COVID’s Impact On Cloud Software Stocks

This is an update to the article “Playing Defense with Cloud Software Stocks” published on May 27th, 2020

Rebound numbers from Q3 will look spectacular following the paralyzing effects of strict shelter-in-place orders in Q2. The economy is officially in a recession after posting two negative quarters of GDP growth at (5%) in Q1 and (32%) GDP in Q2. The latest estimate from Atlanta’s Fed GDPNow for Q3 2020 is showing a record rebound of 35.3%.

This represents an increase of 7.9% quarter-over-quarter and 3.1% below the pre-recession high. For comparison purposes, the Financial Crisis of 2008 bottomed at 4.0% below its pre-recession during the third and fourth quarters of its recession.

The chart above shows the projected Q3 rebound of 35.3% from the Atlanta Fed’s GDP Now released on October 6

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Covid’s Rising Again in New York. Keep the Schools Open.

(Bloomberg Opinion) — Few pandemic decisions have become as destructively politicized as school closures. As a New Yorker article noted this week, whether schools are open depends more on a community’s support for Donald Trump than on its Covid-19 infection rate.

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And now a small resurgence of the virus in New York City has schools facing possible closure. An uptick this week has brought what’s called the positivity rate above 3% for the last several days. Under current policy, a seven-day average over 3% will trigger school closings. It’s not clear that 3% is the right cut-off for closing schools, though, or that re-closing the public schools would slow the pandemic.

The positivity rate represents the percent of positive tests among all those tested in a given time period. Epidemiologists say it’s a measure that depends in part on how much testing is being done. If only the

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