Drug companies are working feverishly to obtain the solution to Covid-19. Certainly a huge reward to whoever is successful! Each time we hear a bit of positive drug news, the markets move higher! This morning, Novavax is the latest company to suggest they “got it,” as they begin their trial period.
The market is only paying attention to 2 areas; a possible cure and Economic/Federal Reserve stimulus. Many believe that after we have a cure, the economy will simply pick up where it left off… and then it’s “Off to the Races!” I hope they are correct!
Last week all markets headed north as the Dow rose 3.3%, the NASDAQ 3.4% and the S&P 500 3.2%.
Interestingly, approximately 20% of the S&P 500 is comprised of Apple, Amazon, Alphabet (Google), Facebook and Microsoft. The Russell 2000 US Small Cap Index is down approximately 18% year to date!! Think about that for a moment!
How Will Life Change?
Life as we know it will be at least temporarily altered, for sure. Here is a short list of changes that are occurring to the “discretionary” parts of our lives!
- Movie Theaters
- Sporting Events
- Domestic Travel
- Foreign Travel
- Sure you can add many more!
Keep in mind, consumer spending accounts for 2/3rds of economic activity and the discretionary side has played an important role in driving our economy forward over the last several years!
The pool club I’m a member of just received instructions on how we are to prepare for pool-season opening. As of now, lounge chairs will be 6 feet apart, I’ll have to go on-line to schedule when I desire to go to the pool, and that time will be limited to 90 minutes of attendance! This will be interesting! How will I & others react when we have to leave very shortly after getting settled?!
My guess is when my gym reopens the rules will be similar to my pool club!!
Jobs Will Be Important
So far, we’ve shed approximately 38 Million Jobs. I do believe the majority will return, however I do not believe we’ll get that close to 100%, any time soon. Companies are going to reassess their employment needs going forward, employing more technology for scale, and profit efficiency.
If 80% of the jobs do return, we’ll have a loss of approximately 7,600,000 jobs.
I’ve spoken to a couple of employers who have started to call back employees. Interestingly, some employees have said they will not return. I’m thinking they believe they’ll continue to receive the additional unemployment stimulus which has some people earning more without working. I don’t think they’re aware that the employer will report they’ve attempted to rehire and the employee refused. Imagine when the employee finds out the additional unemployment stimulus will stop………..
So will the types of jobs change? Many are speculating that we’ll be working from home and the “bricks and mortar” employment will permanently shrink! I certainly don’t know the final outcome, however I do know face to face interaction is healthy AND necessary for quality of life.
Just wear a protective mask until no longer necessary!!!