April is going to be a challenging month for many. WIth the lack of income caused by the COVID-19 Pandemic many businesses small and large are going to be affected by the lack of income being made. Our Nation has implemented emergency powers to our medical facilities and essentially created a mandatory Triage. This is also what our small businesses are doing as well. Deciding what financial problem to treat first.
Many individuals will not be paying their rent on their apartment or home mortgage. Companies, even billion dollar businesses like the Cheesecake Factory have stated they will not be paying their monthly rent. So what impact will this have on the US Economy? Some companies are thriving by making wise investments by shorting the markets and have deep cash reserves like American FX Capital. But many companies are in full panic mode and have little cash to spread around. The Federal Stimulus Package will put roughly 2 Trillion dollars back into the market and was created to fight the missing payments for April. The issue is that the money may not reach the American Market in time.
What happens when all these bills are not going to be paid. The question is will there be lots of negotiation on the debts or will there be a government absorption of debt? If there is some kind of debt forgiveness the economy may get back to a version of its past self. If not there will be many individuals who were and are directv affected by the Pandemic who will not be able to put money back into the economy.
There will be debt payments instead of furniture purchases. In some cases real estate owners who rent to these individuals will find a possible loss in payment from 3% up to 100%. How long can apartment complexes survive without income? With any luck the stimulus package will allow payments to get back on track but massive cuts may be made in the meantime before the money actually arrives. Citizens have not received their $1200 per adults check yet and small businesses have not received grant or loan money either.
It also looks like GDP will be down 30% for the second quarter. If there is not going to be a debt forgiveness of some kind it looks like GDP will continue to suffer. As usual we are not giving financial advice only talking about the market as we see it. For financial advice go see your local broker, investment advisor, or attorney.