Clarity, For Now

Clarity is what every investor craves especially in a world of alot of
dark alley ways that multiply in a recession. At this moment in time,
the ‘stress test’ has given the markets clarity as to the current
exposure of 19 banks to a specific set of scenarios and kudos to those
that are able to raise private capital in order to satisfy the new
requirements. The question looking forward is if the path of the economy
confirms the stressed case, exceeds it or never reaches it. This current
exercise is helpful for the 19 banks and those stakeholders involved but
there are about 8000 others that didn’t go thru this and many of which
also need to raise capital and/or shrink their balance sheets, aka
reduce lending further. April Payroll estimates are for a drop of 600k
with an unemployment rate of 8.9%. Of the 12 months of the year, April
see’s the biggest contribution from the Birth/Death model which also
could have been a factor in the ADP upside.

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