Stocks sank on Wednesday as Wall Street kicked off the second quarter on a sour note amid concerns the coronavirus will keep the economy shut down longer than expected.
“This is going to be a rough two-week period,” Trump said at a White House press conference. “When you look at night the kind of death that has been caused by this invisible enemy, it’s incredible.”
“There’s still tremendous uncertainty,” said Patrick Kaser, the portfolio manager at Brandywine Global. “We can look at history as a guidepost for the market and the economy, but there’s not a perfect scenario.”
“In situations like this, the best thing for long-term investors is to figure out what they want longer term,” he said.
Are these stocks the future?
Strata Analytics founder and macro strategist Matthew Garrett calls this new environment an “exercise in adaptation” for investors and says there are still a few bright spots amid the heightened volatility.
“As everybody’s working from home now, families are also starting to wear the teacher hat,” Garrett said on CNBC’s “Trading Nation” on Tuesday. “There’s a couple plays in that area, you know. I think towards a company called K12 [Inc.]… symbol LRN. They provide a suite of products and software for both administration of schools but also curriculum, testing materials, study materials for kids.… That is going to be a big regime shift now. I think everybody’s getting used to adapting what they call a virtualized classroom.”
K12, a company with a $735 million market cap, is up 5% in the past week, while the S&P 500’s recent gains are slightly below that. K12 has fallen 12% this year, roughly half the S&P’s decline in comparison.
“There’s also a company called Rosetta Stone, people might be familiar with that; they have the language software. So, there’s kind of like two hits on that. If everybody’s thinking, ‘I can’t wait to get to Italy and finally take a vacation again,’ maybe they have some downtime,” said Garrett.
Rosetta Stone is an educational software company worth $318 million in market value. It has fallen 29% this year.
Government Looks to Private Firms for Advice. Probably a Really Smart Move
The U.S. Treasury Department has hired Wall Street bankers and lawyers as counsel on providing tens of billions of dollars in aid to the airline, cargo and defense sectors.
The appointments come after U.S. lawmakers approved a $2.2 trillion stimulus bill last week to mitigate the economic fallout of the coronavirus pandemic.
PJT Partners Inc. will advise the Treasury on its negotiations with the airlines, the sources said. The stimulus bill, known as the CARES Act, provides for up to $50 billion in aid to airlines. Half of it comes in loans and loan guarantees, and half of it comes in grants.
Moelis & Co will also assist the Treasury on its negotiations with companies in the cargo sector, for which $8 billion has been allocated. Again, it is expected to be split equally between loans and grants, according to sources.