Monday – March 16, 2020

Market opens sharply lower as the coronavirus shock continues. Stocks were halted immediately, as circuit breakers were triggered at the open. The shutdown of schools and travel around the country has moved to bars and restaurants, and other popular locations. The US Economy is experiencing shock, and it will continue as activity comes to a near halt. The expectation is that it could be short-lived, and things could be back to normal by Summer. But that is unknowable right now. There will be unintended consequences of course. The Fed aggressively took interest rates back near zero last night, plus increasing quantitative easing, in another surprise move. It did not have the effect it or the President wanted, as the Futures Market closed limit-down again. The Dow and S&P are down 10% as I type, erasing the explosive short-squeeze rally from Friday. This continues to be a very challenging environment to navigate for investors. It is going to get worse before it gets better. We have our eyes wide open as we fight through the challenges. The Financial System is in disarray, but the Fed is providing excess lubrication to keep the pipes flowing. The Fed cannot cure the symptoms of the coronavirus. The Fed won’t be able to provide direct aid to the American people that will be losing a paycheck. Fiscal policy can help there, and it appears the Congress is willing to work together to provide the necessary aid. The number of deaths outside China has now overtaken the number within. Europe has taken over for China as the center of the pandemic with more cases and more deaths. The US is trying to mitigate the spread by staying at home. Social distancing is what the doctors order. The Banks stopped their buyback programs, keeping liquidity to help combat the crisis. There are rumors circulating that the US Stock Market will close, to minimize damage and prevent panic as offices and trading desks around the country are thinly populated. This is another challenge that we are equipped to deal with and we’re doing just that. We continue to be defensively positioned knowing full well it is getting worse. But state and federal government agencies are acting as are companies and the people. This shock is doing serious damage. But getting through the pain will set up a better place in the months ahead. The Market is trying to price it all in. It’s a very difficult time on Planet Earth.

Have a great morning,

Mike Frazier

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