the same time to manufacture, run and service robots. Entrepreneurs are working on a new innovative robotics mechanical trade school in York right now.
Here’s hoping this bundle of optimistic thoughts are all realized in the not-too-distant future.
Until next time, stay healthy…..Tim