What’s the Value of a Corporate Life?
Imagine feeding ducks. As soon as the first bread crumb drops, the entire waterfowl population of the lake descends upon you and your loaf. We’ve all been there, and it’s bedlam! You’re running out of Hovis, the same big geese are stealing all the good-sized chunks, and you can’t tell which little ducklings at the back are still hungry.
In economic terms, today we see President Trump dangling his first piece of bread over Lake Economy. He reasserted yesterday that his “number one priority” was for this federal assistance to be for airlines, their survival crucial to economic growth. However, evermore lobbyists are queuing up as America self-isolates, and insurance companies refuse payouts under pandemic circumstances.
The hospitality industry is crying out for help, shale companies are requesting aid, and most cruise lines are already underwater. Even the casinos have thrust out their hats, and the National Restaurant Association sees a third of all restaurant jobs being lost unless the White House acts with $145 billion in stimulus, fast. The little guy running your local deli doesn’t even have a lobbyist, and tax-payers refuse to write blank checks!
Stocks will plummet and soar based on where the line is drawn for bailout aid. The government has days to ponder this issue, and only afterwards will investors have time to debate why only three-to-four months of revenue loss has left so many corporate balance sheets blown through.
Superinvestor Bill Ackman called this “the buying opportunity of a lifetime” yesterday, but there’s clearly uncertainty ahead. Most will only start buying with both hands once the virus has been conquered, even if they’ve already started edging into bigger and bigger positions.
The more risk-averse among us would rather be a bit late to the recovery than a bit early. Markets are still in bad vibes, vulnerable to more shock news. And did we forget to mention, another stock market circuit breaker was triggered yesterday on the S&P 500’s way down to yet more losses?
