Warren, pls make me feel better
Welcome to “Not Pretty, Not Rich,” a newsletter designed to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything.
A little housekeeping:
A reminder that I’m now sending this out on a Tuesday/Friday schedule for the time being. If any of you would like to see it more or less, let me know.
A disclaimer: I’m neither a financial expert or a professional. I’m just a guy who writes about money, and this newsletter is a place for me to share my opinion, views, and resources. It’s unaffiliated with my employer, and all views contained within are my own.
You can connect with me on Twitter and LinkedIn if you’d like, and email me with any feedback. I always enjoy hearing from readers.
And with that, we’re off. Like a herd of turtles. It’s Tuesday, May 5.
This doesn’t inspire confidence
Many states are starting to loosen social restrictions and let certain businesses resume operations. All the while, we haven’t even hit the worst of the crisis, it seems. The New York Times got its hands on a FEMA document that doesn’t paint a rosy picture.
In short, it says that in less than a month — by June 1 — the U.S. is expected to see a surge in daily new COVID-19 cases. A large surge, too: The numbers are expected to jump from approximately 25,000 new cases per day to 200,000, and an increase in daily deaths from 1,750 to 3,000.
Obviously, this isn’t the news anyone wanted to hear. Many people are ready to resume their lives, and many states and policymakers are happy enough to let them. But a surge like this could really be a dagger — it will likely call for reinstating shut-downs, clobber the stock market, and generally bum a lot of people out.
The guy who created the model from the report says that it wasn’t intended to act as a forecast and is still a work in progress, according to The Washington Post, but at this point, who knows what to believe.
The smartest play here is probably to expect this pandemic to drag out longer than anyone is expecting, especially since we can’t seem to form a cogent, united, and efficient way of dealing with it.
Warren Buffett’s annual meeting was….kind of a bummer?
Warren Buffett, a famous investor and one of the richest people on the planet, helmed the annual Berkshire Hathaway shareholder’s meeting on Saturday. And he did so virtually, for the first time ever.
Usually, tens of thousands of people head out to Omaha to attend the meeting. It’s a big deal — when Buffett speaks, people listen. And while Buffett is typically pretty optimistic, this meeting was a little less upbeat. Understandably so.
I wrote about some of the key takeaways, but what you should know is that Berkshire Hathaway is fresh off of a $50 billion first-quarter loss. And though Buffett said that he thinks the U.S. will pull out of this at some point, things in the near-term don’t look so good. It was a mixed bag, and I think encapsulates how a lot of people are feeling: Yeah, eventually we’ll be okay, but this whole situation sure does suck.
If you feel inclined to see a replay of the “meeting” you can watch it here. If you want to learn more about Buffett (who’s a pretty interesting guy), HBO produced a documentary about him a few years ago that you can check out, too.
The corporate body count
We’re starting to see companies file for bankruptcy due to the pandemic, and when it’s all said and done, it’s likely to be a lengthy list. Now, bankruptcy doesn’t necessarily mean that these companies are going to permanently disappear. Some may reorganize, or the brand names may be sold off — so, they may still exist in some form down the road.
Yesterday, clothing retailer J. Crew filed for Chapter 11 bankruptcy, and they’re likely the first of several big-name brands to hit the mat in the coming weeks. Many companies — retailers and restaurants especially — operate on very thin margins. And a short-term shutdown like this will do them in. Neiman Marcus and JCPenney are rumored to be on life support, too. As many as 25,000 stores nationwide could close permanently.
Here’s to hoping that most ultimately make it through, though, because it’ll just be a bummer if we’re all wearing clothes in a couple of years that are sold under the “J.Crew by AmazonBasics” label.
All right then, I’ll see you guys out there.