The financial markets, and people in general, are looking for strong leadership and an ambitious and coordinated response from our elected leaders. Sadly, the response last night was woefully inadequate. As my mother says – a day late and a dollar short.
I do expect Washington to wake up and do something significant to mitigate the economic damage. The question is when do they finally get their act together and how big do they go.
As my note yesterday indicated, I am somewhat comforted by the fact that the US economy was in a very good position before the onset of the coronavirus. I am starting to see positive signs of activity returning in China and South Korea. Once coronavirus worries start to subside and global economic activity improves, we will likely see stock prices moving higher. At this point, however, there is not enough evidence to suggest such a recovery is at hand.
We have officially entered a bear market today. While very stressful, they are not uncommon, with the last one occurring just 18 months ago. Also, bear markets in stocks do not always lead to recessions in the economy. Of the last 16 bear markets, 7 have led to recessions, while 8 have not. I keep this quote on my desk:
“For those properly prepared, the bear market is not only a calamity but an opportunity.” Sir John Templeton
I remain confident your financial plan has you properly prepared and that we will be able to take advantage of the opportunities that will be available when we get to the other side of the current crisis.
Try to remain calm, focus on your family and their health, and trust we are doing everything in our power to navigate your finances through this storm.
Sources: Ned Davis Research
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