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7am Saturday

April 4, 2020

More bad news brought the market down a mild -2.1% this past week which included a new record number of weekly unemployment claims, the March jobs report, and a worsening COVID-19 outbreak in the U.S. It’s getting harder and harder to shock the market anymore.

Market Update

+ The S&P 500 fell -2.08% for the week.
Here’s how the daily performance for the S&P 500…

  • Monday: +3.35%
  • Tuesday: -1.60%
  • Wednesday: -4.41%
  • Thursday: +2.28%
  • Friday: -1.51%

…the S&P 500 is now -26.5% below it’s all time high (2/19/20).
+ The S&P 500 ended the first quarter of 2020 with a decline of exactly -20%.

  • Since 1928, it was just the 9th quarter that has seen a drop of -20%, and it was the first since Q4 2008 when the S&P fell -22.56%.
  • Since World War 2, it was just the 5th quarterly drop of -20% or more.
  • The S&P was also down -12.51% in the month of March.
  • The drop in March was the worst since the S&P fell -16.94% in October 2008.

An Update on COVID-19

Data as of 8pm Friday night.
+ We now have more than 1 Million confirmed cases worldwide and the U.S. has more cases than any other country:

+ Italy has more deaths than any other country (12% of cases), while China has seen 93% of confirmed cases recovered (can we trust their numbers?):

+ Let’s take a look at what’s happened in the U.S. over the past two weeks…
Here’s a look at where we were as of two weeks ago Friday night (3/20/20):

…and one week ago Friday evening (3/27/20):

…and then last night (4/3/20):

+ And now an update on “the curve”. Here’s a graph showing what the curve looks like for different countries during the first 48 days with more than 100 confirmed cases in that country:

The steepness of the curve is a reflection of how fast the virus spreads. As you can see, the U.S. which has the steepest curve on the graph at this point in the cycle.
More states got serious this week as the pandemic is clearly getting worse throughout the country. President Trump realized his goal of reopening the economy by Easter wasn’t so realistic and he extended the sheltering guidelines until May 1st. Let’s hope that will be it.
The concern is that states like Florida that were late to enter lockdowns will be under those conditions for longer than others and delaying a national return to normalcy in the near future.

Economic Update

+ The jobs market is a mess! As expected when you lockdown 90% of the U.S. there will be massive changes in unemployment. What we are seeing with the economy is unprecedented in our lifetime.
Last week, I shared that a record number of Americans filed for unemployment the week before as initial jobless claims surged to 3.3 million.
This week’s number was even more extreme as we doubled last week’s record number with initial jobless claims coming in at 6.6 million. That means that roughly 2% of the entire US population filed for unemployment this past week alone!
We have not seen numbers like this anytime in modern history. In just four weeks 10.5 Americans have filed for unemployment insurance.

+ U.S. employment plummeted last month by a degree not seen since the last recession. Payrolls fell 701,000 from the prior month and the jobless rate jumped from 3.5% to 4.4% (the highest since 2017). The unemployment rate is expected to surge in the coming months.
What’s worse is the fact that because of the timing the Bureau of Labor Statistic’s reference week for March, most layoffs that took place during the month came after what was captured in this report; in short, this is just the start of a massive wave of job losses sweeping across the economy.

Bear Market Brews

This past Thursday, we hosted our second weekly virtual happy hour in a new series called, Bear Market Brews.
This is a fun event, and we have a great time while trying to inform, educate, and help our viewers with the latest information on the economy and markets. We also make time for viewer questions at the end.
​You can watch the replay here.​
We will be back again next Thursday, April 9th. Please join us!
More info at the link below ?
​https://hzcapital.com/bmb​

The CARES Act

Just over a week ago, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”. The Act makes emergency supplemental appropriations and other changes to help the nation respond to the coronavirus outbreak. My colleagues Josh and Austin dedicated this week’s episode of The Invested Dads Podcast to explaining everything you need to know about this new law. They did a great job highlighting the biggest points of the new Act including big opportunities for small businesses.
​Don’t miss it!​

Positive News of The Week

One thing I hope to do throughout this pandemic is share some of the positive news I’m hearing.
+ Johnson & Johnson signed a contract with the U.S. to develop a coronavirus vaccine. They will begin human testing in Septeber. It could be available for emergency use in early 2021.

What I’ve been reading.

Here are a few things that caught my eye over the last week.

Have a great weekend,
Adam
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