Coronavirus Update March 17, 2020

We know that you are being inundated with information about the coronavirus (Covid-19) and its effects on global markets.  Much of the information you are reading and viewing on television is admittedly, frightening and unnerving.  We have managed through similar situations following the 9/11 attacks and the 2008/2009 financial crisis. 

This week, markets continue to trade at high levels of volatility.  Markets, in our view, will continue to be volatile until issues surrounding the spread of the Covid-19 virus are manageable.  This includes seeing a meaningful slowdown and/or reduction in the number of new reported cases and an increase in the number of previously diagnosed patients who have recovered.  We suggest you refer to the Johns Hopkins University Coronavirus Resource Center website for updates. https://coronavirus.jhu.edu/map.html

At the moment, there is still a high degree of uncertainty about how dramatically school and business closures will affect economic growth.  We know it will be significant, but we don’t know the degree or duration.  It is impossible for anyone to accurately predict whether this will lead to a recession.  It is also impossible to “call a bottom” in the stock market.  Covid-19 and its affects now become another data point we are monitoring. 

Market stabilizing actions are being enacted.  Policy makers around the world are moving rapidly to announce and launch support for businesses and individual workers.  Additional actions will transpire to stabilize the markets.  Furthermore, these programs will also stimulate the forthcoming recovery.  In the U.S. it appears a recovery package of $850 billion is quickly coming into shape.  The bill passed in the House is gathering support in the Senate and may be voted on today or tomorrow.  There is also speculation that this bill will be followed by additional stimulus and support.  This is in addition to the actions taken by the Federal Reserve to inject liquidity into the short-term lending markets and to cut the federal funds rate to 0%. 

We are growing more encouraged by actions taken at all levels of government.  It appears that the combination of federal, state and local government intervention as well as a better public understanding of the virus is leading to a virtual shut-down of everyday life as we know it.  Our position is that the sooner that happens, the sooner we recover economically.  Furthermore, large money center banks are very well capitalized today; they were not so during the credit crisis of 2008/2009. 

We are reviewing our strategies and client portfolios to determine appropriate actions to take.  In many taxable accounts, we have identified tax loss harvesting opportunities and re-balanced accounts accordingly.  It is important to note, we have NOT made significant changes to any of our strategies as our long-term economic outlook remains.  However, we continue to monitor not only coronavirus-related data but all economic data points to determine what steps, if any, to take.  Furthermore, we are in touch with our client base to gauge your concerns and questions.

We want to stress that we welcome your questions, calls and inquiries.  Do not hesitate to call or email us to discuss your portfolio, our outlook or general market observations.  We know that in the short-term these levels of volatility can be concerning and stressful, and want all of our clients to rest assured that we continue to monitor economic, regulatory, and legislative data and actions and will act when appropriate, removing emotion from decisions made as stewards of our clients financial security.