Broker Check

Grappling with the Coronavirus


July 30, 2020 - Coronavirus Update

Though the markets were somewhat directionless this week, potential fiscal stimulus was a key driver of investor sentiment. On Monday, the Senate released details on a new $1 trillion legislation package titled the Health Economic Assistance, Liability Protection & Schools (HEALS) Act. The bill consists of another round of $1,200 direct payments for those who qualify, expanded unemployment benefits (albeit at a lower level), more paycheck protection for small businesses, continued student loan deferment, and funding for schools and universities. As robust as $1 trillion may sound, the fight in Congress is over whether it is enough.

On the COVID-19 front, the news remains mixed. From a positive perspective, there are increasing signs that some of the harder-hit states in the South and West may be plateauing. The number of new cases in these areas is slowing as public health measures such as mandated mask wearing and business closures appear to be paying off. Conversely, China saw its first new case in three weeks.

While a plateauing number of new cases is good news in the U.S., the continuing tug of war between public safety and economic growth remains in full effect. It was announced on Tuesday that consumer confidence fell more than expected in July as business reopenings were rolled back nationwide. Confidence further waned on renewed job and income concerns. The number of individuals claiming unemployment benefits also ticked up for the first time since the heart of the COVID-19 storm in March, further dampening consumers’ spirits.

In the midst of all this, the CEOs of four of the world’s largest technology companies headed to Washington to testify in front of Congress. In a rather unlikely alliance, the top executives at Amazon, Apple, Facebook, and Google testified alongside one another in an effort to make the case that they are not deploying anticompetitive behaviors, and that they provide benefits to American consumers and businesses. These four companies are dominant to be sure – and they are not without flaws – but they have also connected individuals in ways that had never been done before. The hearing felt a bit surreal alongside of the health and economic woes seen this year – but I suppose that’s on par for 2020.

The information provided here is for general informational purposes only and should not be considered a recommendation or investment advice. Investing involves risk and the potential to lose principal.


July 23, 2020 - Coronavirus Update

While choppy, the markets have continued to grind higher in recent days. Discussions, both domestic and foreign, concerning fiscal stimulus were one of the primary drivers of stocks this week. First, after four long days of talks, the European Union reached a new stimulus agreement totaling an unprecedented €750 billion (approximately $860 billion). The EU plans to distribute the funds in the form of loans and grants to its member countries and to the market sectors most in need. By contrast, the U.S. is facing a “fiscal cliff” as the initial round of stimulus is set to expire at the end of July. Getting a second stimulus package through Congress is proving difficult, however, as the two parties continue to hash out the underlying details. At this point, equity investors are expecting a deal will ultimately come together.

There continues to be encouraging news regarding development of a COVID-19 vaccine. Of particular note, Oxford University in concert with AstraZeneca, a large pharmaceutical company, published data showing a vaccine they have in development generates an immune response. While not without side effects – and keeping in mind there is still much testing to be done – the efficacy and safety of the vaccine sound promising. Domestically, the federal government placed a $2 billion order for 100 million doses of a potential COVID-19 vaccine developed jointly by Pfizer and BioNTech, a German company. The U.S. government hopes to have a COVID-19 vaccine widely available by January.

From a geopolitical perspective, tensions between the U.S. and China moved to the front burner again this week as the State Department ordered the closure of China’s consulate in Houston. The closure was ordered in an effort to protect intellectual property and information, a move that a Chinese Foreign Ministry representative characterized as an unprecedented escalation. Time will tell if this will further damage the already rocky trade relationship between the world’s two largest economies.

Through all the recent tumult and economic strain, the stock market is within striking distance of the highs it reached in February, prior to the COVID-19 pandemic taking hold. This is an amazing feat and speaks to the optimism of the American investor. News about a new stimulus package and ongoing vaccine efforts should continue to dominate the mindset of investors, not to mention the headlines, in the weeks ahead. I am hopeful for positive outcomes regarding both.

Market comments based on the S&P 500 index which is unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.

The information provided here is for general informational purposes only and should not be considered a recommendation or investment advice.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed.


July 16, 2020 - Coronavirus Update

Coming into the week, COVID-19 news was mixed. Over the weekend, New York City reported its first day with no coronavirus deaths since the pandemic began– while Florida set a single-day record for the number of new cases in a state. The market got off to strong start on Monday, but stocks reversed course after California ordered all indoor entertainment, including bars and restaurants, to close, frightening investors and pushing the markets into negative territory by close.

Equities renewed their upward march on Tuesday as a number of large banks reported earnings. Here too, the news was mixed. Some banks reported poor numbers as they have had to increase their provisions for potential bad loans, while others, whose fortunes were more tied to trading revenues, fared much better as the market’s volatility worked in their favor.

On a more clearly positive note, stocks surged Wednesday morning after a large biotechnology company reported that its coronavirus vaccine had produced promising immune responses. Even Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, characterized the results as good news. As in prior weeks, stocks in travel and entertainment spiked upward on encouraging vaccine data. This shows the market believes that the travel and entertainment industries’ recovery hinges on the successful development (and deployment) of a vaccine.

Coming full circle, while Florida did have a large number of new cases this past weekend, daily cases have since begun to trend lower statewide for the first time in recent weeks. That said, cases are still rising on a national level and Thursday’s jobs number came in worse than expected. As such, concerns still exist that we could very much have a second wave economic slowdown as some businesses close again. While our expectation is that the U.S. in aggregate will get the new case count under control, we recognize it may take some time to get there.

Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed.


July 9, 2020 - Coronavirus Update

This week the markets were torn between positive economic news and the nationwide resurgence in COVID-19 cases. On the economic front, it was announced last Thursday that a record 4.8 million jobs were added in June, the second month in a row that the jobs data had a strong surprise to the upside. Of particular note was that a significant portion of the job gains were seen in areas such as leisure and hospitality – two industries hard-hit by the initial coronavirus lockdown.

While the strong economic data seen in May and June was welcome, the rising number of COVID-19 cases has investors on high alert as we move into July. In some instances, business owners are increasingly nervous that the pandemic – and its associated economic pressures – may go on much longer than they initially hoped. If it is necessary for businesses to reclose, a marked slowdown in the economic recovery could occur.

One bright spot for global equities of late has been China. Chinese equities have spiked as economic data has been strong, with improvements on both the manufacturing and services front and, by appearances, the containment of COVID-19. While it remains to be seen whether China’s relative strength will be sustainable, it does speak to the benefits that diversification and a modest investment in emerging market equities may bring.

While the market on the whole has been a bit directionless over the past month, some subtler trends have developed. Harkening back to the heart of the downturn, technology stocks have resumed their market leadership while more economically sensitive sectors such as energy and financials have begun to struggle. This could be an early sign that the market is sniffing out a second-wave slowdown. As such, I continue to believe diversification to be the best course of action. Spreading assets across various investment classes allows investors to participate in market rallies when they occur while managing risk should the markets decline.

Stay safe and be well.

Past performance is no guarantee of future results.  Investing involves risk and the potential to lose principal.  

International investing is not suitable for all investors. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging and developing markets. Please consult with your financial advisor prior to making investment decisions.

Diversification is an investment strategy that can help manage risk within your portfolio, but it does not guarantee profits or protect against loss in declining markets.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed.  


July 2, 2020 Update - Coronavirus and the Markets

After a rough finish last Friday, stocks headed upward this week. On Monday, it was announced that the index of pending home sales was up a record 44.3% in May. Paired with the strong new home sales numbers from the week before, it appears home buyers are reentering the housing market – a good sign for the economy at large.

Adding to investor optimism is some encouraging study data on a coronavirus vaccine. While the results of the study are still very much preliminary, the market’s positive reaction shows it believes a viable and deployable vaccine will augur the end of the pandemic and its economic downturn.

News on the hiring front was also generally positive this week. The May jobs numbers were revised higher, showing more than three million jobs were added in the month. June’s numbers did not meet consensus expectations, but they were still in solidly positive territory, with payrolls rising by 2.369 million. A notable recovery was seen in jobs tied to leisure and hospitality, the areas initially hit the hardest by shelter-in-place orders.

However, in spite of all the good news, the number of new COVID-19 cases is up 80% nationwide in the past two weeks. In response, a number of state and local governments have begun to slow reopenings and mandate wearing masks. For many restaurants and small businesses this is a frustrating development, as a resurgence of cases may force many businesses to close again after recently reopening.

This week we also saw the second quarter come to a close. From a stock market perspective, equities fared well having their best quarter since the technology boom of the late 1990s. Time will tell if the market moved too far too fast, but for now, it feels like the markets are heading in the right direction.

The information provided here is for general informational purposes only and should not be considered a recommendation or investment advice. All opinions and forward-looking statements are subject to change without notice based on market/economic conditions. Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. Investing involves risk and the potential to lose principal.


March 26 update: Coronavirus and the markets

For the third consecutive week, the markets began with a Monday sell-off followed by a Tuesday bounceback. All eyes were on both monetary and fiscal stimulus, and early in the week the markets viewed both with disdain. However, that changed as the week progressed.

From a monetary perspective, the Federal Reserve (Fed) took some extraordinary steps – colloquially called its “bazooka” moment – announcing the removal of caps on its purchases of Treasury bonds and mortgage-backed securities, and that it would purchase corporate bonds for the first time. While supportive in concept, the markets initially viewed this negatively, believing that the Fed may be running out of ammunition. However, this sentiment changed on Tuesday as investors began to see improving liquidity in the markets and, thus, everything from municipal and corporate bonds to equities performed very well. The Dow Jones Industrial Average was up more than 11%, its strongest single day percentage gain since 1932.

On the fiscal front, the week began with investors hoping Congress would reach a deal on a massive stimulus plan to support those impacted by the coronavirus. Negotiations stalled out on Monday, but that changed Wednesday morning when the Senate came to a bipartisan agreement for a $2 trillion stimulus package. While yet to be voted on by both houses of Congress and signed into law by the President, the proposed package consists of direct payments to individuals, small business loans, and unemployment insurance benefits.

The amount of monetary and fiscal stimulus being pumped into the economy is unprecedented. While the economic impacts of the coronavirus will likely be damaging, government entities are doing everything in their power to bridge the economic gap until the crisis passes. Nevertheless, wide day-to-day market swings can be disconcerting for an investor. Please do not hesitate to give me a call if you have any concerns about your current investment plan.

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In your investing lifetime, you may only see a situation like the recent novel coronavirus (COVID-19) a few times. This is a circumstance where complete candor is necessary. The truth is that we can’t yet gauge the full economic impact, and by the time we can, the volatility may have passed.

It’s important to remember that, in terms of market declines, the recent drop isn’t unprecedented. In fact, in the last six day-to-day declines of 3% or greater, the market rebounded higher a month later. Past performance is no indication of future returns, and it’s uncertain whether history is a good teacher in this instance.1

Markets Have the Virus

Right now, markets are reacting to the news because the outcome is unknown. In a way, COVID-19 has “infected” markets all around the world. In times of market uncertainty, some traders believe the best approach is to sell. Fear is driving decisions. Nobody would blame you if this uncertainty gave you a bit of
anxiety, as well.

You Don’t Buy Snow Tires in a Blizzard

By working together to develop an investment strategy that fits your risk tolerance, time horizon, and goals, we have been preparing to weather turbulence. When a blizzard hits, the people who already own snow tires are usually happier than those venturing out into the cold, hoping they’re still in stock. In the same way, it’s generally best to make decisions during periods of low market volatility. We’re in the middle of the storm right now.

Here to Support You

This may be the time you need a trusted financial professional most. During most volatility, we advise you to “Be a long-term thinker, not a short-term worrier,” and that generally proves to be the best course of action. In times like this, however, it’s easy to question conventional wisdom.

Remember, we are here to help you and your family during this time. Whatever decisions you make, please allow us to support you through them. Feel free to reach out to our team with any questions or concerns.


1. wstreet.com, February 27, 2020


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