Dear Clients and Friends: April 5, 2020
Prepare for the Worst
This was the sentiment this evening from the President’s daily address. This week and into next, is when we anticipate seeing a greater spike in deaths occurring. Many state governors have said hospital beds, ventilators, and other medical necessities are very limited. Some states have implemented surge capacity facilities for additional treatment. Most states have implemented stay at home orders with only necessary travel. For those who are still having to report directly for work and the heroic front-line responders, my family offers our prayers for your safety. Anyone else needing to be out this week, please be very careful and even wear some type of mask which the CDC is now recommending. In doing this and making these sacrifices, hopefully we are only a few more weeks away from seeing the peak of new cases.
Your Checks in the Mail
Not quite yet, but soon. Treasury is working diligently to build the necessary lists of who is and who won’t be getting stimulus checks. We should know much more in the coming weeks, but for anyone who has filed tax returns, or is receiving social security and has not needed to file returns, your amounts are being cross referenced, and you will automatically receive the stimulus if you qualify. We have already heard of possible scams which are trying to steal your personal information. The IRS or Treasury DOES NOT CALL YOU! Anyone who is calling asking for your bank account, social security number, or other private information is not calling from a legitimate source. There will be letters sent directly from Treasury if needed and we will continue to keep you informed when payments start going out, along with information on who to contact if you believe you qualified for a check but didn’t receive it.
Even though markets traded slightly down for the week, we experienced less volatility swings and started to see pricing within fixed income and liquidity funds moving back to more normalized. Although, decent spreads still exist, and we are trying to use these in our clients’ favor. We are finding good short-term yields in tax free and strong credit corporate bonds. Short-term 1-3-month Treasury Bills stayed positive in last week’s trading action from their historical negative yields the week prior. We believe the Feds bond buying has helped liquidity in this area. The VIX Index has continued to settle down to under 50 last week, this is from it’s high of 80+ back in the middle of March. I don’t believe we are completely out of the woods yet with this market. Technical analysts do admit it’s not out of the question to see a retest of the late March lows. We may experience this retest as we see the peak of the virus and if there’s positive results from social distancing and stay at home orders. If we see positive results from these methods, the bigger question in my mind is, “then what.”
Trying to Keep a Normal Mindset
With the nicer weather this weekend, we tried to spend as much time outside as a family. Started some needed yard work and took in a relaxing walk around the neighborhood. These are hard times as we are forced out of our normal routines, watch or read countless articles about the rising virus totals, and think how our life is being impacted. We need to try and keep a routine, go for walks, read a good book you said you never had time for, use any of the new video phone calling platforms to check in with family and friends. If your over stressed, reach out to a loved one or friend. We will all get thru this together and maybe appreciate those freedoms even more.
I’ve attached a great quick read from American Funds, “Recession Guide.” It’s filled with a few basic concepts as well as more of what to anticipate coming out of recession. This past week, I met with our team’s portfolio manager and we will be finalizing this week our Recovery Portfolio, to take advantage of when this market does bottom and turn higher. I will have more on this in the coming days.
This week I convinced my family to sit down and watch one of my all-time favorite movies, Forrest Gump. First, I can’t believe the movie is over 25 years old. Secondly, as Forrest relives his life sitting on that park bench and reminiscing to his fellow bus travelers, I could only imagine what would have been said about these historic events we are living in now. Very seldom do you ever understand the gravity of what is happening around you or what makes it historic, but I can assure you this is one of those times. Lastly, for those who have seen the movie you understand; “Life is like a box of chocolates. You never know what you’re gonna get.” Never rang so true… Stay safe and healthy this week.