Here is our May 1, 2020 Market Update
In this episode we address:
Summary Version
Economic Impacts
- S&P 500
- YTD = -10%
- Down 14% of the February 19th high
- -1% for the past year
- +30% off the March 23rd bottom
- Finding a responsible way to get businesses back up and running
- Confidence in the consumer – going out to eat, getting on a plane, events, sports, vacations, etc.
- Finding an effective vaccine and/or therapeutic
Moving Forward
- Massive global stimulus and rescue capital
- Markets often bottom before the data
- States starting to open up under strict guidelines and restrictions
- Social media and news sources fanning the flames of fear
- Unemployment numbers keep going up
- How many bankruptcies will we see?
- Unknown earning damage
- How long until confidence is restored
Full Version
This last quarter has been extremely volatile due to COVID-19. We’ve seen the fastest 30% drop in history, runs on toilet paper at the grocery store, and quarantine nationwide.
Experts are looking into a vaccine, hospitals in some parts of the country have been overwhelmed, students across the country have had to move school online, and life has been turned on its side. The markets have as well.
In reality, we’re in a government-led recession, due in part to flattening the curve and protecting our health. As of April 30, 2020, the market was down 10% year-to-date, which is down 14% from the high on February 19th. Looking back one year, the market was down 1%.
Since the low on March 23rd the market has increased by 30%, which may be a bit too optimistic. In many ways, the market has moved beyond the virus, potentially pricing in much of the poor economic news, which is yet to come. The concern is that there is a tremendous amount of uncertainty.
We believe there are three factors that need improvement to continue the recovery. First, we need to find a responsible way to get businesses back up and running. Second, the consumer needs confidence that they will be safe going out to eat, traveling, and attending events. Third, finding an effective vaccine and/or therapeutic will help us find our new normal.
So, the question presents itself, how do we move forward? The markets have certainly benefited and moved toward recovery from massive global stimulus and rescue capital. But what has really changed? Over 30 Million people have filed for unemployment and most of the country is still in quarantine, in one level or another.
Our concern is that the market both fell and rebounded too quickly. One of the real questions is if the market has priced in the negative economic data that will be coming. There are a number of factors going forward that are unknown, which simply means market uncertainty will likely continue. It’s paramount that you’re positioned accordingly.
Remember, that market recovery will happen. We’re not sure how long it will take but we’ll get there. Our plans and investments services take into account both up and down markets. Please let me know if we can assist you in any way.
