Asset Planning, Inc Blog

The latest from the team.

Special Update: Coronavirus, Markets and What You Need to Know

Volatility has surged in financial markets, as investors react to the potential economic and earnings fallout from the rapid global spread of the coronavirus. Given what has been historic volatility, we wanted to provide you with a market update that helps to separate fact from fiction and put this market turmoil in the appropriate context.

Over the past month, equity markets have dropped sharply as new cases of the coronavirus burgeon around the world. That is the primary, but not the only, reason for the recent declines. As of this writing, there are just over 200,000 cases of coronavirus worldwide, 100,000 of which are still “active cases.” In the United States, there are approximately 7,000 coronavirus cases.

On March 9, U.S. markets and the economy were dealt another surprise blow, when Saudi Arabia effectively abandoned OPEC-mandated production levels and began to dramatically discount oil prices and increase oil production. The move was in direct response to Russia not agreeing to comply with proposed “OPEC+” production cuts, and essentially, an oil price war broke out between the two countries (Saudi Arabia and Russia) that saw oil futures collapse nearly 25% in a single day.

In the past, low oil and gasoline prices would have been a positive for the U.S. economy, but a lot has changed in the past few years. The U.S. is now the largest oil producer in the world, and the U.S. energy industry is valued at more than $340 billion. With oil prices so low, many U.S. energy firms will have to reduce production and payroll, which will hit both earnings and the economy. This oil price war directly contributed to the markets taking another leg lower during the week ended March 13.

Finally, in the days leading up to this writing (March 18), stocks have dropped even further in response to the extreme social distancing measures being implemented across the country. These measures, which include the cancellation of virtually every major sports season, travel bans from Europe and parts of Asia, the closing of bars and restaurants, the mass instituting of work-from-home practices, school closures, and curfews, are intended to stop the spread of the coronavirus. Yet they also will have a significant and negative economic impact on the travel, leisure, beverage and restaurant industries to name just a few of the segments that will be hardest hit. The cumulative impact of these measures materially increases the chances of a recession in 2020, which is something virtually no one thought possible just six weeks ago.

Positively, the U.S. government is acting to support the economy and that support has ramped up dramatically in the last few weeks. There are two economic supports bills that are currently making their way through Congress and a third has already become law. Each is designed to help a portion of our population bridge the economic gap until the spread of the virus peaks and begins to decline.

The Federal Reserve, meanwhile, has cut interest rates to zero percent to help the economy. The Fed also has implemented several important measures to provide short-term cash for corporations and to ensure there’s plenty of capital for the broader banking system. Those measures are working to help keep the banking and financial systems functioning in an orderly manner.

Yet despite this support, which is an important economic positive, the world understandably looks very scary to many people right now.

Across the nation, and the world, roads are mostly empty, office buildings are vacant, schools are closed and normal life as we have known it has largely shut down. Yet it’s important to remember that this historic market volatility, along with these societal disruptions, are temporary. At some point, the spread of the virus will peak and begin to recede.

Similarly, these social distancing measures, while unsettling, are also only temporary. Our children will once again return to school and adults will return to work. Air travel will resume, cruise ships will set sail again, and the U.S. economy, which is by far the most flexible and resilient in the world, will recover.

Over the past several weeks, we’ve witnessed near panic, both in regular society as well as financial markets. But as we all know, the worst thing to do during a panic is to panic. That’s because panic leads to hasty, short-term decisions that jeopardize your long-term best interests.  

Meanwhile, shares of some of the most-profitable, well-run companies in the world are now trading at substantial discounts to levels of just a month ago, and history has shown us that over the longer term, these tumultuous episodes can create fantastic investment opportunities, and some of the most ideal buying conditions the market can offer.

As has been said many times over the past few weeks, we are all in this together. That’s why we remain committed to helping you navigate this difficult environment—and always maintain the primary goal of ensuring you achieve your long-term financial objectives.

Continue reading
  1167 Hits

Search Blogs Module

Wait a minute, while we are rendering the calendar
news coverage opt-out February 14 integral member 401K app California Lions Friends estate planning direction Orange County increase Open House clients Orange County Superior Court Federal Trade Commission website cell phone SIM swap scam Expired medications Puerto Rico privacy notices Treasury Department Notary Public Kiplinger Letter 2018 IRA contributions retirement planning identity thieves cell phone provider records credit card fraud Labor Day home break-ins house sitter paperwork clutter Roth IRA money gap insurance spread paper records borrowing money Financial Planning Magazine Legal robocalls home security 900 number client portal FSA Facebook profile earthquake app Wells Fargo employees checklists VOIP landline phones markets “ skimmer ”. spring cleaning hurricane Dorian payments notary services Supplemental Security Income relief efforts flash drive Shred paperwork home emergency kit https :// Social Security Administration partner /owner parking spots jury duty IRS deadline D premiums driver license June 29 Flexible Spending Account Medicare team members tax filing deadlines president Trump Coronavirus Aid September 30 2020. July 6 rescue organizations stock pile 20 year anniversary 70 1/2. 2017 Equifax breach Healthcare Asset Planning stimulus package self-help topics Independence Day tax season spam phone 4 pm -8pm clone counterfeits October 1 2020. Medicare Advantage emergency kits donation counts fun facts EEChecklist-Kits.pdf stockpilingchecklist.pdf executive order memorial Day weekend items earnings fallout September 8 April 18 2017. non-prescripstion sunglasses home toilet paper Mobile Banking Security Tips retirement clients show support insurance policy Wells Fargo customers tax records market turmoil identity theft Affordable Care Act retirement plans IRS phishing scams insurance policies FEMA website January 10 health care costs family members Victor Dergunov drive /usb settlement options assets tax deadline 2017 TD Ameritrade National LINC Conference cell phone service provider Brexit vote pet industry documents wells Fargo Open Enrollment Medicare plan emergency folder 23 andme cell phone carriers offer tax deadlines TD Ameritrade pet donation drive tax returns operations manager Charles Schwab trust September 9 scams car loans company bottom line padlock July 4 information CERTIFIED FINANCIAL PLANNER exam interest CA FTB Fox News story birth certificates 2017 IRA contributions email notifications National Ice Cream month July 3 rd vision screening COVID -19 virus credit freeze asset Planning pets official certification CARES Act Auto insurance Medicare Part B Social Security web address debt credit score Erin Nelsen text messages people medications April 11 water … donation items pet illiegal robocallers business hours cell phone carriers Medicare question policy portal Retirement Contribution Limits pet supplies phone companies holidays approach disaster areas trustee Two-Step Verification phone check lists July weekend credit monitoring service life saver home mortgages Kraig Mathias information Facebook ID card retirement accounts interest rates cell phones home emergency preparedness kits privacy settings offering insurance fun atmosphere prescription eyeglasses DNA test kits https ://seekingalpha CFP ® student loans Ice Cream Social Economic Security contribution limit fees Joey Gonzales phishing sites consumer spending Part B ice cream banking years estate Medicare Part B premiums estate planning breach summer ice cream event investment statements April 15 blog post vacation account numbers Amazon coronavirus Part D premiums . health care services credit card company media accounts chip-enabled EMV cards card reader IRA accounts credit cards emergency kit