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Wkly Round-Up thru Apr 17th 2020; Is This A Dead End Street?

Hey everyone, I hope you are all staying safe and strong in this global pandemic. We see again some signs of more bullish activity but now everyone must ask themselves; -how long will it last and have lows already been put in…get my take in this week’s update.

Weekly Sound Bites:

• The markets saw more reasons to cheer as we had the running of the bulls worldwide as all major indexes saw more gains across all indexes for the second week and some of the largest multi week gains since 1974…and given the support the FEDs and other Gov agencies have extended to the private sector, where (and how) will the US Gov draw the line? Who can go back to work; -why will some be allowed back vs others must wait; -and already we are seeing citizens around the country starting to demonstrate against the closures…so over the next 2 to 4 weeks we should see more of the US Economic Engine come back to life…with President Trump looking to phase in an opening of the US Economy, a potential drug treatment by Gilead and the reopening of a large Boeing manufacturing facility employing over 27,000 all gave the markets a nice reason to finish off the week in a strong fashion…
• This past week banks kicked off Q1 Earning season with a bang- but not of the good kind…Six bank (JPM, WFC, C, BAC, GS and MS showed they all had missed and their share prices moved lower…for the week the bank index (KBW) fell over 8.7%…The primary reason is due the significant increase these banks had added to their loan loss reserves by a combined $25 billion in this quarter of the expectation of potential loan losses…this signals the banks are gearing up for a large number of loan defaults in the coming months should the economy stays in the “off” position for an extended period of time…
• Business comebacks will be more or less a stop and start process…the markets now are pricing in a full restart will be in place by 2021 and getting there to be a linear type of process…but given the margin of error should there be a big setback if the Virus re-emerges, then we could see a more prolonged recovery and perhaps a deeper recession…in all of this the public must feel things are much safer so consumer sentiment will be the key final layer that is needed to get the economy running full steam…Current, GS has created a “Lock-Down Index”, which is a measure of the GDP weighted share of the country that has enforced varying stay-ho9me orders has now risen to 86%…
Weekly Round-Up;

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