March 30, 2020

Good Monday morning,

It was quite a week last week!  With the stimulus bill passing through the Senate and eventually through the House, the U.S. equity markets responded in classic fashion last Tuesday, Wednesday and Thursday gaining more than 3,960 points, or 21.3%.  Unfortunately, uncertainty kicked back in on Friday and the Dow gave back more than 900 points.

The question remains – where or when will we reach the bottom?  If history repeats itself, we will not know for certain until we are about 30 days past that date.  The only thing for certain at this point is that computer program trading is setting the pace in every day’s trading.  You and I, as investors, cannot generate the massive day-to-day swings we have seen in the markets over the last three weeks.  Have we seen this before? Yes we have – December 24 and 26, 2018.  Wild trading sent the U.S. stock market into bear territory (down 20% or more) in the 4th quarter of 2018, ending with a 475 point loss on December 24.  Then comes December 26, and something in the computer algorithms changes, sending the Dow up more than 1,100 points which began a massive rally into 2019.

Our outlook is for continued volatility until the treatment for the Coronavirus is determined, produced and widely distributed and available.  This should end the shelter in place and social distancing orders and get people and the economy back to work.  Have you heard the term, “pent up demand?”  It is expected that once the social restrictions are lifted, people will flood into restaurants, bars, travel and vacation again – all with a powerful demand created by weeks in the house.

Please stay safe and healthy.