Home About Archives RSS Feed

@theMarket: Markets Celebrate Fourth of July

By Bill SchmickiBerkshires 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
Call For Entries: Land of Enchantment
Price Chopper/Market 32 Announce Results of Salvation Army Campaign
Mount Greylock Negotiating to Modify COVID-19 Agreement with Union
Pittsfield Health Subcommittee Asks for Update on GE Cancer Study
Staff Member Tests Positive for COVID-19 at ServiceNet Shelter
Pittsfield's Trattoria Rustica Granted 30-day Inspection Certificate
New Police Chief Takes Command in Adams
Northern Berkshire Adult Education Program Enrollment Open
LitNet Launches Monthly Cable TV Show
Pre-Retirees: Plan Now for Health Care Costs
 
 


Categories:
@theMarket (354)
Independent Investor (450)
Retired Investor (26)
Archives:
January 2021 (1)
January 2020 (4)
December 2020 (6)
November 2020 (8)
October 2020 (7)
September 2020 (6)
August 2020 (6)
July 2020 (10)
June 2020 (7)
May 2020 (9)
April 2020 (9)
March 2020 (5)
February 2020 (7)
Tags:
Currency Wall Street Rally Retirement Europe Bailout Taxes Recession Japan Debt Greece Metals Deficit Selloff Euro Jobs Commodities Election Markets Housing Debt Ceiling Crisis Interest Rates Federal Reserve Pullback Stocks Fiscal Cliff Banks Economy Oil Stimulus Stock Market Congress Europe Energy
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
The Retired Investor: Asia: The Investment Case
The Retired Investor: Where Have All the Christmas Trees Gone?
The Retired Investor: Oil's Comeback
@theMarket: Same Old Stimulus Song
The Retired Investor: Markets Ignore China Sanctions
@theMarket: Markets Bet on Stimulus Sweepstakes
The Retired Investor: Bitcoin Is Back
@theMarket: Market Cyclicals Take the Lead
The Retired Investor: Pandemic Has Been Good to Pet Industry
@theMarket: Markets Are in a Tug of War