The United States is experiencing an extraordinary healthcare crisis – one could say we are actually living in times that are ‘making history’. No matter our viewpoint, we know this: we want to stay engaged with you through these challenging times! And so, it is our firm wide plan to share our views, our pragmatic perspective and to provide a modicum level of education through this crisis.
Economic downturns are impossible to predict and are as sure as sunrise. Today, we find ourselves in the middle of one, and this email is an engagement point to position some helpful facts around the availability of Cash (in the market).
Before we jump into this, we feel it is important to note that the United States has learned from previous dreadful events (and other countries) to take overt actions that seek to flatten the curve of the Coronavirus, COVID-19. Additionally, over the recent weeks, the United States Government has aggressively moved to preemptively alleviate concerns surrounding the safety, security, and the confidence of our U.S. capital markets. The sole aim being to cushion the economy while pharmaceutical companies work swiftly and tirelessly to uncover a medical solution.
One of the primary actions of the Federal Reserve is ensuring all individuals, businesses and banks would have unlimited access to their cash and to their Investments. In particular, the Federal Reserve focused their attention on Money Markets to ensure liquidity. But what does this all mean? StratWealth will help make sense of it all.
Money Markets Defined:
Essentially, Money Market vehicles are designed to provide liquidity, as well as assurances to retail (moms and dads), institutional clients (like banks), as well as corporations (big business) that your money, cash, is readily available, and you will not incur a loss.
What type of Assets are purchased by Money Markets:
The majority of Money Market investments are in high grade securities that are backed by either the full faith and credit of the United States or from World Class Organizations. They may include:
- Certificates of deposit and time deposits
- Variable- and floating-rate debt securities
- Bank notes and bankers’ acceptances
- Repurchase agreements
- Obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
What’s Included in Money Markets:
Bank Sweep Vehicles – The key word is “Bank”!! Generally speaking, the banking and/or financial institutions Sweep Vehicles are built to move a client’s money into a Money Market investment vehicle (or for the large institutions the sweep may go into a US Treasury Bond or Commercial Paper of a large institution like, JP Morgan which is FDIC Insured).
All that said, last Wednesday The US Federal Reserve substantially broadened its program of support for the flow of credit to households and businesses by taking steps to enhance the liquidity and the functioning of crucial money markets. (For more information on the support of the Federal Reserve, see 60 Minutes episode, March 22nd, 2020).
Here is a snapshot summary of the protection available to all Americans:
We hope this educational piece has helped put your mind at ease and given you a better understanding of the financial infrastructure currently in place throughout the United States.
As always, we are paying close attention to the details surrounding COVID-19, and the Government’s move to help families and businesses through this period. Over the last several weeks the capital markets have experienced material volatility that, in our opinion, is predominately panic driven. As mentioned in previous communications with you, panic is not a viable investment philosophy and we will remain calm as we look past the pandemic.
Over the coming weeks, we will likely experience more volatility (and higher infection numbers), but unless the facts change nor will our view: StratWealth’s diversified investment portfolios, planning process, and long-term investment outlook are designed to weather a “Coronavirus driven market selloff”.
Our StratWealth family wishes all the best to you and yours during these ‘historic times’ and we look forward to staying in touch over the coming weeks. As always, you can call us at any time!
By Your Side,
The StratWealth Team
For important disclosure information, please visit: https://www.strat.wealth.com/disclosure.