Home About Archives RSS Feed

@theMarket: Markets Celebrate Fourth of July

By Bill Schmick
iBerkshires columnist
The continuing gain in jobs cheered equity markets on Thursday, just before the holiday weekend. Given the surge in virus cases in more than half of the United States at the same time, some investors were dumbfounded. They just don't get it.
 
The nation added 4.8 million jobs in June, which was better than expected. It was the second month in a row that the employment data surprised investors by beating expectations. Remember, however, that this data is backward looking. The bounce back in the economy as a result of re-opening businesses resulted in these upside labor surprises. Readers should expect those employment gains to moderate next month for some obvious reasons.
 
Topping the list is the massive upsurge in virus cases in those states that chose politics over lives. The pandemic has slowed many state plans to re-open their economies and will impact future growth as well as further employment. I suspect this three-day weekend will damage the American comeback even further, unless the nation actually listens to the advice of medical experts. 
 
In the meantime, I've spent most of the week explaining to clients and readers why I have maintained my bullish stance throughout the last several months. It comes down to my view on the future of the economy and the stock market. There are three main schools of thought on how the economy will weather this pandemic.
 
There are those who believe a "V" shaped recovery is in the offing. These are mostly politicians and investors with their eye on November's elections. Then there are those who think we will see a "U" shaped gradual pickup that will take longer to accomplish. Finally, there is a group who believe we will see a "W" type recovery, where the big decline in March is followed by a sharp recovery (like what we are experiencing now), only to fall back again before finally rising out of the chaos.
 
If you look at all three cases, what do you see? In every case, the direction of the right side of each of these letters is going up.  From my perspective, that is all you need to know. Will the restoration of jobs and the economy require six months, 12 months, or even 18 months? No one really knows, because no one can game the virus without a vaccine. Whether the economy takes a longer or shorter time period to get there, it will still recover, and so will your investments. 
 
There are several promising vaccines in the works worldwide. In some cases, such as one Chinese version (that is already being administered to their army), the chances of success should be known sooner than later. Several drug companies are expected to provide further information on their vaccines in the fall. A successful drug would be a gamechanger, not only here in the U.S. but for the economies worldwide. In which case, the "V" might be the preferred choice.
 
Thanks to the massive stimulus provided by the government, the last quarter in the stock market was one of the best since 1998. And the stimulus is expected to continue fueling further gains in the financial markets. While I still expect markets to have their ups and downs, hang in there, because better days are coming if we all use our common sense.
 

Bill Schmick is now the 'Retired Investor.' After working in the financial services business for more than 40 years, Bill is paring back and focusing exclusively on writing about the financial markets, the needs of retired investors like himself, and how to make your last 30 years of your life your absolute best. You can reach him at billiams1948@gmail.com or leave a message at 413-347-2401.

 

 

0 Comments
     

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
Williamstown Planners Advise Town Meeting Postpone Action on Pot Bylaws
Pittsfield City Council to Discuss Homeless Solutions
North Adams City, School Officials Elect Daunis to School Committee
Mount Greylock School Committee Votes Down Remote Learning Start to School Year
iBerkshiresTV: Interview with Adams Police Chief Bacon
Cultural Pittsfield This Week: Aug.14-20
Berkshires Beat: Girl Scouts Present StoryWalk as Part of Silver Award Project
Doctor Returns to CHP Barrington OB/GYN
Williamstown Police Sergeant's Lawsuit Alleges Racism, Sexual Harassment
Pittsfield School Committee Votes to Change Taconic Mascot
 


Categories:
@theMarket (340)
Independent Investor (450)
Retired Investor (8)
Archives:
August 2020 (2)
August 2019 (2)
July 2020 (10)
June 2020 (7)
May 2020 (9)
April 2020 (9)
March 2020 (5)
February 2020 (7)
January 2020 (10)
December 2019 (7)
November 2019 (8)
October 2019 (9)
September 2019 (7)
Tags:
Japan Crisis Commodities Stocks Selloff Retirement Banks Stimulus Stock Market Markets Election Deficit Fiscal Cliff Currency Housing Europe Pullback Economy Debt Ceiling Europe Jobs Wall Street Recession Taxes Congress Interest Rates Debt Federal Reserve Euro Greece Rally Oil Bailout Energy Metals
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: Markets Are Going Higher
The Independent Investor: Does Cash Mean Currencies?
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
@theMarket: The Economy Versus the Stock Market
The Retired Investor: Tensions With China May Heat Up
@theMarket: Stocks Fall as Congress Fails to Act
The Retired Investor: How Much Are Your Children Worth?
@theMarket: Bailout blues
The Retired Investor: The Weakening Dollar
@theMarket: Vaccine-Driven Markets
The Retired Investor: Bill & Barbara on Their Retirement Journey
@theMarket: COVID Case Concerns Cramp Market Gains
The Retired Investor: Next Bailout Should Address Job Creation