BCA Weekly Commentary 3/27/20


SUMMARY. This week marked progress on a $2 Trillion fiscal stimulus plan passed by the Senate that still needs House passage and signed into law. Plus, a massive injection into the banking system by the Fed as many businesses draw down credit lines for continuing operations. Most importantly, Dr. Fauci who is part of the Trump administration, stated the he believes (as do we) that a drug therapy will either partially or fully address the virus within a month. This point which isn't largely understood nor prominent in the media, may provide even a bigger roll than all of the above because it may address the extreme fear which is causing economic uncertainty and thus business disruptions. We believe a successful drug therapy maybe be critical in restarting the economy as per Trump's plan next month.


INVESTMENT IMPACT. 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. The combination of fiscal/monetary stimulus and successful drug therapies may be critical to the depth & length of the economic crisis. We believe focus in the rebound vs the slow down has started to occur thus we we have maintained equity exposures. During the week we made only minor changes to the model portfolios, but recognize until the above gets addressed markets may remain volatile. As a reminder, with stock buy backs generally on hold by US corporations AND most of the daily volume of markets driven be computer trading "reading headlines" liquidity is lower thus exaggerating market volatility.


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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