Opening Statement from the May 2020 CCPM Forecaster
Originally published on May 3, 2020
Overview
No one alive today has ever witnessed an economic collapse of this magnitude over such a short time span. In just a few weeks we have seen the following: two emergency rate cuts by the Federal Reserve, a $2.2 trillion stimulus package from Washington, $6 trillion in credit facilities created the Fed, a collapse in US Treasury yields to record lows, a collapse in oil prices to negative pricing for the first time ever, the most rapid collapse in the US stock market from record-highs, loss of 30 million jobs in the US, record-low PMI and GDP data for several countries.
As discussed in special webinars held in March (as well as in the Intelligent Investor and Market Forecaster) the impact from the response to COVID-19 is likely to result in a record-low collapse in GDP for many nations. In our view the world has been in recession since mid to late-March. As we stated in April, we believe most economic data from around the globe will be “off the charts.”
For the US, Q1 2020 GDP was recently reported at -4.8 percent. We believe there is a good chance Q2 GDP will surpass the –8.4 percent collapse (final revised data) reported in Q4 2008 (note that the GDP data will be revised for many years before the real numbers are known).
Although not yet reported, it should be apparent that corporate earnings have collapsed. The earnings recession in US stocks ended by Q4 2019 but is guaranteed to resume in Q1 2020 as a result of COVID-19. We have no doubt that Q1 and Q2 S&P 500 earnings will be negative. Estimates for Q3 and Q4 are too difficult to determine at this point. But we do not expect the S&P 500 to record earnings growth for the full 2020 year.
The possibility of a huge wave of corporate bankruptcies is also of major concern. The Fed has attempted to reduce...
This article continues.
To continue viewing this entry please sign in to your Client or Member account.
Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher.
These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.
Article 19 of the United Nations' Universal Declaration of Human Rights: Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.
This publication (written, audio and video) represents the commentary and/or criticisms from Mike Stathis or other individuals affiliated with Mike Stathis or AVA Investment Analytics (referred to hereafter as the “author”). Therefore, the commentary and/or criticisms only serve as an opinion and therefore should not be taken to be factual representations, regardless of what might be stated in these commentaries/criticisms. There is always a possibility that the author has made one or more unintentional errors, misspoke, misinterpreted information, and/or excluded information which might have altered the commentary and/or criticisms. Hence, you are advised to conduct your own independent investigations so that you can form your own conclusions. We encourage the public to contact us if we have made any errors in statements or assumptions. We also encourage the public to contact us if we have left out relevant information which might alter our conclusions. We cannot promise a response, but we will consider all valid information.