Good morning. After last night’s failed Senate vote, we noted suggesting that failure likely needed to happen to move the process forward and that a deal could be announced this morning. Negotiators are not there yet. Following a series of meetings late last night, Senator Schumer remarked at 12:30am that there still was no agreement, negotiators were getting closer, staff would work through the night, and the principals will reconvene in the morning at 9am. The legislation is already weeks b… View More
More than 250 years ago our founding fathers founded this republic to make life better for their fellow citizens. Our constitution starts with the following preamble: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America”… View More
Estimates for 2Q GDP growth are ratcheting down and a 10 percent contraction is not far off from the consensus. Initial unemployment claims could reach 1 million next week. If policymakers get this wrong, contagion can easily spread, despite the temporary nature of the coronavirus. In that context, Congress is rushing to get a $1 trillion plus stimulus passed in the coming days. Senate Republicans released their plan last night. There are large differences between the goals of the two parties, b… View More
After listening to Governor Newsom’s “stay-in-place” decree last night, we had a lengthy discussion about the impact of a total lock down on California, the market and our expectations for it. During that discussion, we talked about the emotions elicited by both market gains and market selloffs. A key observation was that it easy to buy into a jubilant market, but it can be difficult to remain invested during a significant market draw-down. Below is a chart of the Dow Jones Industrial Ave… View More
We spent last week warning policymakers about the urgency and magnitude of the economic fallout from the coronavirus. To be fair, Congress will always lag market participants, and politics constrains a quick response. But the gap was so wide between financial market participants and policymakers that we were deeply concerned. Exactly one week ago today, the consensus view in Congress was to take a wait-and-see approach. But as we all know, once the slowdown hits the data, we are too late. Financ… View More