Something for everyone? Something that makes people buy pretty much anything?
That's how I felt about today when we saw the remarkable non-farm payroll report where 4.8 million jobs were created, much stronger than anyone expected. Almost every single sector improved, getting our country down to 11.1% unemployment, again far better than we thought could happen.
Now, before we start singing happy days are here again let's understand that we are still nowhere near where were before the pandemic struck. Even as industries as diverse as healthcare, education, manufacturing and even leisure and hospitality, which showed, by the way, an extraordinary gain, I know that there's much ground to be made up.
But the comeback, and it is a legitimate comeback, allows for a lot of latitude for everyone, for those who think the economy is coming back and for those who think that we're still in a recession and those who believe that Covid's out of control and they want to take a chunk of the Cramer Covid-19 index, which has 100 stocks.
It's true when you get a couple of million more people hired then you thought, you can make a case for a V shape recovery, especially if we get a vaccine. Some could make a case for a U shape recovery, one delayed by the reemergence of Covid in the south and west, and still others could say there's going to still need more stimulus to keep us from flatlining here.
That's why we saw stocks as diverse as the big retailers, the little retailers, and the defensive consumer packaged goods stocks as well as the industrial stocks, and all the work at home companies surge. You can even buy the banks betting that whatever was going wrong with them might not be as wrong, meaning there might not be as many defaults as we thought.
Me? This number is precisely why I like a barbell approach at this moment where my charitable trust, which you can follow by joining the actionalertsplus.com club, owns some industrials for the recovery, some Cramer Covid 100 stocks on a bet that this recovery will be hobbled by the disease, and some outright recession stocks that happen to be slotted into the index, too.
If you step back for a second, how is all of this possible? I think there was a conscious decision by the government, at the beginning of the pandemic, to open the financial and monetary spigot so that no big companies were to fail just because of the epidemic. As Treasury Secretary Steve Mnuchin assured us, the government was going to offer business interruption insurance to every company large and small, and Fed Chair Jay Powell backstopped any credit needed to any large company. That's how you could have closed national retailers and banned cruise ships and airline companies flying empty planes stay alive until things go better.
Judging by today's number that's exactly what's happening.
Now immediately I heard that the small and medium-sized businesses are still being crushed. They will have to struggle here because of the need to maintain social distancing which doesn't allow them to make as much money, no matter how much paycheck protection the government offers.
Once again, though, I have to remind you that we do not trade those companies. We trade the companies that both Treasury AND the Fed saved, though, and unless the Covid outbreak brings another lockdown - and it very may because there has not been enough social distancing or masking - many just don't take it seriously. At that point you are going to be looking at a shutdown of restaurants, entertainment, travel and hospitality, all sectors that were making a comeback from these numbers. Remember these are big states with big Covid numbers: California, Arizona, Texas, and Florida are about a third of our population and the infected numbers are, to use a succinct word, horrifying. Hence the strength of the Covid 100 index.
Which brings us, because of our holiday shortened week, to next week's game plan.
There's not a lot of stock news Monday, but I think the news will be dominated by new Covid numbers from the weekend. I listen every morning to Dr. Scott Gottlieb, the former FDA commissioner, when he comes on Squawk and he's painting pretty much of an out of control disease right now that will cause us to rethink a lot of the plans we might have had to do anything but stay at home. It's beginning to look like these sports organizations are engaging in a level of wishful thinking that keeps you buying tickets but, ultimately, makes those tickets good for next year's season. I have said it since the Super Bowl and I will say it again, this nefarious disease is so contagious that you simply can't be near anyone who has it whether you are indoors or out, especially if they are singing and screaming which would make my screech owl version of Fly Eagles Fly an ill-advised action.
So, we count the causalities and, sadly, the higher they are, the more likely that the Covid index is going to go from $12 trillion to $14 trillion in pretty much of a heartbeat even if you think the valuations are stretched as most traditionally are, but there's no tradition to refer you to other than the one that Larry Williams help nail on our off the charts segment last week which said that today and yesterday would most likely be up, because the pattern was such a strong one.
Tuesday we have a couple of good new reads: Paychex (PAYX) and Levi Strauss (LEVI) both reporting. The payroll processor should put up better than okay numbers if the employment numbers play out and Levi is moving hard into digital. It's still down a great deal but it's not expensive by any means.
Wednesday Bed Bath & Beyond (BBBY) reports and this will be Mark Tritton's quarter. He's the new CEO, put in by insurgents and he's had his hands full given the non-essential nature of his stores. We need a plan from the man. I bet he will give us one and we will like it but recognize that the company took another step backward during the Covid epidemic closures.
Thursday could be, once again, a house of pain when Walgreens (WBA) reports. These guys truly are the gang that couldn't shoot straight. I think they will offer us the usual number cuts and we will say once again that there is no room for them in a world where Amazon (AMZN) is king. When I was at my old hedge fund I would short something like Walgreens but now, why bother, there is so much optimism someone might want to buy it anyway.
Finally, Friday we don't have companies reporting but we do have producer prices and I wonder if people are going to start worrying that if you throw $2 trillion at the economy to keep it afloat you start getting some inflation. That used to matter. Doesn't seem to anymore.
Nothing seems to matter anymore except which stock to buy, a staggering conclusion with 11% unemployment and an epidemic raging throughout the nation.