In 30 Seconds or Less ….

The Good News – Do you remember what that is?  

• The market appears to have found a floor and trading on the higher end of the range analyst suggested 2 weeks ago. A word of caution, the bottom has not been tested.
• More Big Banks are signaling it’s time to get into the market for their wealthiest clients in high quality US equities and remain in high quality domestic bonds.
• New York has peaked (fingers crossed) in new cases and escalating severity of cases while other New Yorkers, already in ICU, lose their battle. Virus Curves outside of New York show other hot spots still ramping up and a couple weeks away from peaks. The next big question is what will happen when the nation goes back to work?
• The Market is definitely numb to bad news and looking for signs of hope on the other side of the crisis. Hence, the positive trading range.
• The CAREs Act continues to roll out and lawmakers are working on the 4^th Act with another $1.2T being tossed around. As taxpayers we should be asking what is really needed as post crisis inflation worries start bubbling up.
• Unintended consequences of government intervention continue to be highlighted and international finger pointing will change the face of international commerce for at least a generation!

I know many of you are fortunate and have cash that has been sitting on the side waiting to invest. When to re-engage in the market is a very personal decision. There remains a very healthy dose of downside risk for those stepping back in now. You need to look at your risk tolerance, your time horizon, your employment situation, and the rest of your overall financial health.  Please call your professional financial & tax advisors to ensure you are all aligned on what’s best for your family!

In The Weeds –

Here we go with the good news –

Positive Trading Range – The S&P is up more than 21% from the March 23^rd floor of 2,191.  Last week BofA had suggested 2,500 was fair value with 2600’s being the high end for the S&P.  As of last night’s close, it was 2,659. 1^st Quarter earnings are due out anytime for those firms that choose to stay on the normal schedule. (The SEC gave a 30 day extension to the normal earning report cycle.)  Doing the right thing is finally in vogue with numerous CEOs keeping employees on the payroll where possible and publicly making those announcements. Let’s hope they get market support for doing the right thing!   

Why only the wealthiest clients? – A Goldman Client letter was leaked early this week suggesting their wealthiest clients should re-engage in the market. Yet, Goldman’s chief US equity strategist David Kostin suggests more caution publicly. (CNBC 4/8) Why? Simple ~ the wealthiest segment of Goldman’s clients don’t NEED the funds they are investing now in the same way most of us do. Those funds will not make a difference in how they fund their kids’ college tuitions or live in retirement. Again, investing is very personal and unique to each of us. Call your financial planner or get one!

Why is pandemic modeling looking better? While NYC is turning the corner, other metropolitan areas are still a couple weeks out like DC, Chicago, and New Orleans, just to name a few. But more importantly, what’s going to happen when shelter-in-place orders are lifted and everyone goes back to work? No one knows yet. But with higher sensitivity to washing hands, wiping down surfaces, and wearing masks for the sake of others, we should be off to a better start! We’ll have to watch and wait.

The really great news is that most of the US. pandemic models are scaling back the forecasted deaths. With China publicly acknowledging that they did not include asymptomatic or low grade cases in their numbers, the pandemic models overstated the dire cases. Then add the value of social distancing and we’re doing better!  Thank the Lord!

The CAREs Act – The CAREs Act is really a kitchen sink Act.  We keep learning more as everyone digests the full bill.  A couple important notes for this group –

1. For Retirees –

• If you are 70 ½ or older, you are NOT required to take an annual distribution (RMD) from your retirement accounts in 2020 under the CAREs Act, if you do not need it. Of course, you can if you need it! If you can defer that will help you preserve principal at these low valuation levels. Or at the very least, hold off taking it as long as you can this year so the value of your portfolio can float back up!
• For those who already took their RMD at the top of the market and don’t need it, you should look at rolling it over into an IRA if within the normal 60-day window. You could have a nice windfall! (Talk to your tax accountant!)

2. For the rest of us worker bees ~ the CAREs Act also increased short term access to our retirement-savings to get through this crisis:

• Those qualifying for hardship withdrawals can access $100,00 from our retirement accounts without paying the 10% early-withdrawal penalty. You’ll have to pay the normal income taxes on it. If you pay it back within 3 years, those taxes should be refunded. (Talk to your tax accountant!)
• The relief act doubles the size of the loans you can take from your 401K up to $100,000.  Of course, the limit of 100% of the vested account balance remains in place.
• For those who already have a 401K loan, you can delay repayment due in 2020 for a year.  Please note, interest will continue to accrue.
• When contemplating the first two options, please try to hold off as long as possible. Definitely, get your mortgage deferred before pulling this lever! All the talking heads believe the market will bounce back in the 2^nd half of the year. By exercising either of these options, you are removing funds from the market at their current low valuation levels, you could be losing out on a nice bounce back in principal.  (Talk to your plan administrator to get the specifics for your plan.)

Finally, with the supply chain disruptions of medical equipment and pharmaceuticals originally due to the virus and now suggestions of additional disruptions due to political rhetoric (I don’t want to get into the politics), there will be significant pressure on firms to bring manufacturing back on shore or at the very least move manufacturing to more friendly nations for national security purposes. This will ultimately raise the price of goods. The first hint of inflation!

So what to do now?

Continue to focus on staying healthy, call your financial professionals for a financial health check up, continue helping those in need in your community, and continue being your wonderful selves!

We ARE leading our families, communities, and teams through this crisis!

#BeTheCalm #StrongLeadership!!!

Later this week, let’s look at some of the broader issues in the economy like high debt, the oil sector, etc.

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Stay Healthy! Susie