April 19, 2020, Weekend Market Thoughts by Matthew Somberg

Sunday, April 19, 2020

 

Dear Friend,

Happy Sunday evening. I hope this email finds you and your family well. To our clients on the front lines fighting Covid-19 and helping fellow Americans, we thank you for the good work you are doing.

As has been customary for the last several weeks we send you our thoughts regarding the previous week in the markets as well as what to look forward to this coming week.

Last week

  • The Dow Jones Index gained 2.2% and is now down 15% since January 1st
  • The S&P 500 gained 3% on the week and is now down 11.03% since January 1st
  • The NASDAQ gained 6.1% for the week and is now down only 3.6% since January 1st

Additional unemployment claims brought the number of Americans applying for unemployment to over 22 million in the last 4 weeks, which is 13.8% of the U.S. working population.

To put 2020 markets in perspective:

  • The Dow at its March low was down 35%. It is now down 15% for the year.
  • The S&P at its March low was down 32%. It is now down 11.03% for the year.
  • The NASDAQ at its March low was down 22%. It is now down 3.6% for the year.

The figures and volatility speak for themselves. Despite the panic selling in March, all three indices have somewhat rebounded, and their year-to-date returns are now in a normal range of performance. Yet despite the recent rebound, we can’t dismiss the longer-term economic impact of widespread unemployment. It is reassuring to see the markets move higher, but an economic recovery will take time if unemployment numbers don’t improve.

But doesn’t the news media make it feel like the markets will never go back up?

At the risk of sounding like a parent before bedtime, it is time to turn off the TV. Too much television is not a good thing. Have you ever seen an interview about the stock market where the individual being interviewed answers a question with “I don’t know”? Or have you ever heard someone asked a question about the markets responding with “I really have no idea what will happen”? People on television are interviewed to give an opinion and to entertain, even though there is no accountability if they are wrong. So, don’t worry about the market commentary from the person you just heard on CNN or Fox or CNBC because they have no liability if they are incorrect.

What do we have to look forward to this week?

The first round of Government PPP (Paycheck Protection Program) money has been issued to help employers keep their employees on full payroll. This will likely have a positive impact on the number of unemployment claims announced this coming Thursday.

Second, we’ve transitioned into ‘earnings season’ as companies announce their first quarter earnings. Netflix announces its earnings on Tuesday. Social distancing has created a lot of downtime at home for many Americans, possibly resulting in many new Netflix subscribers in the first quarter. Proctor & Gamble and Coca Cola are two blue chips that will also report earnings this week.

Third, as you are likely aware, many state governors have partnered with their neighboring governors to discuss opening their states for business. While opening for business should only start once it is medically safe to do so, this dialogue is a welcome first step toward reopening parts of the economy.

In closing

I, along with the advisors on our team, often joke that in times of financial crisis we are not really financial advisors, we are unlicensed therapists. In these moments, we challenge ourselves to be good listeners, practice empathy, and most importantly, remain rational and level-headed. We understand it can often be difficult to block out all the noise that we hear on TV and online, and to try to look down the road toward better days. We appreciate the trust and confidence you’ve placed in our firm during these challenging times.

Have a great week!

Matt Somberg

Matthew A. Somberg, AIF®
Accredited Investment Fiduciary®
Co- Founder and Principal