We all have a duty to try to figure out how to solve this public health crisis. Let me give you some thoughts I have after a week of tremendous angst and soul searching about what my job should be in helping you in dealing with the hidden enemy, Covid-19.
I worry about your portfolio. I do that because we have terrific people like Dr. Fauci worrying about your health.
Your portfolio is integrally connected to the economy so let me offer what I think can be done to save your portfolio from being ravaged by this scourge.
First, the government must think big, much bigger than anyone is thinking, to battle what will most likely be a depression, not a recession. Yes it is that bad.
There's a bill kicking around that will perhaps produce $2 trillion in aid for people and business. Double it.
No one is ever going to be criticized for spending too little to keep our nation safe and strong and its people healthy. The only way they will be criticized is for doing too little. If we are going to come back and come back fast that's what we need to do.
How much money should be given to the hard working people who have been thrown out of jobs because their companies were shut down by the government... the restaurant workers, the retail workers?
How about as much as it takes. You can prorate by income and wealth, of course, but that money must get to the workers. We are a service economy. We need to keep those services alive because when we beat this we need a base to build on. They can't just get $1000. It can't be one-off. The longer this goes, the government must be ready to give more infusions. Whatever it takes to protect these people that otherwise will have to liquidate their savings and have nothing left so they will work until they die, not until they retire. You should have a choice.
How important are these two tenants?
First, if we do not put that money into the workers' hands there will be utter fear, devoid of hope, and no chance of coming back from this period. That's not what we do. This is not a survival of the fittest nation. It will be horrible enough when we get the new infection numbers. When we get the unemployment numbers this market will be pulverized without the backstop I am talking about.
Second, if we do not help the small and medium sized businesses there will only be three companies in retail: Costco (COST) , Walmart (WMT) , and Amazon (AMZN) , the latter being the most important business entity in the country. That's unacceptable.
We do need to offer lifelines to certain industries that have a huge impact on our nation. Boeing (BA) is our largest exporter and its supply chain touches 17,000 suppliers. That supply chain must be preserved as there are 2 million workers who will lose their jobs otherwise. Provide Boeing and its suppliers liquidity. That's enough.
Travel, leisure, airlines?
Again, the workers. If the government protects the workers then all good things will happen. We always protect the entities and the bosses. No more. This is about rank and file. That's who we need to worry about.
The bosses: give their companies the liquidity they need to stay alive. That's enough.
Next up? For some ridiculous reason this market is, once again, gripped by a belief that if oil doesn't go higher there will be a huge collapse in the banking system. I care about energy independence. It will not be able to be maintained if oil strays much below $30, the breakeven point for so many companies. The president has to call the Saudis and say stop at $30 or you will not be protected. We have all the cards. Play them Mr. President.
I can only ask that the Fed be given permission to buy all the corporate bonds that are necessary to keep good credit companies alive. There will be moral hazards of course. Decide that later. Stop worrying about punishing CEO. Start worrying about solvency.
Finally, I love the public private combination for solving the coronavirus crisis. But it's way too big now. The only organization that can beat this is the military. They have the bases. They have the engineers. They can build hospitals. They can build containment centers. They can run the testing centers because we need massive testing so we can have people go back to work and spend money. We did far more for Iraq than with the military than with the U.S. Mr. President, end that now.
I will have other ideas. But for now? That's what will save your savings. That's my job.