Go Back to Work? But why?

According to JP Morgan, an estimated 65% – 75% of American workers who are receiving unemployment benefits are making more money in benefits than they did when they were working before the pandemic hit.  This is adding a great deal of pressure to retailers, restaurants and other businesses as they re-open their doors to find that many workers are refusing to return to work.  While some employees have legitimate reasons to be fearful, there is a large population of reluctant unemployed workers who would rather make more money and not work vs take a pay cut and come back.  This may change at the end of July when the additional $600 per week federal benefit expires.  At that point, I expect that many will then feel comfortable returning.

Stocks are flying higher again this morning, as hopes rise for a vaccine from Novavax.  Very early trials are looking promising.  However, look back to what happened a couple weeks ago when we had a similar situation, which proved to be false optimism.

The Euphoric / Panic index shows that stock investor euphoria have hit levels that are even higher than they were when stocks were at all-time highs.  This index has been a reliable indicator as to the future direction of stocks.  Based on this indicator, there is a 80% probability that stock prices will be below current levels one year from now.

There remains upward pressure on mortgage interest rates.  We will maintain a locking bias.