Hello and happy Monday to everyone.
Well today, Affinity got back one of our own in the office, clear of Covid-19. Yeah. Symptoms were minimal. But regardless, healthy and back to work in the office. Bad news, we have now another one working from home starting today. That teammate’s daughter was spending time with her grandmother. That grandmother just got diagnosed positive, therefore the granddaughter came in contact, therefore the parent (Affinity’s employee) has potential contact. Both our employee and their daughter are getting tested today, and hopefully within 2 days, find themselves negative and back to work in the office. Until then, that person will work from home and our thoughts and prayers are with all of them.
I too had another test. I took a short trip via airplane to Milwaukee. I wore a mask, and used lots of hand sanitizer, never came in contact with anyone positive that I’m aware of however, I felt it was best to test myself when I returned. I too came back negative.
Today, we have a special treat for our Wednesday Community Café. I usually shoot the Community Café video live and air it Wednesday 8:00am CST for Zoom.com and for Facebook Live. Because of his limited availability and being in such demand, Michael Turner, with American Century will be joining me to talk about how he and American Century view the impact of the market during debates and election time this morning, then we will air it at our usual Wednesday 8:00am. He will also discuss the potential impact on the markets if President Trump gets re-elected and if Joe Biden wins. In addition to that, he will walk us through election scenarios and a big topic, what if the results get contested…Lastly, he will discuss potential changes in taxes for both candidates. Follow me on Facebook to see this, or watch for the zoom.com invitation.
At the bottom of this email is information on a great contact for all things Medicare. If you have question on Medicare, Medicare supplements, or Medicare Advantage plans, please contact Jessica Crowder.
Upcoming dates to note:
Thursday 10/7 Vice President Debate
Thursday 10/15 Round 2 of Presidential Debate
Thursday 10/22 Round 3 of Presidential Debate
Performance DJIA:
Mon 9/28 +1.51%
Tues 9/29 -0.48%
Wed 9/30 +1.2%
Thurs 10/1 +0.13%
Fri 10/2 -0.48%
Last week +1.87%
Since 2/19 market high -5.67%
Tid Bits:
Second $1,200 stimulus checks are likely if a coronavirus stimulus deal goes through. Here’s what we know (CNBC)
- Second $1,200 stimulus checks that are “similar” to the first payments will be in the next coronavirus stimulus package, Treasury Secretary Steven Mnuchin said in an interview this week.
- Mnuchin’s comments confirm that both parties are currently in favor of sending those direct payments, even as they work to compromise on other areas of relief.
- While Democrats have proposed relaxing some rules to make more people eligible, it remains to be seen whether those changes will be in a final package.
- House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are still working on a compromise stimulus bill to help Americans cope with the coronavirus crisis.
- In an interview with Fox Business host Lou Dobbs on Wednesday, Mnuchin said second $1,200 stimulus checks that are “similar” to the first payments will be in the next package.
- Congress authorized the first set of one-time payments when it passed the CARES Act in March. Those checks included up to $1,200 per individual or $2,400 per married couple filing jointly, plus $500 per child under age 17.
- The payments were targeted at low- to middle-income Americans. Full payments went to individuals with adjusted gross income up to $75,000, head of household filers who made up to $112,500, and married couples filing jointly with up to $150,000.
Fed’s Bostic Says Temporary Disruptions Could ‘Become Permanent’, by Steve Matthews, 9/23/20
The U.S. economy’s recovery from the virus-induced recession will get much harder, with more permanent job losses unless there’s additional fiscal support, Federal Reserve Bank of Atlanta President Raphael Bostic said. Bostic’s comments echoed Fed Chairman Jerome Powell, who told Congress today that there was a need for additional fiscal aid with some of the $3 trillion in support programs expired while the economy has been coming back from the biggest downturn since the 1930s. “Right now this is the issue,” Bostic said. “With relief running out there is a pretty significant chance that some of the temporary disruption and dislocation can become permanent. That just means the hurdle that we have to climb is going to be that much higher.” The Atlanta Fed president said that low-income workers and poorer communities have been hurt disproportionately by the crisis, which has eliminated many lower-paying service jobs at restaurants, hotels and tourism attractions. Orlando and New Orleans are two cities in the Atlanta Fed district particularly hard hit, and will take longer to recover than other areas, he said.
‘Complete Mess’: Traders Fear Volatility Long After Election Day, SEPTEMBER 25, 2020 • KATHERINE GREIFELD
Volatility markets from stocks to currencies and bonds show investors bracing for turbulence not just on election day, but for the ensuing weeks as well. The fear is that results from the Nov. 3 vote — already the most expensive event to hedge against ever — won’t be clear enough that a winner emerges without a protracted legal battle. If that happens, the potential for political chaos and prolonged uncertainty is seen as a bigger risk for equity markets than who actually wins the vote, according to UBS AG. “The election outcome itself, once you know it, that would have meaningful but not an oversize impact on the market,” said Stuart Kaiser, the bank’s head of derivatives research. “But the prospect of it becoming a complete mess is another element that people don’t really know how to price.” There’s reason for concern, Wall Street says. Trump this week wouldn’t commit to a peaceful transfer of power. A potential increase in mail-in voting could delay ballot counting, making it difficult to declare a winner on Nov. 3. During the 2000 Florida recount battle, the S&P 500 lost over 4%, yields on 10-year Treasury notes fell 52 basis points and gold prices soared over 12% as investors piled into haven assets. Even the Treasury market, where unprecedented Fed support has muted swings for months, is showing signs of anxiety. Expectations for price volatility in three months versus four weeks are at a level only exceeded once in the past decade.
Traders Warn Of Market Volatility As Trump Tests Positive, OCTOBER 2, 2020 • BLOOMBERG NEWS
Intense volatility, a stock slump and more delays on a stimulus package are some of outcomes investors are considering after President Donald Trump tested positive for Covid-19. Trump’s diagnosis adds another element of uncertainty to a market that’s already been sizing up the potential for a legal battle or political chaos after the Nov. 3 vote. Now, investors are contending with the possibility of Trump’s ill health and how it could affect the U.S. government. “The market move is less about the election and more about the possibility that the U.S. president might become incapacitated,” said David Stubbs, head of markets strategy at J.P. Morgan International Private Bank. “This would inject significant uncertainty into the policy and geo-political outlook. That is clearly a risk-off event and markets are acting as such.” “This will induce nervousness in the markets and we could see a 10% correction in U.S. equities that will likely drag down Asian equities for the balance of the year,” said Gary Dugan, chief executive officer at Global CIO Office. “If Trump is just positive but not ill, markets could rebound,” said Patrice Gautry, chief economist at UBP in Geneva. “U.S. institutions are solid and Vice President Pence should lead campaign and affairs if needed.” “Trump may continue to manage from the White House, so economically the damages are limited as long as he is just positive but not really ill.” “I can’t see President Trump’s positive test being a lasting issue for markets past the initial shock, which is now subsiding,” said Roger Jones, head of equities at London & Capital. “The only way this could develop into an issue is if the election has to be postponed, then there might be a big public reaction,” he said. “However, there is over one month to election day, so it seems improbable.” “Markets will doubtless take fright from news of the President’s illness,” said Russ Mould, investment director at AJ Bell. “It may further decrease the chances of a stimulus package passing through Congress in the immediate future.” “Since markets are hoping for more stimulus, fiscal or monetary, its absence will be a concern, given the still-fragile nature of the recovery,” he said. “This will further lead to dollar weakness as it comes on top of the likely prospect that U.S. stimulus package won’t get approval until after the election,” said Jun Kato, chief market analyst at Shinkin Asset Management. “This may also pressure the Fed to deliver a more dovish tone that would cap U.S. yields and weigh on the dollar.”
Wall Street Analysts See Better Chance For Stimulus Breakthrough, OCTOBER 2, 2020 • FELICE MARANZ
President Donald Trump’s positive Covid-19 test may help bring investors the main thing they’ve been looking for to rekindle the stock market rally: a fresh stimulus package. While Trump’s diagnosis brought turmoil to Washington and the campaign trail, analysts on Friday said it has led to a greater likelihood Congress and the White House will reach a deal on pandemic relief before the election, which may help support equities. The S&P 500 Index, down 6% from its Sept. 2 record, has swung widely in recent weeks as investors assessed the odds of an agreement on another round of support to prop up an economy still struggling to recover from lockdowns and unemployment. The benchmark for U.S. equities fell as much as 1.7% on Friday. It pared that loss to less than 0.5% as House Speaker Nancy Pelosi said aid negotiations with Treasury Secretary Steven Mnuchin will press ahead. The president’s diagnosis might change the tenor of the talks by emphasizing the coronavirus pandemic’s seriousness, and she later said airline industry relief may advance. Trump’s illness has “rapidly shifted the political environment,” Evercore ISI’s Sarah Bianchi wrote in a note. “The chances for a stimulus deal have actually increased as it refocuses the conversation on the virus and gives Pelosi more leeway to worry less about the election implications of passing a bill.” Trump testing positive might now “serve as a catalyzing event (similar to a ‘national crisis’) to force the two sides together” to forge a stimulus deal, Vital Knowledge founder Adam Crisafulli said via instant message. That’s especially true if Senate Majority Leader Mitch McConnell wants to ensure Amy Coney Barrett’s nomination as a Supreme Court justice passes, Crisafulli added, saying that McConnell “may bite the bullet on stimulus.” AGF Investments U.S. policy strategist Greg Valliere said that “this crisis could renew efforts to pass a pandemic relief bill,” as the economy is at risk of “flattening” without it. “Investors should not panic over the news” that Trump tested positive, Jefferies Global Equity Strategist Sean Darby wrote. It had been a “tail risk since other global leaders have contracted the virus,” he said, citing U.K. Prime Minister Boris Johnson. Darby expects the November election will not be delayed, and said that “economic data is moving in the right direction, and U.S. financial conditions are very loose.”
Facts:
Coronavirus
Global 35,452,032cases 1,042,727 deaths
US 7,637,864 cases 214,626 deaths (+2.47%, +5,172 increase from last week)
KS 62,313 cases 698 deaths
MO 137,489 cases 2,307 deaths
Highlights from analysts and economics
From JP Morgan
Note on the Week Ahead
- U.S. presidential election campaigns are always hideously long and this one has felt particularly painful, with such a deep divide between the supporters of the rival candidates. However, recently there has been increased speculation about the grim possibility of the election outcome being contested. Quite apart from the further division this would inflict upon our bruised democracy, many investors are wondering what this could mean for the economy and markets.
- Data this week should allow analysts further hone their estimates of 3rd quarter GDP. The most important numbers include advance estimates of August inventories and international trade in goods, due out on Tuesday, and August consumer spending and September light-vehicle sales due out on Thursday. Overall, we anticipate a sharp bounce in real GDP, potentially rising by 32% annualized in the third quarter, following a 31.7% drop in the second.
- However, percentages can be very misleading when looking at declines and rebounds. It would actually take a 46.4% annualized jump in 3rd quarter GDP to fully recover from a 31.7% decline in the prior quarter. Consequently, we expect real GDP to still be down 3.6% in absolute terms from its 2019 peak in the 3rd quarter. This is only a little better than the 4.0% peak-to-trough decline in real GDP seen in the Great Financial Crisis.
- Moreover, even without the extra drag of election uncertainty, we now expect growth to slide to just 3% annualized in the fourth quarter, reflecting the lack of further federal stimulus and a potentially worsening pandemic, as colder weather drives people indoors where they are more likely to spread infection. A prolonged contest over the election could, at an extreme, further slow consumer and investment spending and potentially trigger a double-dip recession.
- A similar story can be told looking at employment numbers. So far the economy has recovered 10.6 million or 48% of the 22.1 million jobs lost in the pandemic and this Friday’s jobs report could add close to a million jobs to the recovery total. But thereafter the jobs recovery is likely to slow, with the layoff of some 247,000 remaining temporary census workers, the scheduled furlough of thousands of airline workers on October 1st, below average seasonal hiring at retailers, the layoff of restaurant workers as outdoor dining becomes more difficult to sustain, and potential state and local government layoffs. While we expect hiring to accelerate with the arrival of a vaccine, a united effort to defeat the pandemic, rather than a divisive conflict over the election, will be necessary to put the economy firmly on the path of recovery.
- If the economy does double-dip under the combined weight of a resurgent pandemic and political conflict, both U.S. equities and the U.S. dollar could be expected to suffer. For long-term investors this suggests the need for broad diversification and a more global approach to equity investing.
- In three months’ time, Americans will join the rest of the world in saying goodbye to 2020. Never will so many have said “good riddance” with such fervor. As the dawn breaks on 2021 the election will, very likely have been long decided and we will, to that extent, face less uncertainty than today. That being said, the problems confronting our society, our economy and our markets will be formidable. The challenge for investors is to make sure they are positioned appropriately today for that more certain, but still troubled, landscape of 2021.
Weekly Market Recap
As we enter the fourth quarter, investors may find themselves optimistic about the prospects for economic growth after what will likely be an impressive rebound in GDP in the third. Indeed, following an historic 31.4% q/q contraction in 2Q, data suggests the third quarter will likely see an equally impressive 35% q/q gain. While visually this may appear to be a “V”-shaped recovery, investors should recognize that the continuing effects of the pandemic and indecision on fiscal stimulus from Washington will likely cause growth to moderate into 2021. As evidenced last week, the unemployment rate still remains elevated, personal incomes fell 2.7% in August as a result of the lapse in Federal unemployment insurance benefits and manufacturing activity has moderated after rebounding strongly. Altogether, growth should moderate to roughly 2-3% through 1H21. If our 3Q20 estimate is realized, it would still leave the level of 3Q real GDP about 4.2% below the pre-COVID-19 trend and about 3.1% below the level of GDP in 4Q19. To put in context, the financial crisis resulted in a 4.0% decline in GDP, highlighting the magnitude of the last recession. It still looks like 2021 will be a year of recovery for the economy, albeit a modest one until the distribution of a vaccine. This suggests the need to hedge against equity volatility in the short run while maintaining equity exposure to take advantage of an economic surge once COVID-19 has been tamed.
Opportunities:
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Community Café is Wednesday, October 7 at 8:00am for 30 minutes. Topic will be on: “The Market During an Election Year”
- Will live stream on Facebook Live anyone who is friends with me on Facebook or Click Here to Follow The Community Café Facebook Page
- Invitations will go out via email with a link to join on zoom.us, plus those who are friends with me on Facebook
- Speaker this week, Mark Roberts with Michael Turner of American Century
- Invitations will go out via email with a link to join on zoom.us, plus those who are friends with me on Facebook
If you would like a copy of my 30 minute recording of Community Café on the topic of “Tax saving Strategies”, please contact Stacy and we can email it to you. [email protected]
Referral rewards program:
Reminders:
Don’t forget that the news creates drama. The stock market moves for 2 reasons which are greed and fear.
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Thank you for your time in reading these updates.
Stay safe and stay healthy,
Mark Roberts