Quote of the Week

“How far you go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of the weak and strong.  Because someday in your life you will have been all of these.” – George Washington Carver

Technical Corner

The markets had a good rise last week up around 3 1/2%. After today (Monday), the markets are close to the high set on September 7th. Mathematically, we are still saying we are now in Quadrant 4, which is not good for stocks.

The big issue in Washington besides the election and the Supreme Court nominee is whether we will get a COVID -19 stimulus package before or after the election or not at all. The latest bullish refrain on Wall Street is that “another round of fiscal stimulus is coming.” Here is the ironic thing about this new narrative (for those of you with short-term memory loss) until recently, Wall Street’s bullishness was predicated on the flawed notion that the U.S. economy was entering a “V-shaped recovery.” If you watched the nominee on a Sunday morning talk show, there was Larry Kudlow, an economic advisor to the President, spewing the same false narrative.

Well, of course, that isn’t happening despite U.S. economic data bouncing off its historic COVID-19 shutdown. The data now is showing the recovery stalling.

Where do we go from here?

  * Jobless claims remain elevated

  * Bankruptcies are rising

  * Furloughed or temporary layoffs are now becoming permanent job losses

  * An underwhelming corporate earnings season starts this week

I can’t predict the future, but the bottom line is to be careful out there.

Larry’s Thoughts

Permanent job losses mount as pandemic endures OCT. 2, 2020 BY JOSEPH BRUSUELAS

The number of people in the United States who have lost either a permanent or a temporary job increased for the seventh consecutive month in September, another indication that hopes for a quick recovery from the pandemic-induced economic shutdown are not tethered to any economic reality.

With the Sept. 30 expiration of some protections for workers under the Coronavirus Aid, Relief and Economic Security Act having passed, the risk of rising permanent job losses will be one of the major pressing policy issues as the United States heads toward the election on Nov. 3.

In September, the total number of people who have lost employment — and are not on temporary layoff — reached 4.5 million. As we show in the first figure below, that includes the 3.8 million who have lost a permanent job, and the 700,000 who have lost a temporary position.

That large corporations have announced significant layoffs recently, seven months into the pandemic, is a matter of great concern for the long-term health of the economy.

While a possible second bailout of the airlines is encouraging, other industries like hotels, bars, restaurants, casinos and resorts are not likely to receive such government assistance.

Moreover, without either a replenishment of the Paycheck Protection Program or an outright forgiveness of the PPP loans, the lagging impact of bankruptcies and firings of workers for firms that survive is going to be a major issue facing small and medium-size firms going forward.

The increase in people who have lost temporary employment is disturbing for the growing number of workers in the gig economy, from film editors who go from project to project to coders who are often the first to go when a cutback becomes necessary.

No matter what type of employment a worker has, the length of time a person is out of work affects that worker’s ability to regain employment.

For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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These are the opinions of Larry Lof and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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