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Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

By Mike Williams, Genesis Managing Partner

Founder and Managing Partner of Genesis Asset Management, New York

Letter from America

When Now Met Next

By Mike Williams | Monday, 11 May, 2020

I suspect the post-Sell in May and Go Away summer haze chat will be a bit louder than normal.

Why?

The “Reopening” saga.

And as we all (should) know by now, the good stuff doesn’t get much coverage, while the negatives are all made newsworthy.

Control of our emotions over the next quarter or two will be our most valuable resource.

The Latest Monster

The above is from Scott Grannis / Calafia Beach Pundit on "depression level unemployment."

It’s hard to imagine that less than 60 days ago the world was fine and setting records to the upside.

And the surprising rebound is dead ahead.

Yet, our minds are collectively set to extrapolate all of the negatives into very dark futures.

Not everything will go smoothly, of course, but those who underestimate our resiliency and invest against our ability to make and build better things out of the economic quagmire will likely be surprised.

The US Federal Reserve learned that lesson from the Great Recession of 2008-2009 and an economy that spent 10 plus years growing and breaking new records.

So, we should expect and not fear a massive new surge in new businesses to replace the old or harmed ones.

And be patient as the real improvement in jobs will not start happening until after 1st August.

Why?

Well, the current unemployment cheques are averaging about $25 an hour. So, don't be surprised if a share of the unemployed take that deal until it's over.

But that may be a relatively small issue when we look at the rest of the data showing green shoots.

As you may have noticed cars are showing up on roads again - which is likely why the "crude oil disaster" of 10 days is already old news:

In the chart above, Calafia again shows us the amount of motor gasoline supplied to the retail market, with the latest datapoint being 1st May.

Based on that recent surge to the far right, we can stipulate that people are spending about 30% more time on the road, out and about, in just the past few weeks.

That matches what I am seeing at stop lights on the way to the office.

The good news is that the wheels of commerce, the recovery, the buildout, the process of overcoming, are all spinning up.

Ever notice we always hear about data showing a plunge but rarely coverage of the rebounding surge.

The above chart is compiled and released every day by Bloomberg, grading the overall health of the US financial market.

Notice that "conditions" appear to have hit bottom right around the time the equity market bottomed.  However, even as the "news" has gotten worse - they show a surge, in what many can correctly call a very V-shaped recovery.

Shocking, eh?

But this is where the tough processes of markets teach even better lessons - the market thinks "next", while humans, too often, get lost in "now."

And "next" my friends, while full of ups and downs and scary periods, is set to be far better than anything we have lived before.

The data suggests that the health-driven recession we've been living through will no doubt be the most violent - but just as importantly – the most short-lived of all time.

We are in “Period C” now, where better decisions can be made under less stressful conditions.

Note also that our market daily ranges have gone through stages of cooling. In the early days, it was 1500-point days and then we fell to the more recent 500-600-point ranges.

Now we’re seeing a few hundred points either way.

To that end, we have spent the last week going back and forth over the same 500-800 points.

Notice that 77% of the audience is now not feeling too good about the market's future, and / or the future itself.

Remember in 2009 at the 6500 Dow Jones lows that the number under bullish was 19.7?!

Everything is going to change...and that is already underway. And the 2020's and 2030's are set to be, structurally, a replay of the 1980's and 1990's...but on steroids.

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