Unemployment Silver Lining, States and Countries Start to Re-open, Plus More
In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:
- The silver lining behind unemployment numbers
- How have housing prices remained firm in light of the downturn
- Countries and states are moving toward reopening
Jobs Numbers Remain Dismal. Here’s a Silver Lining – The U.S. economy is losing millions of jobs, and the economic data painting the picture continues to worsen. We have written before that many of the job losses are furloughs (temporary lay-offs) as opposed to permanently shrinking the workforce. During a structural recession (like the 2008 financial crisis), companies respond by restructuring the workforce to deal with a potentially prolonged recession. In the current environment, employers appear to be keeping employees close by, in anticipation of the economy’s reopening. A recent survey conducted by Morning Consult found that two-thirds of workers believed that they would return to work for their current employer, which could help restart business much more quickly than if the employer had to rehire.1 When employees are asked to return to work, there’s no need for training, recruitment, job search, background checks, ‘onboarding,’ etc., all of which are costly and time-consuming. Workers can return to their jobs and immediately be productive.
Download Our Dean’s List of Investment Strategies!
You can’t predict how Covid-19 will continue to affect the economy or when the economy and market will bounce back. But the right investment strategy can make a huge difference in preparing your long-term investments for success and helping you navigate these challenging times.
To help you learn more about strategies that cater to different investment objectives, we have created our Dean’s List of Investment Strategies. Our Dean’s List describes five of our investment strategies that are ranked in the top 8% of their respective classes according to Morningstar (as of 3/31/20).2
If you have $500,000 or more to invest and want to learn about five of our top strategies, click on the link below.
Learn More About Our Top-Ranked Strategies!3
Prices Remain Firm in the U.S. Housing Market – U.S. housing prices have remained firm throughout the economic downturn, and have even risen in many cases. Typically, rising home prices would be a positive economic fundamental to consider within a broad set of economic metrics, but in this case, housing prices may be going up for the wrong reasons. The median home price ticked 8% higher in March (year-over-year) to $280,600, even as buyer demand fell -8.5% from the previous month.4 While falling demand should put downward pressure on prices, the supply of homes is shrinking at an even faster pace – hence rising prices. For now, many sellers are holding their ground on prices, as they believe demand will return once buyers can actually get back out and tour homes. These sellers may not be able to hang on for long at elevated prices if demand remains soft in light of the economic recession.
Countries and States Move Towards Re-Opening – The world appears to be pivoting in its response to the Covid-19 pandemic, slowly shifting away from stay-at-home orders and towards economic reopening. Italy, one of the hardest hit European countries in terms of infections and deaths, on Monday allowed factories, construction sites, and wholesale commerce to open. Shops remain closed, but the government is targeting a date of May 18th to reopen many restaurants, and June 1st to reopen bars. In the U.S., some 30 states have started to allow businesses to operate or have made plans and set dates to do so. In Australia and New Zealand – two countries with success stories for containing the outbreak – plans are being drawn to allow travel between the two countries to help their respective economies recover. Hong Kong has experienced two weeks of no new, locally transmitted cases, and is starting to ease restrictions as well.5 The road to economic resurgence will be a long one, but the groundwork is being laid now.
How German Factories Navigated the Covid-19 Crisis – Around the world, economists, scientists, thought leaders, and politicians are all gathering data and forming new ideas for how to best manage a pandemic, in terms of balancing economic considerations with public health needs. Looking for country models and success stories is a useful tool for doing so. Germany offers one such example, where more than 80% of factories remained open during the six-week national lockdown. Germany gave factories the option of staying open during the lockdown, using social distancing, face masks for all employees, in-house Covid-19 tests and contact tracing to manage the workforce and prevent an outbreak. Germany has fared similarly or better than many of its developed neighbors like Italy, Spain, France, and the U.K. in terms of infections, but has far fewer deaths from the pandemic. Among the early lessons learned from the German model: implementing strict safety rules early on, involving employees and unions in safety planning, and putting robust testing and contact tracing systems in place on the local and state level (regional in Germany’s case).6
There is no way to know exactly how this pandemic will continue to impact markets and economies around the world, but finding the right investment strategy can make a huge difference when managing the highs and lows of the market. To help you learn more about strategies that cater to different investment objectives, we have created our Dean’s List of Investment Strategies.7
Our Dean’s List describes five of our investment strategies that are ranked in the top 8% of their respective classes, according to Morningstar (as of 3/31/20).8 If you have $500,000 or more to invest and want to learn more about these strategies, click on the link below to see how they could potentially benefit you.
2 ZIM may amend or rescind the “Dean’s List of Investment Strategies” guide for any reason and at ZIM’s discretion.
3 These rankings may not be representative of any one client’s experience. In addition, they are not indicative of future performance
4 The Wall Street Journal, May 5, 2020. https://www.wsj.com/articles/why-home-prices-are-rising-during-the-pandemic-11588671002
5 The Wall Street Journal, May 4, 2020. https://www.wsj.com/articles/italy-starts-easing-lockdown-rebooting-its-stricken-economy-11588599411
6 The Wall street Journal, May 6, 2020. https://www.wsj.com/articles/how-germany-kept-its-factories-open-during-the-pandemic-11588774844
7 ZIM may amend or rescind the “Dean’s List of Investment Strategies” guide for any reason and at ZIM’s discretion.
8 These rankings may not be representative of any one client’s experience. In addition, they are not indicative of future performance
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
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Returns for each strategy and the corresponding Morningstar Universe reflect the annualized returns for the periods indicated. The Morningstar Universes used for comparative analysis are constructed by Morningstar (median performance) and data is provided to Zacks by Zephyr Style Advisor. The percentile ranking for each Zacks Strategy is based on the gross comparison for Zacks Strategies vs. the indicated universe rounded up to the nearest whole percentile. Other managers included in universe by Morningstar may exhibit style drift when compared to Zacks Investment Management portfolio. Neither Zacks Investment Management nor Zacks Investment Research has any affiliation with Morningstar. Neither Zacks Investment Management nor Zacks Investment Research had any influence of the process Morningstar used to determine this ranking.