We are in a time where the word “unprecedented” seems to be the most used word. Within that structure the real question is how much of the unprecedented info is real. The push to get back to normal creates an environment where hopes are given as real facts. Beware.
Collapsed Consumer Demand
Our take…Collapsed consumer demand is a direct result of a portion of consumers not feeling safe.
Being open for business can only be successful if the first step, safety, is fully embraced.
The problem starts at the top in Washington and will not turn around in the states until that changes.
The following is from this week’s the John Mauldin letter, a must read if you want to understand economics.
“How You Can Help
For now, what can we do? Our immediate problem stems from two sources.
1. The coronavirus is continuing to spread.
2. Concerned consumers are spending less money.
One simple thing we can all do will help attack both problems: Wear a mask in public. We can live with the virus risk, but not when a noticeable part of the population acts in ways others perceive as reckless. Walking around in public without a mask is like wearing an “I want a deeper recession” sign.
Note, it doesn’t matter whether you believe the mask really helps, or the virus is really dangerous. Perception is what counts. As long as substantial numbers believe normal life is too risky, the economy can’t recover. It is really that simple.
I’ll go further. Near-universal mask usage would help the economy more than another multi-trillion-dollar stimulus package would—a lot more, and faster, too. And without adding a penny to the national debt. You can see that in other countries”
The Macro Trade is slowly working and building, the Short Stocks and Oil / Long Bonds and Gold trade. This will take time as the market concentrates on its hope for getting back to normal.