COVID-19 UPDATE: Senate passes revised PPP = improvement. S&P 500 clears 76% retracement, next level all-time highs = "less barbell"

COVID-19 remains a global crisis and we realize that many people need to keep up with COVID-19 developments, particularly since we are moving into the more critical stage ("restart economy"), so feel free to share our commentary to anyone who has interest.


The S&P 500 reached new cycle highs today, closing at 3,122.87, the highest close post-COVID-19 and also clearing a key 76% retracement level (3,109.93).  The next real battle line, as shown below, is 3,393.52, or all-time highs.  The weakening of USD (past week), solid recovery in oil, further fall in VIX point to a growing constellation of financial indicators confirming the rise in equity prices.  And given the mountain of dry power ($5T money market + $2T private equity + $1T corp net raise), there is a lot of capital that could be buying corporate equities if the economic recovery gains traction.  Hence, the market, in our view, remains in the hands of buyers.  



Tonight, the Senate passed a bill easing restrictions and essentially improving the PPP program.  Under the bill, small biz only needs to spend 60% on payroll (75% prior) and could use funds for six months (vs 2 months).  And per CNBC, the deadline to rehire has been extended past June 30th and could get loan forgiveness to defer to payroll taxes. This policy change makes it easier for small businesses to leverage the program and is overall positive.

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