Corporate buybacks are now taboo as many companies are facing scrutiny for having diverted free cash flow to prop up their stock price. In doing so, these companies have created financial inflexibility when needed most. Our country’s deficit will grow dramatically as we look to inject liquidity and confidence into the system. Higher debt has consequences to our currency and perhaps will lead to the end of some essential services longer term.
However, we have also learned that some services, e.g. higher education, can be delivered remotely. We hope and expect, for those where a quality college education seemed impossible, it should not be any longer. For universities with large endowments, it is time to step up. Commercial real estate has or will soon change. Employers will likely allow more staff to effectively work from home and, in doing so, will improve their bottom line. The work at home trend may prove ominous for “rich” commercial real estate markets such as San Francisco and NYC. And perhaps this leads to more affordable housing for those families that have been crowded out. Corporate travel should take a long time to come back. Applications such as Cisco’s Webex and Microsoft’s Teams are a cost-effective alternative to expensive business lodging and travel. {These are not necessarily stock recommendations but observations}. Online retail will only accelerate. Hopefully, our local small businesses can find a way to survive and prosper as they represent an important element of our community fabric. Doctors, nurses, pharmacists, grocery employees, and gas attendants alike are the new heroes and we should never forget those who have put their own life second to others. Drug companies such as Johnson & Johnson that have been feverishly working towards a vaccine exemplify what is right with corporate America! {once again, an observation not a stock recommendation}.
We expect Monopoly boards are being dusted off and families are rediscovering what family time really is. However, in times like today, there are also ugly elements that arise from economic distress—such as increased domestic abuse. We have sent a modest donation to Turning Lives Around 180, a local NJ organization dedicated to protecting families in an abusive relationship. The world is not without risk, but it is full of compassion. Almost everyone has seen videos of people from around the world clapping from balconies and open windows in support of healthcare workers. We encourage everyone to help those less fortunate and acknowledge our new heroes in any way possible. This is what makes this country and world so great. We hope and pray your families are safe and well. These are unusual times, but acts of kindness, FaceTiming and texting of friends and a growing sense of family and community will help all of us get through these restrictive times. There will be a return to normalcy.
We are all in this together and we will come out of this stronger.
