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Update from the Planning Group of the Northwest (5/1/2020) Thumbnail

Update from the Planning Group of the Northwest (5/1/2020)

Happy May Day! Our team wanted to send along some information on the markets and a healthy dose of some hope.  We are all healthy and our team continues to be fully functional. 

  Here are some highlights from this week that we thought might be of interest:

 

 

  • The stock market, US especially, had a strong rally in April. The S&P 500 had its best month since January 1987 (see attached). 
    • April Index Returns:
      • S&P 500: 12.82%
      • Nasdaq: 15.49%
      • Dow: 11.22%
      • Russell Mid Cap: 14.36%
      • Russell 2000 (Small Cap): 13.74%
      • MSCI EAFE (Int’l): 6.39%
    • This week was a big week because nearly 1/3 of the S&P 500 companies reported first quarter earnings. 
    • Fed Chair Jerome Powell announced that interest rates will remain at zero for a considerable period of time and that he made it clear that the Fed has substantial ammunition at its disposal should concerns worsen. The Fed can and will do more and will not run out of capacity to make loans.

 

  • The municipal bond market was in focus with political conversations around the Federal Government support of State and Local governments
    • Last Wednesday, Senate Majority Leader Mitch McConnell (R-KY) appeared on a nationally-syndicated radio show and after asserting that he had no interest in giving states more coronavirus aid to bail out state pension plans, said he "would certainly be in favor of allowing states to use the bankruptcy route." The remarks raised quite a few eyebrows and drew an immediate backlash. Andrew Cuomo, the Democratic governor of New York, called it "one of the saddest, really dumb comments of all time." New Jersey Governor Phil Murphy, also a Democrat, used the phrase "utterly irresponsible." Even Larry Hogan, the Republican governor of Maryland, said McConnell "probably regrets saying that." The comments seemed little more than gratuitous political soundbites to a like-minded audience. Even forgetting that the legal obstacles to states ever being allowed to file for bankruptcy are formidable (see: the 10th Amendment and the Contracts Clause of the U.S. Constitution), the logic behind the comments is curious. Because states can't file for bankruptcy and must balance their budgets, any lack of emergency relief from Congress would simply mean drastic cuts to critical public services funded at the state level (think police, fire, education, public transit, social services, infrastructure), presumably an outcome the federal government is working to avoid. In a letter to the Congressional Leadership team on Tuesday, the National Governors Association made no reference to pension relief in asking for $500 billion of direct federal aid. It's not clear whether McConnell's comments will spook the market the way Meredith Whitney did back in 2010, when she appeared on 60 Minutes to warn of massive defaults within a one-year timeframe, but we would view any selloff due to fears over state's filing for bankruptcy as a buying opportunity.

 

  • Planning Idea for the Week:
    • Budgeting: With everything happening right now, it is an excellent time to update your household budget. Here are some simple steps to help you in that process:
      • Have a specific long term goal in mind (i.e. being debt free)
      • Know how much you really bring home
      • Start with short-term goals
      • Look out further than the next 2 months
      • Pay down debts
      • Take a  hard look at your automatic payments (i.e. Netflix, Magazines, Newspapers, etc.). Look carefully at your credit card and debit card statements and eliminate any recurring payments that you don’t use or need.
      • Be smart about unexpected income
      • For more information: https://bairdwealth.com/insights/A-Budget-You-Can-Live-With

 

We would be happy to discuss how this planning idea can help with your specific financial situation. 

 

  • Good News From Around the World:
    • Gilead (NYSE: GILD) released preliminary data from a US Government trial this week showing that patients given its drug, Remdesivir, recovered 31% faster than those given a placebo. "Although a 31% improvement doesn't seem like a knockout 100%, it is very important proof of concept," Dr. Anthony Fauci said of Remdesivir. "What it has proven is that a drug can block this virus."
    • The  FDA has granted emergency approval for Remdesivir to be used for treatment of COVID-19. 
    • Captain Tom Moore, a British World War II veteran, set out to raise funds for COVID-19 response by walking 100 laps around his garden by his 100th birthday on Thursday. He has raised over $36 Million for the United Kindom’s National Health Service. People have been so touched by his efforts that he received over 140,000 birthday cards. He is also being honored by the Royal Mail. All letters sent this week will be marked with a stamp commemorating his birthday.
    • Tree-planting program in Pakistan benefits out-of-work laborers and the environment. Thousands of laborers in Pakistan who were out of work because of the coronavirus pandemic are being hired by the government to plant millions of trees across the country. Two years ago, Prime Minister Imran Khan launched the 10 Billion Tree Tsunami program, with the goal of planting that many trees over the course of five years to counter extreme weather linked to climate change. The program was paused when the country went on lockdown late last month, but it was restarted in order to create more than 63,600 jobs for people unemployed due to the pandemic, Reuters reports. Workers are maintaining social distancing and wearing masks as they plant saplings, serve as forest firefighters, and set up nurseries. The program aims to plant 50 million trees this year. "All of us now have a way of earning daily wages again to feed our families," construction worker Abdul Rahman told Reuters
    • Our very own Juneau, Alaska has launched a joke hotline so people can start their day with laughter. Every morning by 10 a.m., one of three volunteers — two high school girls and a retired man — records a "good, clean, corny" joke for the hotline, recreation planner Dawn Welch told the Anchorage Daily News. Prior to the pandemic, people could call 907-586-0428 to get an update on the city's hiking program, but with that on hold for now, the line was free. "We thought, 'This is a perfect time to do this,'" Welch said. The hotline launched last week, and so many people tried to call that on the second day, it broke down. The city worked quickly to get it back up and running, because "people just need a laugh," Welch said.

 

We hope that you have a nice weekend and please do not hesitate to reach out with any questions at 907-677-8300.


From our families to yours, The Planning Group of the Northwest

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