Perspective from Pawleys

This week in the stock market has been one of the most difficult in years.  We experienced pull-backs in 2011 when Europe sunk back into recession, in 2015 when Brexit first became a possible reality, and in 2018 under the weight of trade tariffs.  And yet despite those challenges, solid U.S. companies continued to grow their revenues, propelling the stock market to higher levels.  It is important to keep a cool head, but within the barrage of a hyped-up 24×7 news cycle it can be extremely challenging.  At this point, economists and analysts are projecting that there will be a very modest drop in corporate earnings as a result of sales and supply chain disruptions caused by quarantines and shutdowns.  In the meantime, there are a few recent developments that the press didn’t put in the headlines:

1.  Starbucks and Marriott have reopened most locations in China.

2.  Airbus, GM, and Toyota started re-opening factories in China last week, and today Apple announced factories are going back into production.

3. The U.S. Leading Economic Indicators for January were released at +0.8%.

4. Today The Atlanta Fed adjusted Q1 2020 GDP projections up to 2.7% from 2.6%, driven largely by a solid housing market.

A few days ago, the World Health Organization referred to the virus as an “infodemic,” with false information being proliferated by social media and the non-stop news cycle, and recommended a “vaccine” against misinformation.  As for the markets, since February 12th, the Dow has fallen -12.8%.  More importantly the VIX, which is a measure of volatility, has spiked a dizzying +175% within the same time period.  That combination is indicative of a very short-term, unsustainable sell-off.  We will continue to monitor the markets and economy, and also keep a close eye on the potential impact of the Coronavirus.  Please keep your questions and concerns coming by e-mail or phone.  It is so important to us that we do everything possible to make times such as these easier for everyone, and ensure that we stay on track to meet your financial goals.

Thank you very much!

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