power your advice

We Live in New Hope

New Hope. That’s the town in Pennsylvania where my wife and I live. Population 2,500. We are a tourist town. However, there are no tourists because of the Coronavirus lockdown.  The town got its name because when the local mill burned down in the 1800’s, the owner rebuilt, calling it the New Hope Mill.  That’s what we need right now, some optimism for us and our clients.

We hope for perspective.  During World War II, the British lived through nightly bombing raids, food rationing and the threat of invasion.  We hope that we can get through weeks or months of the Coronavirus crisis.

We hope the Chinese were right.  According to their statistics (1) 80.9% of those infected had mild, flu like symptoms.  The mortality rate for infected people with no serious preconditions was 0.9%.

We hope the Chinese are getting back to work.  One of the causes of the market decline was the concern supply chains would be interrupted because the Chinese were fighting the virus by keeping people at home.  People are moving around in China again.  Factories have been resuming production.

We hope the stock market is a leading indicator.     It’s not supposed to be the temperature of the market during administration briefings, it’s supposed to be a look several months down the road, where the economy will be then. We entered this crisis with a strong economy.   That’s the way it’s supposed to work.

We hope the government puts a major stimulus package to work. It looks like this can be checked off the “to do” list.  .  Didn’t it help during the Great Recession?

We hope our smart scientists can discover a vaccine.  Along with our scientists, every major drug and biotech company in the world is likely working on it.  There’s probably a lot of money to be made.

We hope investors look at dividend yields.  In an interest rate environment of ultra-low rates, someone should be noticing there are established companies with track records of paying dividends for a very long time.  This can create demand for certain stocks.

We hope we can all exercise self-discipline.  If 49% Americans are instructed to stay at home to slow the spread of the virus, (2) we hope everyone will realize going to the beach or gathering in groups is not a good idea.  There’s sound logic for following the rules.

We hope the consumer hasn’t forgotten how to spend.  People may be self-isolating at home, but they are active online.  This includes shopping.

We hope a Baby Boom will give a boost to the world economy.  If people around the world are being asked to self-isolate for at least a few weeks, couples thinking of ways to pass the time might be adding to their families around Christmas.  This could trigger lots of spending.

We hope the virus behaves like the flu.  The flu has a season, dictated by factors like humidity and temperature.  We hope the Coronavirus follows the same playbook.  We don’t know, but we hope.

Americans have triumphed over adversity before.  This is a very serious problem we are all facing, but we went into it with a very strong economy.  Let’s hope that works in our favor.

(1)  https://informationisbeautiful.net/visualizations/covid-19-coronavirus-infographic-datapack/  

(2)  https://www.businessinsider.com/us-map-stay-at-home-orders-lockdowns-2020-3