©2019 by Brecken Capital & Consulting. Proudly created with Wix.com

BCA Weekly Commentary 2/21/20


SUMMARY. The virus remained center stage in the media this week as signs that is weighing on growth became more evident. However, the focus continues to be on monetary policy response to offset especially in China as the central bank there printed 3/4th of Trillion dollars in new money to stave off slowing growth. While this occurred, in the US, signs the Fed will act weren't as clear as worries on economic growth mounted. Plus, significant 1Q20 weakness emerged via company earnings commentary. The best illustration of this is the Markit February surveys for Fed which declined from the prior month indicating weakness in service & manufacturing sectors (see blue & green lines below courtesy of Bloomberg). The question is whether that impact is contained within 1Q20 or continues thru 2020. Containment appears difficult and signs of a vaccine are potentially the signal for the world economy to resume growth.



INVESTMENT IMPACT. Conservatism still reigns across our model portfolios as we maintain high cash/bond levels, in fact we reduced exposures further across the board in equities in our models. According to the WHO (World Health Org) in 3 weeks it will report results on 2 interim trials for the virus with existing drugs while development of a vaccine in underway. This maybe be pivotal in determining the direction of economy. Our overall our view is the impact of the virus may push out growth into 2H20 and additional stimulus from central banks may mute its long term impact.


For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can effect your finances.