Update - April 21, 2020

Something Worth Celebrating

We celebrated the three-year anniversary of Manward Letter yesterday.

Thank you so much for being a part of it.

Given the news these days, I’d humbly say our Triad is more important now than at any time since World War II.

The nation is getting a grand lesson on the importance of Liberty, Know-How and Connections.

I’ve got a lot of ground I want to cover in this week’s alert. It’s an understatement to say there’s a lot happening in the world of wealth and health. But I want to start by giving a much-deserved tip of my hat to a few dozen dedicated folks who work for a company that once graced our model portfolio, Braskem (BAK).

Capitalist Heroes

It’s not hard to turn on the news today and see folks griping about their jobs. It seems as though half the nation is begging (and protesting) to get back to work and the other half is begging for more cash from Uncle Sam.

I won’t get into the politics of it all.

But in a nod to our Triad, we must applaud the 40 or so workers at Braskem who took things into their own hands.

They banded together and locked themselves in their factory for nearly a month. That way they could produce essential healthcare equipment 24 hours a day without worries of quarantine or getting sick.

They didn’t wait for the government to tell them what to do. They didn’t wait until they got the wages they felt they deserved. They just jumped in and did what’s right.

That’s something worth celebrating.

There’s a lot of bad news out there these days. But there’s also an immense amount of good.

By no surprise, much of the good news represents the ideas of the Triad.

Liberty, Know-How and Connections do good things… always.

I’m positive that if you make it a point to include the ideas in your life and highlight them when you see them, you’ll be a better, happier person… with extra money in your pocket to boot.

Volume, Please?

Money is definitely on the minds of many folks these days. Wall Street has not had a great start to the week.

I’m watching two things very closely – equity volume and interest rates.

Both are falling. And that’s not a coincidence.

As I write, the benchmark 10-year bond is trading with an interest rate of just 0.56%. That’s just a few basis points above the record lows we saw during the height of last month’s plunge.

It tells us that demand for safe havens is on the rise once again.

Investors are grabbing ultra-safe government debt because, at least right now, return of their money is more important than return on their money.

This is an important theme to note as we go into next week.

On Wednesday, the Federal Reserve will kick off the latest of its two-day meetings. I don’t think Jay Powell is scrambling to find things to talk about.

His plate is quite full.

Already the Fed has taken massive steps toward stabilizing the market. By some accounts, its actions are the only thing keeping the economic machine from stalling out.

The group has already made some huge knee-jerk reactions related to this economic mess. Another big move next week – like even hinting at negative rates – would stir even more volatility.

Unfortunately, I don’t expect Powell to sit on his hands.

We pay him to manipulate the economy… so manipulate he will.

But while the Fed chief may get the microphone next week, it’s equity volume that will truly tell the tale. Volume was huge as the markets plunged. It was relatively moderate as stocks rallied from their lows. And, at least in the context of the recent volume, it’s fairly light as markets dip this week.

It tells me that conviction from either side is fairly low. It could mean the recent upturn will merely pause until we get more data. Or it could mean the bears get their way again for a bit.

Either way, our portfolio is prepared.

If stocks take a turn for the worse, our ProShares Short FTSE China 50 ETF (YXI) will do well. With consumer demand falling faster than expected and with GDP contracting 6.8% last quarter, China now faces the worst downturn it has seen since the 1960s.

This play is designed to profit from the downturn. It will rise as the world’s second-largest economy shrinks.

As I write, the exchange-traded fund is up by 2% today.

Hopefully this week’s action is short-lived though.

If that’s the case, I’m particularly excited about the recent news from our newest position, KBR (KBR). It just announced its role on a massive, multiyear $6.4 billion contract with the Air Force.

It proves that this company is an ideal stock to own during times like these. With a slew of government contracts, its revenue source is quite solid. It gives the top brass reliable cash flow to work with and build from – a rare luxury these days.

The market has wrongly knocked some points off this stock over the last month. It makes it an ideal buying opportunity.

If you didn’t grab shares yet… now is the perfect time.

Testing… Everybody

Changing gears a bit, I opened my computer this morning to a headline that involved a doctor I’ve had a few conversations with recently.

The last time I talked with Dr. Marc Siegel was when he was riding in an Uber across Manhattan. He was leaving his office to go see patients at NYU Langone Medical Center.

These days he’s getting quite a bit of screen time as one of America’s most forward-thinking docs.

Last week, he did something we’re all going to become very familiar with over the next few months.

Siegel, who was complaining of a bit of a cough, took a COVID-19 test live on Tucker Carlson’s show. It’s a new test that gives a result in minutes. It doesn’t rely on a government lab, a multiday turnaround or anything like that. It takes a swab of the nose… and just a few minutes.

Fortunately, the doctor tested negative.

This advancement in testing means a lot. Things have already gotten very political. It will get worse before it gets better.

But please don’t get sucked into it.

Instead, remember that humans have an incredible drive to survive and thrive. And we live in one of the best times ever to be on this planet.

If we focus on our freedom and the intense good that our capitalist drive creates… that idea will continue to be true for years to come.

Some bad things will come out of this pandemic. But I’m convinced some very good things will be born too. Medical innovations will be one of them.

Again, the Triad will lead the way.

Our Liberty, Know-How and Connections are more valuable now than at any time in the last 80 years.

We should celebrate them every chance we get.

Be well,

Andy