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Atlas Market Report

May 1st, 2020

Market Commentary (Key items you need to know):

  • Market Outlook by Ronald E. Lang
  • Fun Links (always popular)
  • Additional Commentary by Allen B. Lang, Senior Portfolio Manager
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Key items you need to know –

Did you forget to buckle up? A wild ride yes with a precipitous pullback of 33%, then a bounce from that bottom of close to 30% to the upside. But reality and the “new normal” is setting in. Economic numbers in Q2 are expected to be worse than Q1 and we just finished the first month in Q2. There will be bankruptcy’s abound and even higher unemployment. The government programs, albeit a nice attempt to show they care, is a band aid at best. The government can’t continue to give the nation continuous paychecks for another 6-9 months at the minimum. Although, has been a suggestion of some politicians. We also can’t reopen the economy without restrictions. Unfortunately, there are too many stupid people in America and don’t know how to say that nicely. Ignorance and selfishness will push the COVID-19 cases spiking upward again in the Fall. Let’s hope not.
Where you should put your Investment Funds
Look at the following sectors; Technology, select Biotech and BioPharma, Consumer Staples (products that we need and use everyday) and select financial institutions (not banks). Many of these companies are doing very well through the pandemic and if you are already in the top names, you should continue to add to them on any dip if you feel it meets your investment strategy.
Keep away from the following sectors; Hospitality, Airlines, Cruise Lines, most Retail, Auto Industry and Entertainment. Unfortunately, it may take several quarters or years before any or all of these recover. Don’t go dumpster diving for the cheap stocks, look for the ones with strength through these tough times. If there are any possible investments in these beaten down sectors, you may want to initiate or leg into an investment position when the first vaccine is about to hit the market and add to it regularly. Until then, keep away.
Look For the Following
J. Crew, Hertz, JC Penny, many Energy companies to file bankruptcy in the next 30-60 days. This is the only strategy left for many of these companies that will use this as a last ditch effort to keep the company alive. Many of them were struggling before the pandemic and were not in a financially good position for any pullback in the economy and certainly not a shutdown. Ultimately, we may have 50-100 companies with $1 Billion or more in market cap filing for bankruptcy by June or July which will slow the recovery process, but may come out stronger by mid-2021.
Most Interesting Analyst Downgrade
Analyst reduces Price Target on American Airlines to $1.00
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Authored by
Ronald E. Lang, Principal
Atlas Wealth Management, LLC
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Additional Commentary by Allen B. Lang, Senior Portfolio Manager

A MINORITY OF ONE

Survey after survey over the past month tells us 40+% of people under 30 will not seek hospital care if they get the Corona Virus, because of the costs. The elderly represent more than 50% of the Virus deaths.
Is that why they crowd them into nursing centers). The economy will take a 20% hit (drop) in GDP
(Gross Domestic Production in the 2nd quarter)—DUH!! Do we really need a survey to tell us that?
Most industry is closed, no wonder there will be less production. Who pays for these surveys and
what real purpose do they serve? NOTHING. All one needs is some common sense and they would
know that sales of goods and products will be severely down in the 2nd quarter. Yes, I know, I shouldn’t be listening or reading this garbage, but it’s thrown at me, and you, every day. The worst example is that there is comparison of the deaths due to the virus has exceeded all American deaths during the Korean War. WHAT???? Where are these great pundits when every year we get hit with a different strain of Flu that takes 40-60,000 lives, every year?  
When I see companies like AT &T and JNJ having good results for the 1st quarter AND Increasing their dividends, I am very hopeful for the year. NOT NECESSARILY for the 2nd quarter, but for the year overall. Both companies have spent a great deal in research and development and still have free cash flows of $2.5-$4.0B. They are not alone, there are many industry leaders that have done the same.
The second quarter results, which will be out by the middle of July will not be very pretty. Even the industry leaders are not giving any forecast as to potential sales and earnings. Because no one knows. Anyone telling you differently is ill-informed.
I believe I am a minority of one in believing this economy will bounce upward very quickly and that the third and fourth quarters will excellent. I believe IT HAS TO.
Once the economy “re-opens”, people cannot be stupid and think that the virus is gone forever. It is still there and the fall months will be the tell all. We must all use caution in our daily activities, but still live. 
To that end, we have “held the course” with the investments we have in client portfolios. There has been very little selling and very little adding to positions. The markets will have a great deal of volatility during this second quarter. Right now (today is Wednesday 4/29/2020) the markets are looking very good. BUT, there will be, at times, large pullbacks. Do not get panicky. If you own well
established companies with a history of good earnings and dividends, ride this out. Our economy today looks like a recession, or a depression, but it isn’t either one. It is an unfortunate pause. If, and it’s merely a guess on my part, if we are going to get, what one would call a recession, or even one that appears to be, I do not see it happening until the second quarter next year, 2021.
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.