COVID-19 Week Three Update

Hello, and welcome to our third weekly report. If you are new to these updates, we at CrestPoint Wealth Management have made a commitment to deliver our perspective on how the COVID-19 outbreak is affecting our clients.

Last week we touched on a few key topics:
• COVID-19 cases in the US will continue to rise.
• The stock markets can bounce off lows rather quickly.
• The Federal Reserve and policy makers had made it clear drastic measures would be taken to prop-up the US economy.

As we have all seen, reports of new coronavirus cases continue to rise, both globally and in the US. Two sources of raw data we regularly track that you may find interesting are the daily situation reports from the World Health Organization and the US Centers for Disease Control and Prevention. The links are below:

https://www.who.int/…/novel-coronavirus-2…/situation-reports

https://www.cdc.gov/…/2019-n…/cases-updates/cases-in-us.html

The Dow Jones Industrial Average had its first three days of successive gains Tuesday through Thursday, a period in which the index gained 21.3%, its largest three-day jump since 1931. It should be pointed out that this is a fluid situation, and that market volatility in the near term is still likely.

We saw two major actions from the federal government last week—the Federal Reserve announced an unprecedented program to purchase investment grade corporate bonds, a move slated to provide $300 billion in financing to keep the economy moving. Most important was the relief bill (the CARES {The Coronavirus Aid, Relief, and Economic Security} Act) passed by Congress. While not perfect, this bill does provide some major items for investors such as temporary easing of IRA borrowing rules, and suspension of required minimum distributions (RMDs) for 2020. We will have a piece coming out soon detailing major items in the coronavirus relief bill.

At least for the short-term, coronavirus cases in the US will continue to increase. Unfortunately, we have seen unemployment numbers spike. We should expect to see some volatility in the markets, but the drastic swings we had throughout March should settle as a clearer picture of our economic condition becomes evident. As stated in last week’s update, the stock market is a predictor of the economy and not a reflector of the current situation. It’s impossible to identify a bottom, and this period we are in may prove to be a very good time to invest additional funds. 

We encourage our clients to maintain their long-term perspective unless they've had a major life change. We're here to help—please give us a call if we can be of assistance. Again, thank you for the opportunity to work with you.

The CrestPoint Wealth Management Team