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Economic Perspectives (May 28, 2020)

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COVID-19:

  • In the US the daily number of new cases is trending downwards
  • NY still has the highest number of new cases with ~17,000 over the last week, although CA and IL have similar numbers
  • As states reopen, there is the possibility of a resurgence of new cases

Economic Perspectives:

  • Jobless claims continue to decline which could drop unemployment to below 20%, but most of the improvement (3/4) is coming in CA and FL
  • High-frequency economic data is suggesting trends consistent with an 11.4% YoY contraction in US GDP
  • Mortgage purchase applications have rebounded to pre-COVID levels
  • Motor gasoline demand and other travel indicators continue to improve
  • U.S. Lodging RevPAR -69.9% y/y in Week Ending May 23, showing continued weakness!

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Responses

  1. I am pretty sure there will be the second wave as it’s reopening. But not sure how low the stock market will go. (It could go lower than today, but might not as much as the lowest point in mid March.)  

      1. It is possible be more severe. But may only be partially re-shutdown, and Trump will give the illusory confidence because of his election soon.

      1. just finished watching it! it was awesome, minus the part where the audio cut out lol… during the video you mentioned how airlines and hotels would be better than cruise lines when it comes to high utilization companies. i couldn’t agree more! I’ve been looking at Apple hospitality REIT, they have an impressive line up of hotels under their belt and naturally their stock price has taken a nose dive.

        let me know what you think.

        1. For the week ended May 9, portfolio occupancy was 24%, with daily occupancies occasionally in the upper 20s in the most recent week. The immediate impact of COVID-19 in March was broad-based, and by mid-April, 59% of our hotels were running less than 15% occupancy. Since that time, we have begun to see improvement with over 40% of our properties at 25% occupancy or greater and 15% of our properties over 50% occupancy for the week ending May 9.

          1. At March 31, 2020, the company’s total debt — the total capitalization net of cash was approximately 40% and weighted average debt maturities were 5 years with no maturities for the remainder of 2020 and $32 million net of reserves maturing in 2021. We anticipate entering into an amendment to each of our credit facilities that would provide relief from the covenants for a period of 4 quarters beginning with the quarter ending June 30, 2020

        2. This one is very highly levered towards if the population fears a second wave over the next 3 quarters or not. Do we see a spike? Travel restrictions? If so I wouldn’t touch.

          1. thanks. I’ve been watching it but haven’t invested, also with the current protests/riots, that 2nd wave can come sooner than we anticipated.

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