Credibility is a leader's currency. With it, he or she is solvent; without it, he or she is bankrupt. - John C. Maxwell

With a much more difficult economic environment prevalent across the United States, people are uneasy, worried, and understandably upset. It is in trying circumstances when you are best able to evaluate those in charge. The most high profile areas of leadership are in politics, sports, and business. The general public continues to be skeptical of those in charge. It is understandable. In professional leagues, the high salaries, lack of compassion and loyalty for fans, and less than stellar behavior by players doesn’t help credibility. Many of the leading corporations across the business universe are seen as entirely focused on profitability without any concern for the public welfare. The top executives are viewed as selfish and greedy. Energy, pharmaceuticals, banks, and the technology arena are prime examples. In politics, at every single level (city, county, state, federal) and in any capacity (assemblyman, mayor, governor, congressman, Senator, President) there is outright disbelief or hostility of what is said and done. In many cases, it is for good reason. In this kind of environment, if you are operating or investing in a business, you are facing doubt. Investors trust those who prove they are reasonable, fair, and acting in the best interest of their clients. With this in mind, let’s look at what is currently taking place across our land.

The biggest piece of the working population in the United States resides in the small business segment. It is precisely the place where obstacles are being thrown up to make it more difficult for people (owners and employees) to provide for their families. Many businesses have been closed for months. Workers have been let go. Owners are waiting for loans or other government assistance. State governments continue to make it harder for many industries in service or travel related areas (airlines, hotels, casinos, hair and beauty salons, Pilates, gyms, etc). Restrictions on capacity and social distancing guidelines make it very difficult, if not impossible, for these enterprises to operate profitably. What makes the issue even harder for business owners to accept is the lack of awareness and understanding by public officials. For example, here in Nevada this week, Governor Sisolak was scheduled to hold a press conference on Tuesday outlining ‘Phase 2’ of the reopening plan. He had to cancel the press conference because he reportedly may have been exposed to someone with the Covid virus. After canceling the presser, government officials said the Governor would post a video outlining the phase two details. The video never showed up, at least not in a timely fashion. If you want more proof, look at what took place in Michigan with the Governor’s boat. In Virginia, the Governor ordered everyone to wear a mask. You can get more evidence by looking at California, New York, New Jersey, and Hawaii, too. It’s hard to imagine, but this might be the tip of the iceberg.

The very states I mentioned are looking at huge budget deficits. They will be forced to cut public sector employees like government workers, policeman, firemen, and teachers if they do not get financial assistance from the Federal Government. It is why Mr. Cuomo ventured up to Washington to consult with President Trump last week. The states need help to plug budget holes, as do many cities. It is probably inevitable there will be not only budget cuts, but higher taxes on constituents and businesses. Not a pretty picture, unless the country can get the economy back on track. Let’s just say your skepticism is warranted.

In the market this week, continued optimism on reopening helped stocks post strong gains. Chase CEO Jamie Dimon remarked at a bank conference he thinks there is a strong possibility of a V- shaped recovery. Boy, I hope you are right, Mr. Dimon. If there is one bank CEO that does have credibility, it is him. On the earnings front, Canadian banks Royal Bank of Canada and the Bank of Montreal missed their numbers. One high profile investor, Steve Eisman (Big Short) has long been short the Canadian banks. An area that is showing strength is housing, where the high end is best represented by Toll Brothers. It reported a good number last week. Also posting a beat in the housing space was Lumber Liquidators, the flooring supplier. In technology, Salesforce put up yet another good number while Workday missed it’s mark. Looking at big box retailers, always impressive Costco missed slightly while Big Lots exceeded it’s guidance. Now, let’s look at some other noteworthy items.

Politically, the dual dilemma of China’s actions in Hong Kong and Twitter’s editors helped bring the Donald out of his shell. I know, it’s tough to get him to pop his head out. Restrictions on Hong Kong relationship with the United States and a new executive order on the liability limit (rule 230) of media organizations were the result. The more intense focus is on the civil rights issue from the George Floyd incident in Minneapolis. Moreover, questions about this incident and other similar ones in Georgia and Kentucky, along with others from prior years, are clearly justified. In connection, the rioting and looting which took place over the weekend in Minnesota and other municipalities is disturbing. People invested their hard earned money in those businesses, whether it was individuals or corporations, and that some leaders decided they were not worth protecting is yet another example of why today’s politicians have very little credibility. Hopefully, there is nowhere to go but up. On that encouraging note, stay safe and cool, and thanks for reading the blog this week.