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BCA Weekly Commentary 3/13/20

SUMMARY. To be clear we continue to believe the virus is a BLIP in growth NOT the end of it and the talk of another major recession combined with a financial crisis is overblown. This week marked another volatile week with extreme panic over the spread of the virus throughout the world. Fear was evident in the early part of the week, but appeared to have waned on Friday, tied to a comprehensive testing plan announced by the Trump administration. Greater testing has demonstrated to be effective for containment so as to level the number of cases in other countries. It appears that is what investors are focused on: a leveling of cases so the testing plan went along way to alleviate fears thus a huge market bounce on Friday. Also there was reported a second advanced case of the virus being treated with existing drugs that has proven successful. Trial results will be announced by several drug companies next month when we deem important to reduce fear. Lastly, the week ended by the Federal Reserve announced the start of another round of QE of unprecedented size and next week will likely announced at least a 50 basis point reduction in interest rates.

INVESTMENT IMPACT. This week market a turning point in our model portfolios particularly in the growth oriented ones. For the first time since last Summer we have an equal weight in technology vs the S&P 500 (roughly 20% of model): we had little or no exposure since last Summer. In addition, we eliminated or reduced exposure of those companies that we deemed to have at risk dividends, high debt levels or would be in need of financing in the future. Throughout all of our portfolios have an annual dividend yield of 4% or better ($4 for every 100 invested annually) so as to provide an income stream regardless of market movements. Our overall view is the impact of the virus as temporary, pushing out growth into 2H20 as 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.

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