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Business and Market Update

Sigma Investment Counselors

March 18, 2020

Sigma is Open for Business:

As we survey the landscape we want to make sure that there is no question about Sigma being OPEN for business. – We are taking every precaution and making sure we are following the CDC and other government guidelines to protect our employees, doing our best to help them remain healthy and safe. At this point we have personnel in our office every day with the remainder working remotely.  As you know, your advisors can be reached by cell and via e-mail.  For now, a person will be answering the phone during business hours.  After hours the messages will go to voicemail, which we are all checking regularly. – Should we go to 100% work from home, we will advise you accordingly.

Market Update:

In addition to the tragic loss of life, it is quite hard to truly wrap one’s head around the shock of what has transpired, what we are currently experiencing, or the magnitude of the anxiety caused by the uncertainty of the lengths of the various lockdowns and business closures.  It will take time for people to digest the shock of it all.

Markets remain “fluid”. – Up until this week much of the government activity singularly focused on assistance in the procuring and facilitating the disbursement of necessary medical supplies (test kits, labs, masks, ventilators, ICU beds, etc.).  All this is being done to make sure we can do the best possible job to provide health care to those in our society that are most vulnerable or will come down with the virus.

Recent announcements from the Federal Reserve are referred to as Monetary Policy.  The Federal Reserve has stepped in through interest rate cuts as well as providing liquidity to the banks and markets. Their early actions have served to bridge the gap and avoid runs on the banks that would result in compounding the issues at hand by throwing us into a systemic financial crisis.  (Ex: 2008-2009 system wide financial crisis).

We are now seeing swift movement by the Administration and Congress to address the cash flow needs of both American workers and American businesses of all sizes.  In the past week unemployment rules were adjusted to assist with the workers that are now out of work / not getting paid.  We expect additional announcements to assist individuals with their cash flow needs.  This is referred to as Fiscal Stimulus.  Significant stimulus packages are being worked on by Congress and the Administration (lead by the Treasury Department Secretary Steven Mnuchin). The bill passed in the house and currently being negotiated in the Senate for final signature by President Trump, incorporates various financial packages to help small and medium size businesses survive the mandated closures, as well as financial packages for larger companies, particularly those in the travel and hospitality industries. (Airlines, Hotels, Restaurants, etc.).  It is encouraging to see nuances being implemented as opposed to a “one size fits all” package.  All these efforts will serve to provide a safety net for the people most financially vulnerable in our society as well as those businesses who a month ago were thriving and now have been brought to their knees or devastated by the abrupt halt in business.

As we come out of this, we all will emerge from this experience forever changed in many ways.  A very long time ago, I was told it takes about two weeks to break a habit or develop a new one.  Hopefully in part, we will have developed healthier habits and better understand the importance of all those “little things” we can do to keep ourselves and those around us healthier.  In a similar vein, it is clear to me that the economy and businesses will also emerge stronger.  I believe people will have a deeper appreciation for the jobs they have and for the people they work with every day, be they employer or employee.  For individuals, businesses and government alike, this “black swan” experience is providing a new and important perspective.  It has exposed vulnerabilities we did not even know existed a mere few weeks ago, whether in the workplace or in the systems on which we have come to personally depend upon.  Be it the healthcare system, a company’s disaster preparedness, the speed of our internet connections or the extent to which we rely on social interaction.

Another part of that perspective is having no choice but to spend time with immediate family and exploring activities that existed before we had the internet or perhaps even TV. Things like books, puzzles, board games, playing outside and (heaven forbid) conversation may be staging a comeback.  When my kids left home we decided not to downsize.  I am a holdover in my neighborhood that has pretty much always been filled with families with school age kids.  We have sidewalks throughout the development.  Every Saturday and Sunday for the past 12 years I have taken my dogs for a mid-morning walk around the neighborhood, 30 – 40 minutes depending on the weather and how much my dogs want to doddle.  Like clockwork after my walks I come home and announce to my husband that I never cease to be amazed by the number of people I don’t see on those walks. Sometimes I see one person walking their dog, or a couple of kids at someone’s house shooting hoops.  Most days, however, I see no one….until last weekend when each day I saw six or seven different groups of parents outside walking around or playing with their kids. ……What a novel concept.

Truth is stranger than fiction.  In our wildest dreams, not even science fiction, could any of us have ever imagined the environment we are experiencing today. (Who would have believed it?!) Most importantly, we will be devastated by the loss of life.  We will mourn for those who have perished and we will miss them dearly.  Yet, as a nation, we will also look ahead.  I am truly confident as we emerge from this worldwide catastrophe the U.S. will be a stronger nation and will lead the rest of the world by example. While not an immediate snap back, I believe our economic re-entry will be more rapid than most expect.

Be well, and as always, please do not hesitate to contact us with questions and comments you may have.

Denise M. Farkas, CFA
Chief Investment Officer

 

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