A Risky Rise Continues

The Afternoon Audit
Monday | 5.11.2020

Big Tech Leads Stocks to Rise
Catch Up Quick
An Iranian warship accidentally struck another with a missile during an exercise, killing 19 sailors and wounding 15 others in the Strait of Hormuz
White House Senior Economic Advisor predicts unemployment rates “north of 20%”
According to Governor Cuomo, New York coronavirus hospitalizations fall to March levels
Amazon reportedly is considering a takeover of AMC Theaters
My Monday Opinions
Universities have an insurmountable challenge ahead— they must convince students for the next year that online classes are worth the the same as in-person ones; however, once the pandemic subsides, they will have to re-convince students that in-person classes are the best option to retain tuition revenue
Biometric ID company CLEAR (you've likely encountered at airport checkpoints around the country) is introducing a product that will link personal health data to verified IDs to help businesses screen employees for coronavirus infections— if effective, this will play a huge role in the successful revamping economic activity prior to a vaccine
There is a strong chance Tesla CEO Elon Musk moves his HQ out of California, as he could save billions in taxes over time if he moves his company and his home to Nevada or Texas
The Risks of Reopening
States Ease Restrictions
New York will begin a gradual reopening this week, allowing "low risk" industries such as landscaping and drive-in movies to resume operations
Governor Newsom on California said "70% of the economy in the states...can open with modifications into the next phase"
Other states across the nation are easing restrictions as well— this is no new news
Around the Global
New coronavirus infections accelerated in Germany days after it loosened social restrictions
South Korea again closed down bars and clubs after seeing its largest one-day increase of new COVID-19 infections in a month
In Wuhan, Chinese authorities also reported five new cases on Sunday, the city’s highest number of new infections since 11 March
Tying it Together
Countries that began the reopening process before the U.S. are simultaneously experiencing an increase in cases
It seems inevitable that the U.S. will follow in the footsteps of these countries, especially with people more eager than ever to get out of the house and interact with family and friends
The Bottom Line
I think it is dangerous for U.S. equities to price in a successful reopening, especially because the current budget deficit leaves very little room for further fiscal support
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