Good morning and first and foremost, we hope that all of you and your families stay healthy and safe and please follow the Covid-19 protocols in your communities. It will be impossible to shorten this social, economic, and financial crisis if we don’t follow the social distancing protocols.

We suspended our fundamental view today because we cannot quantify the downside, but we also cannot quantify the upside response in the economy and corporate profits once the crisis passes.  Treasury Secretary Mnuchin said we are only in the second inning of fiscal response, and the Fed has made it clear they are going to throw everything they can at this to buffer the downside and help the recovery.  How can we possibly put out an EPS expected view when there is so much more news coming on the government’s reaction to this crisis?  This is going to be a period driven by Human Nature, and we expect a “Capital V” recovery once we have moved through the bottoming process.

In a market crash, the only way to know if you made the low is if there is a multi-week period of stabilization. This crisis is so much bigger than a financial crisis because the social distancing mandates are both a supply and demand shock we have not seen before. We have not gone back on offense because until you get that multi-week bounce and stabilization, you do not know if you have put in the initial low. Again, we thought last week was that point, but the Covid-19 global crisis has brought into play both (1) a historic global and domestic economic shutdown, and (2) an incredible monetary and fiscal response. We don’t believe you can come up with a rational operating EPS estimate not just because of the negative economic shutdown, but because the positive monetary and fiscal response is as historic as the negative. Until we see some way to figure out the EPS, we are going to base our financial market plan on human nature, which means we only know there has been an initial panic low after we have seen more than a one- or two-day bounce.


This is a time with undefinable risk and volatility.  Please only make a trading or investing decision based on your own personal financial plan or with the help of an adviser. 


Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.

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