Are we getting a false positive signal from the stock market, or is it a predictor of the economy in 3 to 6 months? This is the question business folk, big, small, and tiny, are asking themselves as the markets regain the ground lost in the early March slaughter.
The big tech stocks, Microsoft, Google, Apple, and Facebook, plus Amazon, Walmart, and Costco, are still sitting near all-time highs, while unemployment swells, small businesses languish, and Macy’s and Kohl’s starve. GM and Ford stock shrink, and Tesla stock hits $700 per share.
Are we on the eve of a depression or is this just a temporary misstep on the great trampoline of growth in America?
The machining business is straddling the chasm between panic and smiles of confidence. If a firm is predominantly an automotive supplier to anybody but Tesla, things look bleak. But for how long? There is plenty of potential demand waiting in the bushes.
People fear public transportation, which may translate to car sales. My sister bought an Audi SUV in February and my wife and daughter were both on the cusp of buying new vehicles. They will be back in the market when it feels safe to test drive some possibilities. My daughter is looking at the Jeep-Chrysler Pacifica, while my wife’s lease expired 3 months ago on her Camry.
We are waiting for the waters to calm. I’m sure there are many others in our shoes. But when will it be safe to do something, when right now a big trip is to visit the local supermarket for groceries to be put in the trunk after ordering ahead? The crazy thing is that we know our fear will dissipate and mostly be forgotten, but will it take 2 months, 6 months, or a year to regain our mojo?
We are just beginning the early spring of revival. I can feel it on good days when the sun is shining and neighbors are venturing out and talking without masks on. My sons are going out on walks together. My granddaughters recently met up with some close friends (10 feet away). I’ve almost gone to Dunkin Donuts to pick up coffee. My cardiologist tells me that his hundreds of patients are doing well and that the few who tested positive have recovered, except for the one frail man who died. I have friends who have recovered. It almost gives me confidence, but not enough to end my 33 day quarantine.
Yet business goes on. Most of my precision machining clients are working and reasonably busy. Medical and guns are strong. Military is okay but hesitant. Auctions are still taking place.
There will be a warm gust that begins to clear the fog of hesitation. It may be Major League Baseball or the NBA that gives the signal that we are waiting for. Yes, they will probably play without crowds and all of the participants will take their temperatures before play or practice begins. There will be missteps. A player or coach or ump will get sick, but one misstep does not mean it isn’t worth resuming. People always get sick and the world doesn’t fall apart.
Eventually we will have to coexist with COVID-19. We are social beings. We need to connect, travel, touch, and do business. We need to shed fear and take some calculated risks. The politicians and bureaucrats will dither, but the stock market is telling us, hopefully correctly, that good news is coming soon. Maybe when the ump yells “Play Ball!”
Question: What is the first thing you plan to do when shelter-in-place orders are lifted?