June 10, 2020

We argued and presented some data consistent with the view that the economy has a self-equilibrating mechanism. We also argued that as the economy opens up and the aggregate supply rotates toward its long run supply, the economy will expand. Our interpretation of the data suggests that the economy is poised for a V shaped recovery. This is quite a bullish scenario and the markets have behaved accordingly. Looking ahead to November and beyond, it is clear to us that what the federal government action has done what is appropriate and then some. Yet, we do not know where the Federal Government will draw the line. We do wonder whether we are going to go down the interventionist, redistributionist road? Or are going return to free market policy driven principles? We are at a fork on the road and it is not clear which way we are going to go. This being an election year, by November we will have a clear idea.

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