Good Tuesday A.M.,

Bonds, and particularly Mortgage Bonds, are having a good day. Equities are hurting a bit with the Dow down 200 and giving back half of yesterday’s gains. Stocks are still so inflated it seems implausible for them to rise further but they do. Fundamentals are not important right now. It is interesting though that just 5 companies are driving the market up. There’s a nice graph on that and how bad unemployment is just below. There’s just not much sense in the markets at this point. People need to be working for the economy (and companies) to grow. The Fed and the Government are manipulating the paradigm to support everyone. We should all be thankful, as everyone is benefiting. If you want to work, you likely can (the JOLTS number today showed 5mm jobs available) and if you don’t want to work, you don’t have to, as the government will pay you more than you were making while working. That last part will of course run out. It is supposed to run out in July, but does Mr. Trump extend until election time? I would think so, as it will be even tougher than it looks now to win if unemployment doubles from here. With all of this, the Fed is buying up every bond it can, pushing prices paid up and with that, rates down. The saving grace on the amount of debt the treasury is issuing is that the rates are so low, the debt service is not problematic (that is assuming we do have a strong recovery).

The S&P 500 is extremely concentrated.

The labor market will take many years to recover from the pandemic shock.

And… switching over to Covid for a moment, let’s just touch on the graph below. Which states would you like to emulate? More testing and less cases or the reverse? This is a real problem.

Please remain safe and be healthy.

Make today great!