The Transcript 05.18.20

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Succinct Summary: Economic activity is trending positively as shelter in place orders are slowly lifted around the economy. The data is better than it was but still very bad for any other environment. Markets have discounted a quick return to normalcy, but this week’s comments suggest that business leaders expect the recovery to take longer. For the hardest-hit industries, it could be years before they are operating at peak levels again. And even if demand snapped back today it could take months for the supply side of the economy to rev back up. Importantly, employment will likely rebound slower than the rest of the economy, which is a big deal for the demand side of the economy given how high unemployment numbers are. Editor’s Request: This weekly newsletter is made possible by donations from our readers. If you like what you are reading, click here to donate (Our suggested donation: $10 per month). Help us keep The Transcript going.

The Transcript 05.11.20

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Succinct Summary: Companies are reporting signs of improvement in the economy. But the rebound is coming off such a low base that these numbers would still be considered very bad in any other environment. The duration of this rebound will depend heavily on whether or not there’s a second wave of infections. Still, even without the virus it probably will take the economy a long time to recover from such a severe shock. 

On an industry basis: private capital markets are searching for price levels; consumers are dreaming of the future; tech is chugging along; and the industrial/energy economy is feeling immense pain.

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The Transcript 05.04.20

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Succinct Summary: This week was the height of earnings season and it was a little surreal to see the magnitude of revenue declines in some industries. These declines weren’t surprising though and many companies said that there were signs of recent stabilization. However, markets have pinned hopes on a V shaped recovery. If we don’t get a V there could be a second wave of volatility. The most concerning data point from this week is that China and Italy are experiencing U shaped recoveries.

Editor’s Request: This weekly newsletter is made possible by donations from our readers. If you like what you are reading, click here to donate (Our suggested donation: $10 per month). Help us keep The Transcript going.