How will Markets React as US Economy Reopens?

The U.S. is gradually lifting lockdown procedures in the country after the Coronavirus pandemic.
The U.S. is gradually lifting lockdown procedures in the country after the Coronavirus pandemic.
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How will Markets React as US Economy Reopens?

May 4, 2020

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James West, CEO Midas Letter.
James West is a professional trader and a successful entrepreneur with over 10 years of experience in the financial markets.

Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolito joined Midas Letter to discuss the reopening of the U.S. economy and the effect that could have on the lives of Americans and world's markets.

In order to revitalize the economic recovery, the U.S. is gradually lifting lockdown procedures in the country after the Coronavirus pandemic. Parks are reopening, arena's are unlocked and restaurants are serving at a 25% capacity. President Donald Trump is saying Americans can start to re-integrate back to their lives before the pandemic, while still remaining safe and without risking lives. This fact however remains to be seen. The Coronavirus has killed more than 67,000 Americans to date and the number that statistics climbs to after the reopening will be very telling on the future state of the economy.
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The reality of a normalizing market post pandemic, for both businesses, traders/investors and people's lives, will be a gradual process. As economies reopen, we will be looking at the severity of a "second-wave" of COVID-19. From a market perspective, what could perhaps be even more scary than the virus itself is if there is a new spike in cases/fatalities as populations start to reintegrate. Will nations start to adopt further testing requirements and controls in order to prevent a large-scale second virus breakout? It is going to be interesting to see how governments continue to support economies moving forward as we find out the answer to how the world is going to adapt back to normality.

For shorter-term trading plays: 148 companies inside the S&P 500 Index (INDEXSP:.INX) are reporting earnings this week. This follows the "Big 5" tech stock last week. Feel free to read: What to Invest In as Amazon & Apple Earnings Disappoint, Sell in May and Go Away? or Buy Right Now and I'll Tell You How or Making Sense of the S&P 500 where we dissect those earnings.

2/30 components from the Dow Jones Industrial Average (INDEXDJX:.DJI) also report. On an international basis, some of the big names reporting this week are: BNP Paribas SA (EPA:BNP), UniCredit SpA (BIT:UCG), Bayerische Motoren Werke AG or as you know them: BMW (ETR:BMW) and Credit Agricole SA (EPA:ACA). Even if you are not trading in international markets, the results are key to understanding the "big-picture" of how the Coronavirus is effecting nations and the largest corporations worldwide.

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Traders are going to have to be increasingly cautious when placing their capital into markets in the short-term. The sentiment in the market leans towards a "bearish" view with surging unemployment rates, uncertainty as economies reintegrate and further data releases from the negative impact on businesses from the virus.

A common theme for the average investor at this moment in time is: value investing. People are selecting stocks which appear undervalued currently due to the sell-off with hopes of a large recovery. Although this can be a great strategy, famously used by Warren Buffett, attentiveness and diversification is encouraged as there is no promise of a complete economic recovery in the foreseeable future.

Watch the complete interview for a complete analysis of what traders should be considering this week.

Happy trading,

James West
Midas Letter

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Sell in May and Go Away? or Buy Right Now and I'll Tell You How


May 3, 2020
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What to Invest In as Amazon & Apple Earnings Disappoint


May 1, 2020
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