Barron’s Weekend Summary: As the coronavirus pandemic rages, a robust fiscal response from Washington is imperative if the US economy is to avoid a deep, lengthy recession; The outbreak presents a rare opportunity to buy tech’s Big Five
* Cover story: The coronavirus pandemic is the ultimate black swan event, unlike any threat faced by the US since the Spanish Flu of 1918; “Washington must go all in now on fiscal aid, or America will pay later—a robust fiscal response is an imperative if the US economy is to avoid a deep, lengthy recession or, as some fear, a depression. And it’s going to have to be bigger than many of us can even imagine.”
* Tech Trader: Positive on AMZN, AAPL, FB, GOOGL, MSFT: The clear lesson for investors grappling with how to respond to the coronavirus pandemic is that cash is king—“and on that score, tech stocks are far better positioned than any other sector”; For investors looking to jump back into the market, this is a rare opportunity to buy tech’s Big Five—the outbreak affects them all, but each is likely to come through the downturn with its business intact.
* Trader: The impact of the government’s efforts to battle the pandemic will take some time to play out—once markets start trading like normal again, investors can turn their focus to what the way out of the current crisis will look like; Positive on T, TMUS, VZ: Americans who are forced to shut themselves up in their homes during the coronavirus outbreak will lead to a far greater reliance on the Internet, TV, and phone connections—and potential gains for wireless carriers.
* Interview: Inigo Fraser Jenkins, portfolio strategist at Bernstein Research, says a strategist can provide a framework for looking at the market and probable future returns, and that it could be time to buy stocks, if investors have a two-year horizon.
* Features: 1) As the nation battles the coronavirus, the Trump administration, Congress, and the Federal Reserve are working to shore up the economy, yet healthcare—the industry facing the greatest crisis—is not the focus of Washington’s current $1 trillion-plus push, a situation that needs to change as states run out of supplies; 2) Cautious on BAC, C, GS, JPM, MS, WFC: Big banks say they have never been better prepared for a crisis, but even though the sector has gotten hammered as investors worry about whether banks can deliver and get past the crisis without being swamped by bad loans, their stocks are appealing on some fronts; 3) When the world emerges from the coronavirus pandemic, some businesses, and perhaps entire industries—including airlines, energy, and cruise operators—will have taken a major hit and may need a federal rescue if they are to continue operating at full strength; 4) Robert Sluymer of FundStrat Global Advisors, Katie Stockton of Fairlead Strategies, and Andy Addison of The Institutional View discuss what their indicators say about the market’s future—there is bad news, such as further downside for the S&P 500, but also good news, such as the relative outperformance of healthcare and stocks such as WMT; 5) The nation’s regional banks are particularly sensitive to the challenges posed by the pandemic—they have less diversified lines of business and loan portfolios and can be concentrated in one particular area, though many are less exposed to commercial business than they have previously been; 6) Positive on REGN: The company has identified hundreds of virus-neutralizing antibodies that could potentially be used in a Covid-19 cocktail drug that might offer efficacy in preventing and treating the virus, according to SVB Leerink analyst Geoffrey Porges; Regeneron chief Leonard Schleifer tells Barron’s how the company’s technology platform is speeding drug discovery, and how to think about the economics of treatments for pandemic diseases; 7) Cautious on AAPL: “Disgruntled customers and developers say Apple adds to its advantage by weighing the scales in favor of its own products, charging outsize fees, restricting how and when developers may distribute phone apps, and collecting and hoarding valuable business information about the developers’ own customers.”
* European Trader: Industries haven’t all been equal in the month since the stock market rout began—the European banking sector has been hit particularly hard, and in spite of the hundreds of billions pledged by governments in the form of credit guarantees for struggling companies, bad loans could still come back to haunt balance sheets
* Emerging Markets: Brazil so far hasn’t faced a major Covid-19 outbreak, and while it does export slumping commodities like oil and iron ore, its $3 trillion-plus economy is mostly driven domestically—but bargain hunters had better pause for breath before pouncing on devalued Brazilian stocks.
* Commodities: “Retail gasoline prices have hit their lowest level in more than three years, though US drivers might not be fully able to enjoy it with many states on lockdown due to the coronavirus.”
* Streetwise: “At some point, adding money to falling stocks starts to feel like dollar-cost hemorrhaging,” says columnist Jack Hough, who adds that if investors are buying stocks, financial strength is key.