COVID-19 Update #1
This week we were reminded of the amazing ingenuity within our country and our ability to reunite and work together, for the greater good of humanity. While life as we knew it may have appeared to come to a screeching halt, Americans refused to be complacent. We witnessed some of America’s largest corporations using their knowledge, talent, and resources to start producing many of the critical items that healthcare workers have been telling us they were in critical need of. Ford teamed with both General Electric’s healthcare unit and 3M to boost the production of ventilators, respirators, and other protective equipment that are desperately needed. At the same time, Elon Musk said that Tesla will reopen its’ Gigafactory in Buffalo, NY “as soon as humanly possible” and start manufacturing ventilators. Aside from the household names, many smaller companies are also answering the calls of our healthcare workers and first responders by switching their modifying their production lines to making cloth masks for those putting their lives on the line for the rest of us.
Time to bring out the big guns…or should I say computers? While much of America was playing defense, IBM unleashed the power of supercomputing and identified the 77 drug compounds that are the most promising in stopping the spread of the COVID virus. While we all wish they found a cure, this information will allow researchers to focus their efforts on the most promising compounds, accelerating the timetable to find an effective treatment and bring it to market. At the same time, the White House Office of Science and Technology Policy formed the COVID-19 High Performance Computing Consortium by bringing tech giants and academia geniuses together. Since college students might try to turn that tongue twister into a drinking game, let’s curtail that and just call them the new Dream Team.
The biggest release this week was the highly anticipated numbers for initial jobless claims. While it may have been the largest one-week jump in unemployment claims history, what’s important to note is that the projections of many economists were even higher than the actual number that was released. That, combined with the Senate voting to approve the $2 Trillion Stimulus Package (and the expectation that the House will approve it on Friday) is what led to a 6%+ jump in the S&P on Thursday. That said, we will be keeping a close eye on the weekly numbers, along with the 4-week moving average of initial claims, and watch to see how the continuing jobless claims trend in the coming weeks and months. Assuming government support is approved, the impact will be different from that of unemployment numbers of the past.
We have learned a lot over the past week and month about the virus and about how we expect it to impact the economy. It is important to note that the market acts as a prediction machine. Markets make their largest swings when there is uncertainty about future revenue and profits, and as we (the market) learn more about what was previously uncertain, that knowledge gets priced in.
Continue to be safe and responsible during these exacting times while we help you Traverse these turbulent markets.