COVID-19: Thoughts on a Manic Monday
The markets continued the unprecedented volatility which we’ve all been experiencing for the past several weeks: Friday sent us into the weekend with a near 10% gain, and Monday took that gain away, and then a bit more. Tomorrow? Tomorrow will most likely see a continuation of emotional, and volatile down and up market movements.
So, what happened, today?
As expected, the Federal Reserve lowered interest rates, but some investors thought that to be a bad move, fueling some of today’s sell off. We believe the Fed’s action is one piece of an important response, and that their action was appropriate.
Social distancing is recognized as a key step in controlling the spread of COVID-19, and while many citizens voluntarily abided by the requests, others did not. So, many states, including Indiana, announced various formal restrictions.Limiting contact slows the spread of the virus, which helps to reduce the likelihood of our healthcare system becoming overwhelmed. We see these actions as being beneficial.
In short, two positive, intentional actions were taken and the markets responded with more selling.
While monetary policy, such as Fed rate reductions, and fiscal policies, such as ongoing conversations for government intervention are important, the emotion which is magnifying these market drops will be best quelled as healthcare professionals begin to gather, and act upon, the information needed to address the virus. It would be inappropriate for us, as financial professionals to put a timeframe on those efforts. But, progress is being made daily.
The other piece of today's action relates to the data beginning to be collected, and estimates that are beginning to be created as to possible impact on the U.S. and Global economy, and we will share our thoughts on some of those estimates in the coming days.
The financial impact of the market swoon is palpable, and the emotional toll of worries related to the virus is real. We continue to avoid wholesale changes to portfolios; the emotion and volatility of the markets discourage such. But, we will maintain our watch for opportunities to adjust allocations with a focus on quality holdings.
We know that your questions and concerns may continue, and we will work to keep you informed, while making ourselves available for your calls and emails.