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April 25, 2020
Today’s update will be a bit more abbreviated than what you’ve been used to over the winter. Spring is here and we are anxious to get outside. After working many late nights and weekends over the past eight weeks I decided it was time to spend some much needed time with the kids. The weather was beautiful Friday afternoon and the forecast isn’t looking as good for Saturday and Sunday, so I shut down earlier than most Friday’s to take the kids fishing followed by a family campfire.
+ The S&P 500 was down -1.34% this week.
Not bad considering the action in the oil market.
Quote of the Week
“Nothing gives one person so much advantage over another as to remain always cool and unruffled under all circumstances.”
– Thomas Jefferson (3rd US President)
Chart of the Week
A good reminder that the long-term trend of the market is up and to the right. There is always uncertainty with the economy that causes many to expect a big crash or a stop to the uptrend. As we’ve just witnessed over the past two months even during a pandemic that shuts down much of the economy the stock market can surprise to the updside. Consider this fact:
In 65 calendar days, we’ve dropped 34% in 33 days, then rebounded 27% in 32 days.
Another 4 million Americans filed for unemployment last week:
On a positive note, it’s the second week in a row where the number was less than the prior week. Keep in mind the market direction is inversely correlated with the direction of initial jobless claims so as claims come in lower week over week historically the market reponds favorably.
What Happened to Oil?!
So, oil actually went to ZERO and then more this week as prices went NEGATIVE for the first time ever. Here are 3 great resources to help you understand what happened:
- There’s Nowhere to Put the Oil (Bloomberg)
- How Oil Prices Went Subzero: Explaining the COVID-19 Oil Crash (Visual Capitalist)
- The Invested Dads talk about all things oil on this week’s podcast. Don’t miss it!
More Economic Stimulus Is On the Way
President Trump signed a $484 billion coronavirus relief package into law Friday as Washington plans the next steps in its unprecedented attempt to rescue the economy from the fallout of the coronavirus pandemic.
This is the fourth package passed by Congress to respond to the outbreak, with a total cost approaching $3 trillion. As Covid-19 cases rise and sustained economic shutdowns keep millions of Americans out of work, it’s very likely this won’t be the last relief package we will see.
This legislation includes:
- $310 billion in new funds for the Paycheck Protection Program, which provides small business loans that can be forgiven if used for wages, benefits, rent and utilities. $60 billion is set aside for small lenders.
- $60 billion for Small Business Administration disaster assistance loans and grants.
- $75 billion in grants to hospitals dealing with a flood of patients.
- $25 billion to bolster coronavirus testing, a key part of efforts to reopen the economy.
That’s it for today! The time with the kids was great. I hope you also get some extra time with family over the weekend.
Have a great weekend,
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