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Week Ending Letter | April 3, 2020

Recently, I was talking with a neighbor (more than six feet apart mind you) and he was reminiscing about his childhood. He mentioned each night when having dinner with his parents and siblings they would play a game called High/Low, where each family member had to share what the high and low point of their day was.

As he grew up and started his own family, he noticed how life got so busy, that many times his family was not actually eating dinner together. Fast forward to today, his son is home from college, his daughter’s volleyball practices are cancelled, and he and his wife are working from home. He said now his family is once again eating dinner together and they are playing the High/Low game that he enjoyed as a child. He mentioned how life changes and yet goes full circle.

Beyond the virus and its impact on our lives, the High and Low of my week both deal with Francis. The High is how excited he gets when I get home and runs to give me a hug. The Low, however, is he is no longer taking his daily naps, so he is extremely tired each night causing dinner and shower time to be a battle. I’m sure this is something many of you can relate to at different times in your lives. For me, while there are lows, I know I will cherish this period with Francis growing up as a father, because the highs will be forever memorable moments.

What was your High and Low for the week beyond the virus and its impact on your life?

This week as compared to prior weeks, market volatility was lower as the market, as measured by the S&P 500, traded in an approximate 7.3% range. Much of the news related to the economy dealt with unemployment claims and the March 2020 job report. Last week more than 3.2 million people applied for unemployment benefits which at the time was more than five times the previous record. This week 6.6 million people filed for benefits, which unfortunately was another new record. The March jobs report showed a loss of 701,000 jobs with the unemployment rate rising to 4.4%. Expectations are for the unemployment rate to continue to increase due to the known unemployment claims.

There is no playbook to how the economy and markets will emerge from this period, however we are tracking five potential indicators:

1. Confidence in timing of a peak in new COVID-19 cases: Monitoring daily. Where is the curve and where do doctors and scientists think it will go?

2. Visibility into the probability and severity of a US recession: Most likely already there. Seeing unemployment numbers and year-over-year decreasing numbers reported by some businesses.

3. Markets have priced in a US recession: Most likely already there. See indicators 1. and 2. above.

4. Sentiment and technical analysis indicate limited number of sellers remaining: Already there. As previously discussed, the speed of this correction was the fastest in history.

5. Policy responses have been sufficient to restore confidence. Already there. See below and there is continued discussion about additional stimulus options.

We are starting to see the beginning of the double-barreled support from the Federal Reserve (Fed) and Washington’s recent $2 trillion fiscal stimulus plan (CARES Act). While they won’t fix the root of the problem—only doctors and scientists can—it may help the economy restart more quickly once the pandemic subsides. Fed Chair Jerome Powell noted we very well may be in a recession, but this isn’t a typical recession, as our economy started from a strong position. The $2 trillion CARES Act, totaling more than 9.3% of GDP, provided an additional boost. For reference, the 2008 fiscal stimulus plan was 5.5% of GDP, showing just how much larger this plan is than anything else we’ve ever seen. These measures may be viewed as a bridge for consumers and small businesses to help them get to the other side, and so businesses are positioned to take full advantage when the economy restarts. The combined monetary and fiscal policy action may be the catalyst to propel a historic bounce back for our economy over the second half of this year.

We are starting to hear of scammers, fraudsters, and other criminals taking advantage of rapidly changing data and facts associated with COVID-19, both in the workplace and in our homes. Government agencies, corporations, and news outlets continue to warn individuals to be mindful of increased fraudulent activities during these uncertain times.

These scams, which can be sent via email, text message, and social media claim to provide COVID-19 updates, sell products, ask for charitable donations, or reference government aid packages. These messages appear to be legitimate in nature but seek to fraudulently obtain personal information, financial gain, and create panic. Use these tips to identify and avoid scams:

  • Watch for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or experts claiming to have inside information on the virus. There are currently no vaccines, potions, lozenges, or other prescriptions available online or instore to treat or cure COVID 19.
  • Do your homework prior to donating to charities or crowdfunding sites. Confirm the validity of the organization as fraudsters are now advertising fake charities. Do not let anyone rush you into a donation, particularly those who ask for cash, gift cards, or wiring of funds.
  • Do not click on links or open attachments from sources you do not know. Cybercriminals are using the COVID-19 headline as a tactic to spread viruses and steal information. Do not provide personal information, payment information or sensitive workplace information via suspicious email addresses.
  • Be suspicious of urgent demands and emergency requests. The health and safety of you and your family is the top priority. Do not fall for scammers threatening fees or fines, cancelled deliveries, and health concerns in exchange for financial gain.
  • If it sounds too good to be true, it likely is. Many individuals have begun to receive robo-calls and social media requests for social security numbers, banking information, and gift cards. Scammers promise high paying work from home opportunities, free sanitation and cleaning, as well as COVID-19 protection in exchange for payment and sensitive information.
  • Be mindful of scammers using government aid packages for criminal gain. Lawmakers have announced plans to send Americans checks to assist with the financial burden of the virus, with details still in discussion. The government will not request payment, nor will anyone reach out requesting personally sensitive health or financial information in exchange for financial support.
  • Obtain your news from a trusted source. Be mindful of text message scams, social media polls and fraudulent email accounts sharing false information to create panic. Before acting on information, review its source and check a trusted news outlet to confirm its validity.

When in doubt about a mailing, email or call you have received, give us a call. Two sets of eyes are better than one. If you believe you have fallen victim of a scam, call your local police at their non-emergency number and consider reporting to the FBI’s IC3 Internet Crime Database.

As mentioned, several weeks ago, we are not seeing a major disruption in our ability to successfully meet with you. We are continuing to follow our normal schedule for regular progress meetings with the only change being that we are doing them over Zoom or the phone. If you would like to schedule a time outside of our normal schedule, please give Courtney a call. As we are planning for your entire lifetimes, we may provide you some documents to complete before our meeting.

Finally, we will being having our next webinar Tuesday at 6:00 PM Arizona time in which we will give a brief update about the economy and markets. This webinar is subject to change depending on the number of people in attendance. Please respond to this email if you would like to attend the Tuesday webinar.

Have a good weekend and we will talk to you soon.


Chris Zeches, CFP®
Managing Partner