(Houston)

If there was ever a time to take a hard look at investing in oil, this might be it. Black gold just hit an 18-year low, falling under $20 per barrel. Evidently, in physical oil markets, barrels are already changing hands for $10 each. The market is grappling with a price war at the same time as a massive glut of excess oil at a time of sharply shrinking demand.

FINSUM: Two thoughts to weigh here. On the one hand, oil was recently at $63 a barrel (in January), so this is a very substantial fall, which means a potentially great buying opportunity. On the other hand, oil is not nearly as scarce as many thought at the start of the last decade, so it is not inconceivable that prices could stay low for a long time.

(New York)

The outlook for retail is bleak. Investors already know this, but separating those who might actually go bust from those who will muddle through is key. The US’ big stimulus package had little directly for retailers, but there is enough to throw them a lifeline. According to analysts 630,000 US retailers have had to shut their doors since Coronavrus erupted. Larger companies have responded by furloughing staff, delaying obligations, and tapping revolving credit lines. The retailers most at risk seem to be the mall-based chains that focus on clothing—who were already struggling against ecommerce. Think J.Crew, Neiman Marcus, other department stores etc.

FINSUM: Our team has considerable experience in retail, and in our view the coronavirus will be looked back on as the coffin nail in brick and mortar retail (especially for clothing). This lockdown is going to accelerate the shift to ecommerce, and brick and mortar shopping habits may be permanently reduced.

(New York)

One of the hardest things to do in a crisis is to sit back and let one’s mind relax enough to think creatively and see the big picture. This has been particularly hard to do in the fog of the coronavirus, which is not just a financial/economic crisis, but primarily a health emergency that has disrupted our everyday lives more than in any period since WWII. So what are some of the long-term economic, and thus market, consequences of this virus? We believe the main outcome of this huge lockdown is ultimately going to be more consolidation of power by large corporates. As Main Streets across the US are cleared out of small business that do not have the capital to survive, American consumers will be ever more incentivized to look online and to existing behemoths (who have the resources to weather this storm). As a very short-term example, think of the 100,000+ workers will will quickly migrate from Main Street retail/service sector jobs into employment for Amazon; the consolidation that is happening in employment will front-run consumer spending.

FINSUM: As sad as it may seem, we see this lockdown as a big tailwind for the S&P 500 over the next few years, as this is the kind of crisis that will wipeout small competition and concentrate revenue in an ever smaller group.

(New York)

Markets have been on an extraordinary run over the last three days. 20%+ for the Dow and a measly 18% for the S&P 500, technically ending the bull market. It was the best three-day run since 1931 (in itself a bleak reference). However, many on the street think this rally was too bullish too fast, as we are arguably not even to the worst of the health crisis, and certainly not in the worst part of the coming economic slowdown.

FINSUM: We are going to have at least two quarters of awful earnings and several months of terrible jobs data, so there is a long way to go. This seems like a stimulus-euphoria/dead-cat bounce rally.

(New York)

Advisors who might be thinking of moving—now may be the time. Big crises are often a catalyst for advisors changing firms. The reasons why are numerous. Some advisors grow unhappy with the support their current firm gives them during a hard period like this one. Others see a big drop in revenue and need the bonus check of signing with a new firm in order to keep their team intact. Others try to sell soon after a crisis hits because their valuation (based on AUM/production) will likely not be higher for years.

FINSUM: Generally speaking, one would think that there would be a lot of moves in the next several months. However, one issue right now is that advisors cannot have face-to-face meetings with their clients to take their temperature on a move. All that said, if you are considering a move, many firms are ready to cut checks.