Commentary: Paul Ebeling on Wall Street, Taking the Long Term Outlook +


The DJIA is up about 30% from its 23 March low at 18.591.93, the S&P 500 SPX is up about the same per cent from its low at 2,237.40, and the NAS Comp has climbed by 32.5% from its lows of 6,850.67.

My work shows the US market will continue rising well into Y 2021 as treatments and vaccines for the C-19 coronavirus disease are discovered. The drivers are Zero interest rates, and unpresented liquidity that the Fed is adding make for a Boom year.

Wharton Professor Jeremy Siegel noted Friday, thaat unprecedented support for the economy by the Fed and the US government make it nearly impossible for the stock market to test to its 23 March lows.

Last Week’s Action

Thursday, stocks gapped North by 300 DJIA pts, faded, and rebounded late in the session that spilled into after hours trading.

This produced a lot of movement that produced gains of 1%, as the NAS marked a new recovery high.

Technical Analysis

The S&P 500 and the DJIA, have mostly remained in sideways ranges over the past 4 wks.

S&P 500 is trying to form a cup-with-handle base and is trying to build another break North.

NAS gapped to a new recovery high, there was cheering. Then, it traded back and forth around the high during the entire session and closed almost exactly where it had opened. This move makes 3 similar gaps running while it grinds North.

Friday, all 3 major US stock market indexes finished above resistance turned support and are now Bullish across the board, will know more this week.

On the state of the economy

Those saying we had to sacrifice the economy to save lives have succeeded in only the former, The Wall Street Journal writes in a scathing rebuke of lockdowns at all costs amid the global C-19 coronavirus chaos.

The tradeoff isn’t between lives and livelihoods,” WS-J editorial board concluded. “The policy goal has to be to protect both as much as possible.

Deploy more personal protective equipment, greatly increase testing, build surge capability to handle flare-ups, and isolate society’s most vulnerable to keep hospitals from getting overwhelmed.

But for heaven’s sake reopen the economy so we do not consign millions to years of poverty.

The op-ed was in response to those denouncing a past call back on 19 March, “Rethinking the Coronavirus Shutdown,” when the shutdowns were just beginning.

Well, after Friday’s horrific jobs report, how do you like the shutdown now?” the WS-J wrote. “The people who said we have to sacrifice the economy to crush the virus have succeeded in the former even as the virus will be with us for many more months or longer.”

The WS-J shared President Trump’s belief, “Americans need to work to make a living, and they want to work,” and the attempt by the Democrats to “blame President Trump for the economic pain” will be another failure.

It is important to stress that the strict lockdowns were a government policy choice,” the WS-J wrote. “But the damage is done, and our focus is not on recriminations. The issue is what to do now, and the public is wise enough to know that public health cannot be sustained without a healthy economy.

“Americans can see the destruction all around them. They know the virus will be with us for a long time unless there is a vaccine, so we have to learn to live with it and have a functioning economy.

On the state of America’s businesses

American businesses are set up to come back stronger than before this C-19 coronavirus chaos hit.

Company executives and strategic planners are/have reimagined business model as they return to full speed.

Those who step up their game in this moment will be better off and ready to confront the challenges and opportunities of the next shocking threat.

The strategic areas to focus on: recovering revenue, rebuilding operations, rethinking the organization, accelerating the use of digital solutions, and speed matters.

Speed matters

It will not be enough for companies to recover revenues gradually as the crisis fades. Exectives will need to rethink their revenue profile, to position themselves for the long term and to get ahead of the competition.

This favors action over research, and testing over analysis. Establish a brisk cadence to encourage agility and accountability.

Companies must rethink their operating model based on how their people work best, and remote is taking over.

The C-19 chaos accelerated the shift to digital. But the best companies are going further, by enhancing and expanding their digital channels. They are using advanced analytics to combine new sources of data, such as satellite imaging, with their own insights to make better and faster decisions and strengthen links to customers.

Companies must understand what customers will value, post-C-19, and develop new use cases and tailored made experiences based on those insights.

Given crisis-related disruptions in supply chains and channels, adaptability is Key. That means changing the ecosystem and considering nontraditional collaborations with partners up and down the supply chain bringing them home or very much closer to home.

Rapid revenue response is not just a way to survive this chaos. It is the next step on how companies will have to operate.

The Big Q: How do they go about choosing what to do?

The Big A: Identify the primary sources of revenue and, on that basis, make the “now or never” moves that need to happen before the full recovery starts. This may include developing customer experiences focused on increased health and safety; adjusting pricing and promotions based on the new data; reallocating spending to proven growth sources; reskilling the sales force to support remote selling; creating flexible payment terms; digitizing sales channels; and automating processes to free up sales representatives to sell more.

Once identified, these measures need to be prioritized to reflect their impact on earnings and the company’s ability to execute quickly.

Leadership, resilience and knowing that the future may be shocking are the Keys to success now. 

Have a healthy week, Keep the Faith!

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