Home About Archives RSS Feed

@theMarket: Virus Numbers Help Stocks

By Bill SchmickiBerkshires columnist
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 this week. That brings the total close to 20 million people in three weeks. That is a historical pace of losses. Yet, the stock market gained on the news.
 
One reason the market went up (instead of down as many expected), was yet another stimulus program announced by the Federal Reserve Bank almost simultaneously. The Fed committed an additional $2.3 trillion to support the new Coronavirus Aid, Relief and Economic Security Act (CARES) Act, called the Payroll Protection Program and the Economic Injury and Disaster Loan Program. There was some concern by banks that loans to all these small-business owners might be a risky proposition, especially in the time frame that the government was demanding.
 
Stepping up to the plate to support these loans, the Fed has come in at just the right time to ensure the success of the government's fiscal stimulus effort. There is no telling what else the central bank may be willing to do. As it stands, Fed Chairman Jerome Powell said this week that "there's no limit on how much we can do as long as it meets the test under the law." 
 
The only thing they can't do, I suspect, is buy equities out right. Of course, the U.S. Treasury could do so, and the Fed could fund the purchases. Given that kind of power, is it any wonder stocks skyrocketed again this week? It is for these reasons that I have cautioned readers not to sell. In this era of corporate socialism, even financial markets are fair game. The government's control of the economy and financial markets has never been this vast and far-reaching.
 
In addition to these events, there are also plans by the Trump administration to get people back to work as early as May. The success of this plan is largely dependent on the ability to test Americans for the COVI-19 virus. That is nowhere near possible today, but the hope is that it will be soon.
 
The White House plan would be for a gradual reopening of the economy, starting with those areas and cities that have low or non-existent cases of the virus. The risk here is that the effort might backfire. The transmission rate could reignite, for example, giving a second life to the spread of the virus.
 
As we enter this three-day holiday, readers should expect that after a 28 percent rebound in the S&P 500 Index from its lows on March 23, a period of profit-taking could be in order. We have reached an important technical level at 2,790. If we can hold above it, we might have a chance to close in on 2,900, however, the odds are not in our favor.
 
As we enter Passover, I find some similarity between those in Egypt and our own plight today. It may have been the blood of the lamb brushed above the door, or the mask and gloves we wear today, but I am sure the feelings are the same. I will take this time to hope and pray that this modern-day plague will pass over your homes and the loved ones who dwell within it. And for all the Christians and Easter Bunny believers out there, have a Happy Easter!
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
 
 
     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Candidates Forum and Luncheon at Lenox Community Center
Students Named to Simon's Rock Fall 2023 Dean's List
Clark Art Free Gallery Tours for Parents and Infants
Berkshire Adult Baseball League Welcomes Players for 13th Season
EPA Lays Out Draft Plan for PCB Remediation in Pittsfield
Williamstown Select Board Awards ARPA Funds to Remedy Hall
North Adams Regional Reopens With Ribbon-Cutting Celebration
Clarksburg Sees Race for Select Board Seat
Crosby/Conte Statement of Interest Gets OK From Council
WCMA: 'Cracking the Code on Numerology'
 
 


Categories:
@theMarket (480)
Independent Investor (451)
Retired Investor (184)
Archives:
March 2024 (6)
March 2023 (2)
February 2024 (8)
January 2024 (8)
December 2023 (9)
November 2023 (5)
October 2023 (7)
September 2023 (8)
August 2023 (7)
July 2023 (7)
June 2023 (8)
May 2023 (8)
April 2023 (8)
Tags:
Fiscal Cliff Banking Greece Japan Debt Ceiling Election Debt Deficit Oil Rally Commodities Stocks Stock Market Congress Metals Bailout Euro Employment Currency Federal Reserve Europe Taxes Stimulus Jobs Banks Interest Rates Crisis Selloff Retirement Markets Europe Energy Economy Pullback Recession
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
The Retired Investor: Immigrants Getting Bad Rap on the Economic Front
@theMarket: Sticky Inflation Slows Market Advance
The Retired Investor: Eating Out Not What It Used to Be
@theMarket: Markets March to New Highs (Again)
The Retired Investor: Companies Dropping Degree Requirements
@theMarket: Tech Takes Break as Other Sectors Play Catch-up
The Retired Investor: The Economics of Taylor Swift
@theMarket: Nvidia Leads Markets to Record Highs
The Retired Investor: The Chocolate Crisis, or Where Is Willie Wonka When You Need Him
The Retired Investor: Auto Insurance Premiums Keep Rising