March 25, 2020

Good morning,

Yesterday was a very big day with the Dow Jones Industrial Average posting its largest single-day gain since 1933 by gaining more than 2,100 points and more than 11.2%.  The S&P 500 and the NASDAQ also posted substantial gains.

Why yesterday?  We see it as the convergence of three events on the same day.  First, and probably most significant, was the anticipation of the Senate passing an economic stimulus bill (which did not come until early this morning).  Second, the Administration taking the position that younger workers may be able to return to work sooner than previously anticipated, targeting Easter as the goal date.  Lastly, the advancements of the medical community toward developing a treatment and a vaccine, with some drugs going into human testing and on the verge of mass distribution.

The newly passed Senate economic stimulus bill is being dissected today, but at first glance it appears that nearly $2T will be used to provide financial support to individuals, small business and major corporations.  This fiscal policy action is what the markets have been looking for, especially after the Federal Reserve moved forward with monetary policy more than a week ago.

The final frontier remains with medical science and how quickly the U.S. can determine, produce and distribute the drug, or drug combination, that brings the end (or at least containment) to the Coronavirus.

As for the markets, volatility remains a factor today.  After opening up more than 600 points, the Dow and the other major stock indices have turned slightly negative.  We believe that news of medical advancements and containment of the virus will be the next driver of the investment markets.

Be safe and healthy.