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Atlas Market Outlook – April 1st, 2020

Money Management Newsletter & More

Atlas Market Report
April 1st, 2020
Market Commentary (Key items you need to know):
  • Market Outlook by Ronald E. Lang
  • S&P 500 Index Technical Analysis
  • Fun Links (always popular)
  • Additional Commentary by Allen B. Lang, Senior Portfolio Manager
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Key items you need to know –
We just finished the worst quarter in the history of the Stock Market, down 20% in three months. Our newsletter doesn’t need to remind you of this since this is the 2nd headline behind any COVID-19 information besides the running ticker of Total Cases and Deaths, both Globally and US-Based. We try and look for the positives and the main one we can garner from this is the economic cycle has most probably been reset. We had been predicting a Recession between Q1 – Q3 2021 depending on who won the Presidential Election in November 2020. This has thrown an entire toolbox of wrenches at that prediction since the next 6 – 9 months will show deep recession economic numbers. Coming out of this situation will come significant investments by the government into Infrastructure (which is many years, possibly decades overdue) and major corporations. Meaning, the “surge” of these investments and backfilling entertainment, shopping and travel will seem like a boom in 2021.
First things first. We need to see the number of new cases decline and trend down. Second, we need a vaccine to give everyone a sense of comfort going out in public places and being in crowds. Hunker down folks. Make sure you exercise and eat right! Be smart and be safe.
The hospitality industry has been decimated and is only going to get worse. How long do you think it will take for someone to feel comfortable booking and getting on a Cruise Ship? How about going to a crowded movie theater? It will take time. Hotels, Airlines and Car Rental companies will take about a year to recover or longer. Right now, we don’t see them as investible.
Also, energy companies, specifically in the Oil production and distribution are getting crushed. A barrel of Oil hit $20.13 on March 31st. The majority of the Oil production and distribution companies in the United States have a cost of $50 – $60 per barrel to drill and produce. Look for bankruptcies and significant M&A activity over the next 12 months in this industry. Right now, despite the frothy dividends, we believe they will be cut sooner than later, this sector is uninvestible.
Select Utilities and Technology Sectors are investible along with select Healthcare companies. We all need water and a company to take our garbage. If you are working at home, think about the technology you are using to help you be successful and collaborate with your co-workers and secure your networks. How about the Healthcare companies that are supplying the Protective Equipment to the doctors, nurses and first responders who are exhausted and overworked. Also, the healthcare companies that are manufacturing and distributing prescription meds. During these times, many people will need additional meds to keep them sane and calm.
Don’t chase the BioTech companies. Meaning, many are coming out and saying that they could be in clinical trials by September and release their COVID-19 vaccine by Q1 or Q2 2021. Folks, this is ALL SPECULATION. Many of them saw their stock jump after the announcement and then pullback. Who knows where the truth lies in this those announcements, but most of those companies are uninvestible at this time. It is probably smarter to look for an ETF in that space and own a basket of those companies because you don’t know who will be the winner or winners.

In Summary

As I always say at the end of my conversations, ” Be Safe and Healthy”. You must be smart about living your life right now and for your friends and loved ones. Follow the basic rules of Social Distancing and the “Stay at Home” mandates. Rather it be a few months, then be sick and have side effects for many years. Its a small price to pay.
We make ourselves available to tough conversations. If you need to talk, schedule a call with us. Click the Schedule Link – Schedule a Call with an Atlas Investment Advisor – CLICK HERE for Availability

Just in Case!!!

1918 Spanish Flu (Video Documentary)

Other noteworthy items:

Passengers on Airlines are significantly down. One year ago there was an average of 2,510,294 airline passengers flying in a one-day period. March 30th there was 180,002 in a one-day period.
S&P 500 Index Chart

Technical Analysis

(To Enlarge: Right Mouse-Click on Pic Below / Then “Open in a Browser)

Authored by
Ronald E. Lang, Principal
Atlas Wealth Management, LLC
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Additional Commentary by Allen B. Lang, Senior Portfolio Manager
IT AINT OVER TIL THE LADY SINGS
She may be humming, but she ain’t singin’.
Investors watching the 3 day surge of 4000+ points in the Dow last week may have been feeling euphoric. But then came Friday and a 900+ point drop.
This is NOT panic time. I do believe we MAY test the lows again in the market, but the long outlook is not as bleak as some (so called “pundits” ) would have you believe.
Yes, cash is “golden” at this time, but there are so many that rely on dividends to live and good quality securities with a long history of paying and raising dividends and who have a significant position in their industry is where one should be.
Once the pandemic is controlled and the economy gets back to “normalcy” I STILL believe we will see higher highs than before. We are just TOO STRONG A NATION TO “THROW IN THE TOWEL”. I do believe some normalcy will resume by the end of April (middle of May at the latest). But that is my opinion!
Hang in there and I’m available for any questions.
PS. March 31 ends the first quarter. And a lot of the selling and buying you witnessed are some of the major portfolio managers readjusting their portfolios. In some cases selling off losing positions and buying other securities in the same industry. This has always happened at the end of quarters, and it’s called “Window Dressing”.
By the way, because of the “Window Dressing”, don’t be surprised if you see a down market Wednesday, Thursday and/or Friday.
We like to make this newsletter a “quick read” with small bite-sized chucks of topical information so you can understand what’s going on in the markets and economy and if it may affect you, give you time to make the steps necessary to protect yourself or take advantage of it.