Best week for the Dow since the 1930's and making strides on the Coronavirus….From the longest Bull market in history… to a bear market… back to a Bull market… all within 3 weeks...truly historic events are at hand
We wanted to drop you a short note after the last few weeks, which have been nothing short of exhausting and nerve racking. After many record down and record up trading sessions, it appears the markets may have finally found an equilibrium on Monday. With our war on this silent killer making great advancements as well, we think the worst (in the market) is behind us for the time being. That said, we would completely expect to see up days and some back filling down days as we move forward and see how different industries are affected by the forced economic shut down.
We sent out a number of updates trying to keep you as informed as we could on both the quick moving news affecting your portfolios and the opportunities we see developing. We mentioned how oversold the markets were and that when it hit an inflection point it would release like a stretched out sling shot propelling the markets up as fast as they came down. Tuesday was an inflection point with the Senate finally getting serious and negotiating a strong aid package to help the American people and American businesses.
We also believe expanded rapid testing may allow some areas to open up sooner than some may expect. This coupled with businesses adapting to "social distancing" may help get the country’s economic engine started again sooner than expected. We are seeing business and people alike adapt to "curbside pickup", live-streaming dance lessons, remote public education, new movies released for streaming, etc. This may be classified as the Speedbump recession. We think GDP in Q1 will be a little less than 1% annualized and the GDP for Q2 will be somewhere between -10 to -15%. We do see the GDP for Q3 and Q4 north of 3% based on research we are currently reading. We will keep you posted as things move forward but we think things are moving in the right direction.
As you saw with yesterday’s new unemployment applications, the shutdown has been swift and ugly just as the markets predicted. We completely expect more ugly economic reports to come, but as you saw yesterday, the markets have much of this bad news is priced in at the current levels. The good news is there is light at the end of the tunnel, and as we said before, we do not think it is a runaway train.
Early data shows that the shelter-in-place initiatives are slowing the spread of the virus. The President and his Coronavirus task force have made great strides in therapeutics and vaccines over the last few weeks. There will be a lot of data for them to review this weekend, and we believe they will start to put policies in place to start opening up some parts of the country sooner than later. Even Governor Cuomo from New York has admitted that the social distancing strategy currently being implemented has its drawbacks, and he is on board with working to find ways to get people back to work. We are fortunate to live in a time when we can adapt to remote work options, food and supply delivery services like Amazon's, and rapidly deployed testing to identify possible solutions to the virus.
Our rebalancing strategy has worked well moving into areas of the market where we see value in at this time. We will continue to make adjustments to the portfolios in the next few weeks.
On a personal note. We hope you and your families are staying safe and actually taking time to spend together and reconnect. We have such busy lives that we often neglect the things that we most cherish. Take time now, because when we are all sent to go back to work, we will all probably be running to make up for the lack of productivity over the last few weeks.
Feel free to contact us at any time with any questions or concerns.