"Improved Dow shows world is far from ending Chicken Little" by: John Sample

   What a difference a week makes. 
   Last week the Dow dropped almost 1900 points in one day. The various equity indexes had their worst weekly performance in three months.
   There was unrest in the streets last week, while this week it’s announced that retail sales in May jumped double digits, far exceeding expectations.
   Next, you learn a steroid improves recovery from Covid-19, because it’s not focusing on the lungs but on swelling.
   This type of news in one day sent the indexes north though they have work to overcome last week’s losses. 
   I would point out the desperate need to proclaim that the economy in recession before we had ended two quarters with negative GDP may have to revised.
   While I do believe that the overall economy is returning much faster and stronger than expected, the price to small business will be significant.
   Some use the phrase of thinning the herd to label the medical impact of Covid-19.
   I would suggest that in fact that is exactly what will happen to many small businesses.
   Many of these businesses were just paying the bills and keeping a family supported - far from being a success but they did contribute.
   This is where you will see the impact. I doubt in six months that much in our daily lives will have changed, except as it relates to how we conduct business.
   You only have to look at those companies that had their stock values return so quickly.
   Anything that can be conducted on the internet has taken market share.
   The retail sales numbers reflect that consumers are not sitting at home.
   I would suggest that should you not live near a major metroplex that your life may be already back close to normal, if that is even a realistic adjective in this brave new world.
   As much as I have a distaste for government, I have to hand it to the Federal Reserve for doing everything possible to support the economy.
   Instead of the old and tired concept of shovel-ready projects that take years and hardly deliver the projected results, the Fed is getting money into the hands of businesses that will allow them to withstand the economic shutdown.
   The Fed announced this week that it would even purchase companies’ debt issues.
We will witness the emergence of an economy that in February that showed record low unemployment with GDP growth.
   That GDP growth was not in the 3% range, but could have reached it without the pandemic.
   The last three months of setbacks will be significant, but don’t overlook this country’s ability to recover.

 

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