30 April 2020

1) Experts are speculating on the interest rates going negative in the near future, something that President Trump wants. Negative interest rates have been a reality in the EU (European Union), with studies showing that investors do not significantly increase their equity holdings as interest rates decline. But when the rates go negative, they start increasing their equity holdings significantly. This in turn is a big boost to the stock market. Interest rates are an excellent predictor of long range growth potential, today’s level reflecting the markets expectation of sustained low future growth.

2) Larry Kudlow, the top White House economist, is calling for stimulate measures before a slowdown of the economy. Measures include tax breaks such as payroll tax holiday and deregulation of small businesses. This is in anticipation of growth in the second quarter worse than in the first, which shrank 4.8%. Additionally, he supports a second stimulus package to create incentives to grow in the medium and long term. Also more investment in infrastructure should be included.

3) After posting a massive first quarter loss, Boeing has announced they will slash staff and production of about 16,000 people or about 10% of its personnel. Demand for air travel evaporated because of the coronavirus, so Boeing is drastically scaling back production of the two widebody passenger jets, its 787 Dreamliner and the 777. Boeing lost $1.7 billion dollars, while shutting down its factories, because of the pandemic, added another $137 million dollar lost.

4) Stock market closings for – 29 APR 20:

Dow 24,633.86 up 532.31
Nasdaq 8,914.71 up 306.98
S&P 500 2,939.51 up 76.12

10 Year Yield: up at 0.63%

Oil: up at $15.35

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