March 31, 2020

Good Tuesday morning,

There was a different feel in the U.S. stock market yesterday.  Volatility was relatively low with no real “new news” on either of the Coronavirus (CV) or the economic fronts, yet the Dow gained 690 points. That different feel was described as hope – hope that medical science would find the medication, or combination of medications, that would combat the CV.  It was reported that the FDA cleared for use chloroquine and hydroxychloroquine for treatment, and several drug manufacturers are donating millions of doses to hospitals throughout the country.  Also reported was that major manufacturers, such as Ford, GM and My Pillow have re-tooled to manufacture needed supplies from respirators to face masks.

There was also hope that the stimulus package would add support to a rapidly failing decelerating economy.  This last bill, just more than $2.2T, is the third such stimulus bill and is seen as only one in a series of stimulus bills to come.

Today ends the worst month is terms of equity performance since October 2008.  But what is to come is far more important.  Our view is that the GDP in Q12020 will be positive, but only slightly.  The big question is Q2, where GDP estimates range from -10% to -30%.  Many market analysts see Q3 as “turning the corner,” and Q4 for recovery.

We will get through this together.  Please be safe and healthy.