I want to thank those of you that have replied to us with encouragement and appreciation of what we have been providing and how helpful and reassuring our topics have been to you. I am not an “author” and your comments have helped us know that as these challenging times continue, reading our Commentaries have been helpful. We are all going through the same things and whether you or someone you love has been infected with the virus or not, it has impacted all of us. Since there has never been a global pandemic of this kind, we are all figuring out the best ways for us to cope with it. If you are like me, sometimes I can handle it like a champ and other times, like when my daughter who is a high school Senior gets no Prom or graduation, it either makes me sad or angry. I keep reminding myself that while I have no control over the stock market, the pandemic, or the governmental response, I do have complete control over my mindset and my attitude. Honestly, most days I do well. However, the longer this goes on, I find myself getting more defiant. My dad always told me, “The only thing you can do at all times, is your very best.”
My youngest daughter, Addy, is turning 11 years old on the 24th. We have been hoping and praying that “back to normal” would have happened by now for her sake. At 11, birthday parties like Senior Proms are still very much a big deal. They are equally important to my wife. She makes custom cakes based upon the party’s theme from scratch. My children look forward to seeing their cakes and sharing what their mom did with their friends as much as opening their presents. My wife lives for the responses of other mothers of her creation when they drop off their children. As it was with Easter, the “family traditions” are needing to take a little detour. This year, there will be no bandwagons of girls screaming and laughing with my daughter leading the direction. There will be no hugs to her friends, when she opens their gifts. As sad as this makes me for her, I know what there will be. A cake, custom made with lots of love, and probably even bigger and better than ever. While the virus may have taken Addy’s friends from her this year at her celebrated moment, she still has her Mom. And her Mom, will ensure to be over the top, to attempt to cover any deficits in her daughter’s day. While there are many things that COVID has changed for all us in the short term, there are other’s that the virus has only made better. Times such as these also bring out the best in people and we have some amazing friends and family. Despite the ban on distancing ourselves, Addy is going to have something she has never had in her honor before, a parade. Our friends and their families are decorating their cars and at a designated time on Friday afternoon, will be driving in front of our house with their four wheeled “floats” celebrating my 11-year-old daughter. While I already know it won’t be the same, in a lot of ways, it could end up being better. And, I already made a deal with myself. No more than 3 tears, 10 tops. Happy Birthday Addy!
For those of you with businesses that applied for the Payroll Protection Program (PPP), we have heard from some of you that received their loan proceeds. CONGRATULATIONS! You either applied early in the program, which you should have done, or your bank took good care of ensuring your loan got funded. The Small Business Association (SBA) announced last week, that it has run out of the initial PPP proceeds. From many bankers I have spoken with, they believe that another round of funding will be approved by Congress soon. Today, the political parties are working on another $400 billion approval for this program.(1) If you already have an application in with your primary business bank, it is suggested you maintain your position “in line”. You may also want to investigate applying with another bank as well to increase your odds of funding. Some of you have reached out letting us know that your bank did not participate in the initial PPP stimulus. If that is the case, we do know of some banks that are working with non-bank clients. However, there are not many, and they will require you to move your primary business account to their bank if funded. While no one is certain of the new funding time frame or if the rules will change at all compared to the first round, it is a good idea to submit your application somewhere, especially if you have not done so previously, to increase your odds of funding. The first round of stimulus for PPP was $349 billion and was extinguished in 13 days. For those businesses effected by COVID, these are good programs if you can get a bank to fund your loan. We will keep you posted as things progress.
The other level of funding that began last week, were the individual checks of up to $1,200 per person under certain income thresholds provided by the Economic Impact Payment (EIP). If you filed your 2018 or 2019 federal tax returns and were due a tax refund that you provided electronic deposit information by giving the IRS your bank information, you either have or will in the near future see contributions to your bank accounts. If you owed money or requested your tax refund by check, those individual stimulus checks will be mailed to your address on record. You should be able to tell whether you provided bank instructions to the IRS by looking at your 2018 or 2019 tax returns on what method you selected. We have also gotten calls from some of you that have met the qualifications and have not seen deposits to your bank accounts. The IRS set up a website called “Get My Payment” at https://www.irs.gov/coronavirus/get-my-payment. You will need to input your full Social Security number, date of birth along with your mailing address to validate the status of your check. There is also a Frequently Asked Questions tab that is being added to daily on what to do if you have any questions.
The markets were again in positive territory for the 2nd week in a row. The Dow Jones and S&P 500 both finished higher ending 4/17/2020 at 2.2% and 3.1%, respectively. With these increases for the week, the Dow is up 10.70% and the S&P 500 is up 11.30% for the 2nd quarter. These indexes are still down year to date for 2020 at -14.50% and -10.50%, respectively.(2) Taking the last two weeks into consideration, the trajectory of the market has improved. We are either optimistically pessimistic or pessimistically optimistic. We are not at the point where we believe the downside volatility is over. While we have entered a bear market (in 3 weeks no less), it is too soon to tell whether the US is officially in a recession. There are three things we are watching unfold: unemployment, stimulus infusion, and election. Unemployment continues to climb at almost 6 million new unemployment claims per week. While we have yet to hear about any of our client being infected with COVID-19, some of you have unfortunately lost your jobs. This more than likely is going to have a ripple effect. With long term unemployment, it impacts loan payments, including mortgages. We are hopeful that once the state economies are opened again, and commerce improves, we are hoping that rehiring will occur. As discussed, the PPP and EIP are in the beginning stages of releasing funding and checks. While this money will be used for expenses, we hope that consumer confidence and spending will begin to increase. While putting money in consumers hands is one thing, opening the doors of Best Buy for them to shop is another. The election and how we are going to pay for the largest stimulus package being implemented, being the CARES Act, since the Great Depression is also causing additional uncertainty. While I continue to be impressed with the swift government stimulus and intervention, we are concerned about the long-term impact of how we are all going to pay for these programs. There are multiple ways this can be done. However, one of them starts with a capital “T” and ends with an “ax”.
While February got the ball rolling downhill, and March it picked up momentum, April over 17 days has let some “sunshine in”. Although, we have another 10 days to go before we reach the end of the month. There is more to come so don’t release your seat belts just yet. Continue to make your monthly contributions and for those of you with cash on the sidelines, get it invested. As things have improved over the last two weeks, I am hopeful that some of your anxiety, at least regarding your investments and wealth, has subsided as well. Thank you for continuing to read our information. We value you, your families, your businesses, and our futures.
Pursuing Wealth, Wisdom, and Well Being Together,
(1) Pymts: “The Next Round of PPP Funds: Will it Happen In Time for SMBs?”
(2) Amundi Pioneer Market Monitor