June 5, 2020
Grand Re-Opening – Under New Management!
How often have we seen this? A store closes and within a short period of time GRAND RE-OPENING, UNDER NEW MANAGEMENT sign appears. Is it really new management or just a new company set up by the prior owners to make it seem new? Sometimes it really is new management while other times it is just a reshuffling of the deck chairs.
So, the country is in the throes of a Grand Re-Opening. City by city, county by county and state by state. Slowly the process of re-opening restaurants, parks, beaches, hair salons, retail stores and possibly sporting events and larger public gatherings is taking place much to the joy of most residents. However, Under New Management is the case but do we have new Enlighted management? That is the question.
Without passing any judgement on whether we closed up to late or too soon the reality is that what our public officials faced in January, February and March is much different from what we see today. Consider the following COVID-19 statistics from the World Health Organization, https://www.who.int/
|Total Cases Worldwide||Total Deaths Worldwide|
|February 1, 2020||11,953||259|
|March 1, 2020||87,137||2,977|
|April 1, 2020||823,626||40,498|
What is abundantly clear is the picture changed dramatically in the month of March. COVID-19 turned from a mostly China epidemic to a global pandemic. As we all are also too painfully aware the United States saw a rapid growth in the number of COVID-19 cases and related deaths. Fear gripped the entire country and with a cascading number of nationwide closures of schools, businesses, social events our national economy took a hit the likes of which we had not seen since the Great Depression. Stock markets went in to a free fall and the Dow Jones Industrial Average (Dow) fell from an all-time high of 29,551 on February 12, 2020 to 18,591 on March 23, 2020, a 37% drop in a five-week period. Many at that moment were fearful that the worst was yet to come. https://www.morningstar.com/indexes/dji/!dji/quote
Since March 23, 2020 and as of June 5, 2020 the Dow has gained back 8519 points or 45% from the March 23 low. This percentage rebound is significant but keep in mind for the market to get back to even from a 37% drop it needs a gain of 58%. (A bit of mathematical gymnastics but believe me it is true.) A nice recovery but still not back to the starting point. Will this straight upward trend continue? Probably not. There will be stock market ups and downs but we do believe the economy will get back on track and grow.
Back to the question. Do we now have enlightened management? Have our governmental representatives learned anything from the past 3 months? Have We the People learned anything from the past 3 months? These are questions I do not have answers but I am hopeful. We have seen the consequences of neglect by all involved. Massive unemployment and government spending. Neither is sustainable. Our economy has to operate to save the future for us all. There really is no other choice. Governments only exist to provide benefits when they have the resources to pay for those benefits. Without an effectively running economy there is little or no tax revenue flowing to governments, city, county, federal and therefore no means to fund necessary programs, fix the roads and provide the national defense.
- Am I optimistic? Yes, and for the following reasons,
- We now know what COVID-19 is and how devastating it can be, especially to the over age 60 population.
- During the early part of the crisis ventilators were in extreme short supply. We now have a much greater supply and the ability to ship on a rapid basis.
- Testing is so much farther ahead now than 3 months ago. To date (June 5, 2020) the US has tested 19,944,047 individuals or at current rate of 60,279 people per 1 million in population. https://www.worldometers.info/coronavirus/. Still a long way from testing every US citizen but far better than where we were on March 1.
- Emergency rooms, Intensive Care Units and Hospitals in general are much better equipped with Personal Protective Devices (PPD’s) than at the beginning of this crisis.
- Rehiring is occurring. Just today (June 5, 2020) the US Department of Labor reported non-farm payrolls jumped by 2.5 million people in the month of May alone.
As always, if you have any questions regarding your account, please feel welcome to call our office. We do have staff physically in the office daily from 8am-4pm.
Current Data for the Dow Jones Industrial Average found at https://www.morningstar.com/markets historic data before the year 2020 found at the websites noted above. Past performance does not indicate future results. This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Kestra Advisory Services, LLC. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.