Enduring a "Tough Two Weeks Ahead"
by Eric Nager on Apr 3, 2020
The President’s March 31 daily update on the Covid-19 virus included a sobering comment that we should be prepared for two difficult weeks. Yes, that seems to be bad and even unnerving news, but the silver lining could be that the virus impact may be in the process of peaking out, at least in the New York City area. Getting past the high point of the curve and reaching the downside will be very encouraging to all. To be sure, New York is not the entire country, but it is the epicenter for the virus here in the US.
The other potentially good news at the end of the two-week period is on the economic front. That is when the individual checks from the Government are expected to begin showing up in people’s accounts. Today, Treasury Secretary Mnuchin said that small businesses (under 500 employees) should be contacting their bank or financial institution and apply for the forgivable loans because that money is ready to go this week. Let’s get the money flowing so that the economic healing can begin.
It is not our intent to minimize in any way the suffering or the tragic loss of life associated with this terrible virus. However, we feel it is important to focus on the progress in dealing with this serious health issue and the economic recovery that will follow.
A brief comment regarding the soon-to-be released TD Ameritrade March statement: This will not be pleasant reading, but perspective is important. The volatility (the rapid swing in prices up and down) is beyond anything that we have seen before. On February 19, the market hit an all-time high and by 3/23/2020 it had dropped about one-third of its value before rallying back to finish down about 19%. To put that in perspective in 2019, the market had over a 20% gain, which means that in most cases there was only a small net gain for the one-and-a-quarter-year period.
Please watch the brief video attached by Brian Westbury. This video provides perspective regarding the current market situation and an encouraging outlook for the future. Brian’s knowledge and experience as well as his pleasant demeanor make this four-minute presentation easy to watch. https://www.ftportfolios.com/Commentary/EconomicResearch/2020/3/30/recession-v-shaped-or-u