Week Ending October 9, 2020
Stimulus…To be or not to be… Depending on the hour and who you are listening to, it’s going to be big, maybe skinny, no deal or maybe a deal after the election.
What it means – One side wants a massive bail out for poorly run states and bureaucracies and the other wants targeted spending to directly impact those that are hit by the mandatory shutdown due to this virus. Either way you cut it; the markets are waiting on bated breath for clarity.
Vaccine/Treatments/Therapies… Gilead, Regeneron and Eli Lilly showing great promise.
What it means – All have filed to get emergency use authorization for their COVID-19 therapies. This has been a massive effort and should give many people comfort in knowing the President and many others have benefitted from these therapies. This will go along ways to providing confidence to all of us who want to get back to a normal life.
Jobs… Looking backwards, all the data tells us we are on the right track. More jobs, less unemployment, higher wages. Yet, without the stimulus bill and bailout for the airlines watch out below. The air beneath our wings may be sucked out quickly.
What it means – Pelosi continues to hold the airlines hostage to get her way for a big government bailout for poorly run states. Not to mention liability protection for employers. States are now taking liability protection to help businesses reengage and start back up. Yet, Pelosi refuses to negotiate on these two issues. Liability protection is a ticking time bomb for businesses. If you can sue for getting COVID, What is next?
Speaking of poorly run states… According to the Bureau of Labor statistics, California is leading the way with nearly 35% higher rate of unemployment over the national average.
What does it mean – If you live in California, chances are you have already searched online looking for a business-friendly state with great schools and quality of life at a reasonable cost. While California has an unemployment rate of over 11.4% up from a record low of 3.9% prior to the release of the COVID Virus in March. The national average is now at 7.9% down from 14.7% at the peak in April. States that have opened or have done so more aggressively are attracting scores of Californians. Nearly 100,000 people making over $100,000 per year left CA in 2019 prior to the shutdown according to the BLS.
Inflation… The Fed wants it bad.
What it means – As we open for business in most of the country. Small businesses will start to re-emerge from the ashes. There will be more demand on resources and the cost of money should go up. The Fed will keep rates low but expect the real cost to borrow rise as banks try to reassess risk and the cost of that risk due to the uncertainty of government reactions to future breakouts and closures.
Have a wonderful week,
Doug De Groote, CFP®, MBA, CTC