Dividends and 2nd quarter starts with broad tumble

If you are looking for negative news from an economic point of view it is not hard to find. The markets are down, it was revealed about 100,000 people are expected to die from the virus in the US (being optimistic is maybe a little less); most states have a statewide stay at home order; there was a “fight” between Russia and Saudi Arabia about the price of oil and it went down causing energy stocks to go down and Whiting Petroleum, one of the biggest drillers in Texas or the Bakken shale formation to seek Chapter 11 protection. The stay at home has caused auto sales to plunge 40% plus; mortgage applications are down 24% which means the spending on the appliances and home renovation is down.

In the second week of April is earning for the 1st quarter and it is expected to be a recessions type. The purchasing indicators measured by the new orders to factories and Purchasing Managers Index are expected to show recession type numbers. This is addition to the number of claims for unemployment insurance. If the money from the Treasury is delivered on time as suggested by Secretary Mnuchin that will be a welcome offset.

Chris Zaccarelli of Independent Advisor Alliance in Charlotte, NC said the comments made by President Trump and Governor Cuomo suggesting the virus effects will get worse than better, the virus is going to around longer than expected. If people have to stay at home for 2 or 3 months, then the economy will take longer to restart.

Linking to dividend paying stocks, during the stay at home many larger companies are making allowances for delayed payment of bills. That does mean the bills do not have to be paid, just delayed or the fees which we all hate to pay do not exist. Those fees should not have made for a profit or not a profit; The larger companies such as utilities residential numbers have gone up, but the large users in manufacturing and offices have gone down, still utilities are good stocks to hold. In viewing the crisis, remember health is most important, a close second is financial health.

There are more questions than answers, till the next time – to raising questions.

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