- The Bureau of Economic Analysis reported Wednesday morning, before the opening bell, in its “advanced” reading that real Gross Domestic Product contracted at a seasonally adjusted annual rate of 4.8% in the first quarter of 2020. That’s a tighter squeeze than the expected 4.0% contraction. It also follows a 2.1% expansion in the final quarter of 2019. It is likely that the second quarter’s print will be even worse than this given the U.S. did not start to really see the economic implications, such as shelter in place and closure of non-essential businesses, until March. https://www.reuters.com/article/us-usa-economy/coronavirus-savages-u-s-economy-in-first-quarter-bigger-hit-still-to-come-idUSKCN22B0A1
- Also on Wednesday, the Federal Reserve left interest rates near zero and repeated a vow to “do what it takes to shore up the U.S. economy amid an ongoing coronavirus pandemic that will not only weigh heavily on the near-term outlook but poses considerable risks for the medium term as well.” The equity markets reacted positively to a combination of news including positive press on Gilead’s therapeutic drug remdesivir, trading 2.66% higher on the S&P 500. https://www.reuters.com/article/us-health-coronavirus-gilead-remdesivir/data-on-gilead-drug-raises-hopes-in-pandemic-fight-fauci-calls-it-highly-significant-idUSKBN22B1T9
- U.S. jobless claims have now topped 30 million with the Department of Labor’s report last Thursday showing an additional 3,839,000 claims, a decrease of 603,000 from the previous week’s revised level. In the release, the Department of Labor again noted that the Covid-19 virus “continues to impact the number of initial claims and insured unemployment.” More than 24 states have moved ahead with plans to relax restrictions to help with the data. https://www.reuters.com/article/us-health-coronavirus-usa/u-s-states-grapple-with-reopening-as-virus-forces-millions-more-jobless-claims-idUSKBN22C2QW Ma
- Markets trade lower today on comments from the legendary Warren Buffet around the airlines and not finding attractive buying opportunities thanks to the Government’s support. Also we are now in the early innings of a spat between China and the U.S. (with likely global support) around the origin of the virus and if there is blame to be thrown about. As we have mentioned, market bottoms are a process and giving back some of the recent run is healthy for the long-term prospects of the market. More and more we are favoring active managers in today’s market who can pick around the rubble and find opportunity. https://www.reuters.com/article/us-usa-stocks/sp-500-dow-dip-as-buffett-dumps-airlines-china-tensions-flare-idUSKBN22G16U
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