Stocks Rise as Investors Await Stimulus

Catch Up Quick

• Q2 GDP may record its biggest fall on record

• The U.S. closes its consulate in Chengdu after China orders its shut down

• Berkshire Partners agreed to buy fitness brand CrossFit

• 7 companies plan to go public this week on U.S. exchanges

• Google extends its remote work order to summer 2021

• The U.S. began a COVID-19 vaccine trial including ~30K people

• Trump says states should reopen as U.S.

My Monday Opinion

• Expenses are piling up for local businesses, as investments in fancy air filters, plexiglass shields, stockpiles of PPE, and whatever else it takes to lure customers and workers back into place are mandatory for survival— these expenses as a percent of revenue are exponentially higher for small businesses than their larger competitors, reflecting their need for incoming government stimulus as well as a transfer of wealth from a broader lens

Thought of the Day

• So far, while many Fortune 500 companies have reported better than expected numbers, earnings have fallen more than 40% from the same period last year

• With that said, the S&P 500 index is over 200 points higher today than it was last year at this point

• It can be said that this year over year rise reflects the future growth prospects prevalent during the corresponding periods despite the drastic fall in EPS

• A big part of these growth expectations today relies on future stimulus

• Recently, Deutsche Bank chief U.S. economist Matthew Luzzetti projected the Fed’s balance sheet to reach ~$20T (this refers to total assets)

• Just this morning, White House & Senate Republicans finalized a coronavirus relief package worth about $1T

• However, according to CNBC, it's full of proposals rejected by House Democrats

The Bottom Lines

• It seems problematic to me for a disconnect between stock prices and company performance to be justified by an incoming stimulus package

• This isn’t because of the probability that it won’t pass on Capitol Hill, but, from a more simplistic standpoint, because these legislative efforts are a direct ramification of economic shambles

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