I’ve said it before and I’ll say it again…
We are living in very weird, amazing and terrifying times – not just as investors – but as humans on this planet.
In the midst of a global pandemic – America is experiencing civil unrest not seen since the 1960’s…
Meanwhile, the markets move forward, regardless of whether the world is ending or getting a new start.
However, with the threat of a second wave of lockdowns coming due to spiking COVID-19 numbers due to the states opening up and the massive protests – the markets are starting to feel that worry – with volatility raising its head once again.
But…
Are these fears unfounded?
Or are we on the verge of another economic shut down?
Here’s what the Gorilla thinks…
Now, will we experience a second shutdown?
Not according to Treasure Secretary, Steven Mnuchin, especially when you keep in mind that second COVID wave everybody is talking about – is probably already here.
Which is both troubling AND relieving – as if we’re in the midst of the second wave already – it looks like we’re going to be ok.
As it’s been reported that total cases in the US have topped 2 million recently with states like Texas, one of the first to reopen after the lockdown, reported just north of 2,500 new cases, the highest one-day gain since the pandemic began.
California, one of the states looked at as one of the best when it comes to handling the COVID pandemic – has seen hospitalizations jump every day for almost the past two weeks.
Florida, another early opener, isn’t far behind – with its recent week’s total of just over 8,500 new cases – was its biggest one-week gain so far.
Even with all that going on…
It doesn’t seem like the U.S. government is going to drop the hammer on the economy a second time in 3 months.
Mnuchin, has gone on record saying that he believes shutting down the economy again would hurt more than it would help – as businesses across the board are just getting their legs under them again…
Not to mention the economic impact a second shutdown would have on all those people who are just getting back to work after an almost three-month hiatus or furlough.
But with the markets recent 1,800 point drop – it seems that Mnuchin felt the need to reassure the world – and in particular, investors – that he wouldn’t support a second economic halt.
“We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Mnuchin said. “And not just economic damage, but there are other areas and we’ve talked about this; medical problems and everything else that get put on hold. I think it was very prudent what the President did (shutting things down), but I think we’ve learned a lot.”
And he’s not alone in his thinking…
As there are many other economic experts out there that agree that a second shutdown could do more harm than good.
One of these experts said, “If we shut the economy down again, many small businesses wouldn’t survive. Policymakers seem to forget that small businesses are often seasonal. The lawn companies only work a few months a year in some parts of the country and can’t afford a season-long shutdown. Retailers tend to enjoy one great quarter and three surviving quarters. Shutdowns make these business owners question their viability.”
It’s true…
While there have been a few “big” business that have felt the affects of the shutdown – such has Starbucks (SBUX) having to close 500 of their stores – it’s the small business that were shuttered for the pandemic that may feel it the most, as some of them may not ever open their doors again.
Most restaurants operate on just 14% profit – which isn’t much – but is STELLAR in the industry…
Some are operating on just 4% profit. If you take away their ability to make money again – those “little guys” are most likely to close their doors for good.
The problem? A LOT of people are employed by these types of companies – and shutting them down – shuts these people out of the work force.
It comes down to this…
We, as a country, could afford a second shutdown when we barely survived the first one – and the people in charge know it
So as investors – the bottom line is…
Don’t worry – we won’t be shutting down anytime soon.
That being the case – if you’re finding yourself struggling to find winning stocks during this time – I would like to offer you this opportunity to become a subscriber to GorillaTrades today.
If you’re struggling – the Gorilla may be able to help. Our recommendations are based on hard data and facts – not speculation.
Or…
If you’re doing ok on your own keep going – but if you need help – just know GorillaTrades is here if you need us.
Either way…
Don’t worry about a second shutdown – we should be safe!
“Never think that lack of variability is stability. Don’t confuse lack of volatility with stability, ever.” – Nassim Nicholas Taleb
