To Our Valued Clients,
In 2020 we entered the 12th year of economic expansion in the United States; however, as we all know, our economic expansion came to a halt when the Coronavirus pandemic finally entered America. The arrival of the unwanted virus has wreaked havoc throughout the globe and we expect economic disruptions to continue until we have a medical remedy and can undergo massive testing across the United States. As of March 28th, at the time of writing, there are over 800K cases globally ‐ across our land we have over 125K cases prompting a number of states to issue enforceable quarantine measures while many cities in the United States have issued “Shelter in Place” orders.
The COVID‐19 outbreak has adversely impacted capital markets ‐ including the S&P 500, the Bond Market and the overall economy. In the United States, the markets peaked in February with the S&P 500 reaching 3,393 and closing at 2,585 on March 31st, representing a 23% decline. During the quarter, the S&P 500 hit a low of 2,191, representing a peak‐to‐trough change of 35%. The market then lifted in late March to claw back over 10% from the quarterly lows. In the meantime, the US 10‐year Treasury hit a low of .50%, from a 2020 high of 1.94% on January 2nd, 2020. During the weekend of March 21st, 2020, the Department of Labor reported a record breaking initial jobless claim of 3.283 million, representing the highest reading on record.
To help offset the growing financial and economic pressures caused by the current nationwide shutdown, the United States has enacted on the following:
- The Federal Reserve ‐ Announced massive policy measures aimed at improving credit and lending as well as backstopping all Money Markets. The Federal Reserve Board broadened its program of support for the flow of credit to households and businesses by taking steps to enhance the liquidity and functioning of crucial money markets, Mortgages, Municipal and Commercial Paper.
- Washington – President Trump and Congress reached a bipartisan agreement on a $2 trillion coronavirus relief act, known as the CARES Act. The CARES Act is officially the largest relief bill ever enacted in our country.
- Healthcare – Washington has been working tirelessly with the FDA and NIH to produce a vaccine and/or a medical solution to contain the COVID‐19 virus. Additionally, many large and small private businesses have also repositioned resources to produce personal protective equipment (PPE) for those on the ‘front line’.
The signing of the CARES Act, and various healthcare solutions in test or trial appear to be having a positive impact on capital markets.
Yet StratWealth remains cautious
During the latter part of March, markets rallied from levels that we believe were extremely oversold and at the time of writing remain well off their all‐time highs. However, America is still expecting a further acceleration of cases in the coming weeks.
As we have stated often, panic is not a viable investment philosophy and we need to remain calm as we look past the pandemic. In the coming weeks we can expect more volatility and more bad news surrounding COVID‐19 (data on illness and our healthcare system). We are awaiting concrete evidence to prove the United States is able to mitigate the exponential growth of the virus (“Flattening the Growth”), can accelerate testing, and can work to find a vaccine or therapeutic solution. In the meantime, the Stratwealth Investment Committee continues to evaluate the global pandemic and economic ramifications as well as analyzing options in our investment holdings to mitigate the downside (while benefiting from any potential upside opportunities in the future).
Stay Safe & Well,
The StratWealth Team
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