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The Week Ending | April 17, 2020

While I find myself a naturally positive and optimistic person, with everything going on, even the most positive person may encounter times causing them to feel less than optimistic. From watching the news, to reading the paper and even going on social media, it can feel as if there is so much negative news. I constantly remind myself that even with everything going on, I should not forget about all the good that is taking place, be it in my family, my community or even through the kind acts I see of strangers. I encourage you to look for these positive acts and influences as it is truly refreshing to see.

Over the years, more and more people are reading the newspaper online. Besides Sunday for the printed advertisements, I do not see many people in my neighborhood getting the daily paper delivered. How we digest news has changed, but so has how we find ways to relax. Growing up, I remember reading the newspaper’s comic strips from Beetle Bailey to Calvin and Hobbes to The Family Circus. The one comic strip which I always enjoyed was Marmaduke. For those who may not remember, Marmaduke, revolved around the Winslow Family and their Great Dane, Marmaduke as drawn by Brad Anderson. As a child our family had Great Danes, from Cassie to Sugar and Kia. Cassie and I grew up together and had many fun “adventures”.

When seeing the comic below, it made me think of our Great Danes. As you all know, I was a competitive swimmer from age 5 until graduating from college so obviously I liked the water. I have many memories of the Great Danes being just like Marmaduke, being afraid of the water. Seeing this picture brought back many fun memories.

Did you have a favorite comic strip?

Moving on to the topic of the markets, as measured by the S&P 500, the market was up approximately 2.7% this week. Much of this increase could be attributable to three good news reports about 1) a sooner than expected peak in COVID-19 in the United States, 2) positive drug testing results and 3) discussion about reopening the economy. Since the lows of March 23, the S&P 500 has gained approximately 27.2%, which is the greatest three-week rally since 1933. This increase in the market has taken place even as economic data looks worse with millions of initial jobless claims and significant drops in consumer confidence, retail sales and manufacturing. One of the possible explanations for such a positive move is the stock market is forward looking, estimating prices for stocks many months from now and assuming a return to a more normal world. As mentioned previously, unexpected news, both positive and negative, can affect the stock market.

Looking to update the playbook we first shared a few weeks ago:

1.Confidence in timing of a peak in new COVID-19 cases: Almost there.
2.Visibility into the probability and severity of a US recession: Already there.
3.Markets have priced in a US recession: Almost there.
4.Sentiment and technical analysis indicate limited number of sellers remaining: Almost there.
5.Policy responses have been sufficient to restore confidence. Already there.

While these indicators can change, we have started to see more positives. Changes this week include Signal #1, which was upgraded from “monitoring daily” to “almost there.” Based on the latest data from Johns Hopkins, it may be possible to declare the peak with confidence over the next week (though a second wave cannot be ruled out). The other change made is to Signal #4. Recent gains have removed oversold conditions. As mentioned earlier, with stocks having just staged one of their strongest three-week rallies ever, more sellers may emerge potentially putting pressure on the market. While these five indicators can’t tell us with 100% accuracy when “normalcy” returns, it is another tool that can be used as we continue through the current environment.

While going into another weekend which may seem like the same as last weekend, I plan on looking to do something a little different. I will call a friend that I haven’t talked with in a while. You too, may find this is now a good time to reach out to old friends as well. You may find that now may be the time to restart that book that has been sitting on the shelf that you never finished reading. Now may be a great time to “spring clean” and organize the closet. Now may even be the best time to read the comics and take yourself back to a simpler time.

From our family to yours, have a wonderful weekend and may you stay safe and healthy.


Chris Zeches, CFP®
Managing Partner