Coronavirus, Unemployment, Markets: Special Wealth Update, Mar. 26, 2020

virus-1209738265Last night, the Senate passed “phase 2” of the Virus Relief Bill which will provide free testing, expanded funding for food security programs and ensures paid sick leave.  In addition, news passed that the floor of the New York Stock Exchange (NYSE) would be closed Monday March 23rd.  THE MARKETS WILL REMAIN OPEN!  Only the NYSE floor will be closed.  Though this is not normal operating procedure, today the vast of majority of trades on the NYSE occur in an electronic format.

On March 6th, the VIX index (the markets “FEAR” index) increased to over the 50 mark for the first time since March 5th of 2009.  This fear index measures uncertainty in the market and has subsequently increased to over 80 as 5%-10% market swings have become then norm over the last few days.  These levels are consistent with what we experienced during the debt crisis.

While concerns over Covid-19 certainly contribute to this uncertainty, understand that most market participants have shifted to remote trading since March 6th.  This shift to remote trading over the last two weeks is likely as large of a contributor to market volatility as are Covid-19 headlines. The closing of the floor on the NYSE on Monday and shifting to electronic trading will certainly be a shift, but most firms have already moved trading operations to remote locations over the last two weeks.

With increased uncertainty around Covid-19 and ongoing media hysteria, markets will remain volatile.  But as market participants become more accustomed to their new remote operations, they will become more accustomed to properly evaluating the long-term outlook for investments.  This should positively impact market volatility and provide price relief for stocks.

As public officials continue to adjust the health-care response to the ever changing landscape of the Covid-19 pandemic and the Federal Reserve exercises monetary measures to provide economic support, we continue to process this new information.  “Phase 3” of the Virus Relief Bill is estimated at $1.3 trillion and has proposed direct payments to families ($500 billion) with a second round of payments if the emergency persists.  The bill would also include $50 billion in loans to the airline sector and $150 billion to distressed sectors.

In consideration of these uncertain times, we remain very cautious around short-term market moves and continue to adjust client portfolios accordingly.  Yet, the Investment Team at Old Second Wealth Management maintains a long-term perspective on evaluating the trajectory of the economy and opportunities for client portfolios. Should you have any questions please reach out to your Relationship Manager or Investment Officer.

Rich Gartelmann CFP® – (630) 844-5730
Steve Meves CFA® – (630) 801-2217
Brad Johnson CFA®, CFP® – (630) 906-5545
Jacqueline Runnberg CFP® – (630) 966-2462
Ed Gorenz – (630) 906-5467
Mike Demski – (630) 966-2430
Mike Cava CFA®, CFP® – (630) 281-4522

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

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