Advisor Insights Market News Weekly Market Commentary

Market Update: Impact of social distancing and sudden economic stops

Written by: Benjamin Bimson CIMA®, CMT® / CIO, BCJ Financial Group

This crisis is affecting us all. The good news is that nobody is hiding from this one.

New statistics are coming off the press at a nearly unprecedented pace including what may or may not happen based on fiscal and monetary policy. This crisis is affecting us all (every sector, every country and every family), many people are suffering in various ways, and now it looks as though recession is inevitable. However, the good news is that nobody is hiding from this one.

The Federal Reserve and the government are working at a breakneck speed to try to shore up the damage even before it is seen in the economic data. That likely will help blunt the trauma from what some are likening to the Titanic striking the iceberg almost exactly 108 years ago. This time, the financial and government saw the iceberg, but the collision was unavoidable. How many get into the lifeboats will determine the severity of the likely recession to follow.

Ned Davis Research has put together a table of likely affected sectors as we explore the potential impact of social distancing and sudden economic stops. The table below highlights the sectors that will feel the slowdown the most although affects will be felt throughout the economies of the whole world.

Copyright 2020 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at www.ndr.com/copyright.html. For data vendor disclaimers refer to www.ndr.com/vendorinfo/.

 

Despite the staggering number of industries that are being affected (highlighted portions make up nearly a third of GDP numbers), the number of people facing layoffs and inability to work, there is not only hope for the markets, but also hope for people most affected. The pain is likely to increase short term, our health system will discover ways to treat or vaccinate (even if it takes some time to arrive at lasting methods). The sheer amount of stimulus that our financial and government seems willing to commit to minimizing the damage, eventually will enable the market to find a footing and new technologies, businesses and opportunity to present themselves.

We remain optimistic that we can all come out of this crisis stronger than ever before. Now it is important to understand the value of taking a long-term approach without being blind to current environments.

Fear can make us all forget that this country has overcome revolution, civil war, terrible health pandemics, two world wars, depression, dust bowls and a host of other seemingly definitive difficulties. We all must do what we can to protect our families but not forget to help anybody we have the power to help. Everyone has something they can contribute and if we all do what we can, the damage will be minimized, and the recovery will be rewarding to more people.

Taking the time to discuss any concerns with your advisor is invaluable to helping you make decisions in this extremely difficult time, and remember – there will be bright days ahead.

 

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Copyright 2019 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Right Reserved. See NDR Disclaimer at www.ndr.com/copyright.html. For data vendor disclaimers refer to www.ndr.com/vendorinfo

Investment advisory services are offered through BCJ Capital Management, LLC., an SEC Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein.  BCJ FG 20-31

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