When FDR spoke those words at his 1933 inauguration, the Wall Street Crash of ’29 had pretty much seen its nadir. Of course, the thing about a nadir is that it can only be seen in the rear-view mirror. Roosevelt had no idea how long a recovery might take. However, what he did know was that it would take a dramatic shift in American confidence if things were ever going to get better.

For several weeks now, we have been inundated with stories of doom, gloom and financial collapse interspersed with “Don’t worry too much, unless you are a really old and frail person.”

Of course, CoVid-19 is nothing to sneeze at but we truly encourage all to ‘keep calm and carry on’. So far, not many people are taking that course of action. Evidence abounds across the various financial markets with their erratic behavior of this week.

As folks like to say these days, ‘This is not our first rodeo’. We’ve been in this game a long time and I have never seen intraday turn-arounds like this before. This fact alone should tell you that, in way too many cases, planning has been tossed out and replaced with reactionary trigger-pulling. People should know better. Oddly, they probably do.

The bottom line is that the market is still trying to find a floor and gauge how the coronavirus will impact various sectors of the economy. So, as we have to say too often, uncertainty generates fear. On Wall Street, fear is gravity.

I’ve been looking at the coronavirus charts this morning and I must say that, while not exactly rosy, this thing looks to me like it’s flattening out. The most significant data points being a) the rate of new cases is falling, b) the rate and percentage of cases recovered/recovering is rising rapidly and c) the ‘Deaths’ figure is not what most people think it is. It is not made up of only people whose cause of death was coronavirus. It includes those who had a CoVid-19 infection and died…perhaps of something other than their coronavirus infection.  Something to keep in mind as the figures get updated.

We would be remiss if we did not also include a mention of the economic impact, which may well end up being more influenced by psychology than the coronavirus…or even the regular old seasonal flu.

In any case, this too, shall pass.

 

Ron’s Market Minute – More on the Virus Effect

The current Coronavirus outbreak has not (yet) been designated by the WHO (World Health Organization) as a ‘pandemic’ but I believe it is fair to say that recent market action looks like pandemonium.  The realization that the ‘Chinese Problem’ has become a global one has had a ferocious effect on global markets causing them to express more pressure than we’ve seen since the Euro Crisis. There have been signs of a capitulation (last Friday) and the recent ‘surprise’ interest rate cut by the FED has helped US stocks recover a large portion of its losses.

Here’s the key: Markets are operating with great uncertainty- not only about the severity of the virus but also around the costs of the efforts to contain it.  How anyone can look at the recent data, consider what possible support can be offered by banks and government entities, and formulate reasonable fundamental market valuations is beyond my comprehension.  The result has been a time of particularly extreme volatility as headlines surge between pessimism and relief. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

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