Weekly Market Commentary March 23, 2020

Fast Facts

Do You Like Pina Coladas?- Can’t find Purell? You could soon be sanitizing with coconut rum, said Kate Krader in Bloomberg.com. Small-batch distilleries in the U.S. and U.K. are “doing their part to pitch in on the effort to slow the spread of the novel coronavirus.” After all, effective germ-fighting sanitizers must be at least 60 percent alcohol, “a product that distilleries have in abundance.” With a little added aloe vera, and “botanicals and flavorings from their signature spirits as a twist,” the companies are giving away their boozy concoctions—just avoid the temptation to imbibe. Brooklyn-based New York Distilling Co.’s recipe calls for “uncut gin” with the “scent of juniper berries and citrus,” while California’s Prohibition Spirits has created “three flavors of sanitizer that evoke popular cocktails: key lime margarita, old-fashioned, and piña colada.”

Serenading Kindness- Helena Schlam is in self-imposed quarantine at her Ohio home, but the 78-year-old isn’t lacking for entertainment. Taran Tien, 9, and his sister Calliope, 6, this week staged a classical musical concert on their elderly neighbor’s front porch. The siblings put on their best formal attire, picked up their cellos, and played a 30-minute repertoire that covered everything from a Bach minuet to “Go Tell Aunt Rhody.” Schlam sat a safe distance away and cheered after each song; her grandchildren, who live in Israel, watched the concert over FaceTime. “This was a delightful break for all of us,” said Schlam. “It was such a real gift.”

Feuding Neighbors- A British senior citizen has been slapped with a restraining order and a suspended prison sentence after she used her pet parrot as “a weapon” to torment her neighbors during a 16-year harassment campaign. A court heard how Catherine Searle, 81, would play opera loudly to “overstimulate” the bird and cause it to screech for days on end. Paul and Lydia Appleton, both 61, described the endless squawking as “Chinese torture” that left them desperate for “some nice peace and quiet.”

Weekly Focus – Think About It

“In the midst of every crisis, lies great opportunity.”        –Albert Einstein, Physicist

The Markets

The coronavirus (COVID-19) continued to spread across the United States last week.

On Friday, March 13, the Centers for Disease Control (CDC) reported there were 1,629 confirmed and presumptive cases and 41 deaths. Last Friday, March 20, the numbers had increased to 15,219 cases and 201 deaths.

Governments in several states – including California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Louisiana, Maine, New Jersey, and New York – have issued shelter-in-place orders that apply to the entire state or one or more counties within the state. The intent is to enforce social distancing and slow the spread of COVID-19, reported Wired.

Mandates varied by region. Many included closing non-essential businesses and required residents to stay home unless they were buying groceries or gasoline, filling prescriptions, seeking medical care, or exercising outdoors (while practicing social distancing).

The shape of many Americans’ daily lives has changed significantly. Last week, Barron’s reported initial claims for unemployment benefits in the United States increased sharply, while U.S. manufacturing productivity dropped significantly.

The impact of measures taken to fight the spread of COVID-19 on companies, financial markets, and the economy is difficult to quantify at this point. However, there is reason to hope it will be relatively brief. The Economist reported:

“Despite stomach-churning declines in GDP [gross domestic product, which is the value of goods and services produced in a nation or region] in the first half of this year, and especially the second quarter, most forecasters assume that the situation will return to normal in the second half of the year, with growth accelerating in 2021 as people make up for lost time.”

Monetary stimulus will have a significant impact on outcomes around the globe. Central banks have been implementing supportive monetary policies. Last week, the Federal Reserve lowered its benchmark rate to near zero, announced a new round of quantitative easing, and took additional steps to inject liquidity into markets.

Fiscal stimulus – the measures implemented by governments – will also be critical. To date, the United States has passed two stimulus measures. The first provided $8.3 billion in emergency funding for federal agencies to fight COVID-19. The second is estimated to deliver about $100 billion for testing, paid family and sick leave (two weeks), funds for Medicaid and food security programs, and increases in unemployment benefits. The third stimulus is currently being negotiated in Congress and may provide more than $1 trillion dollars in relief to individuals and companies, reported Axios. On Sunday, Reuters reported the Senate planned to vote on the bill on Monday, March 23, 2020.

Major U.S. stock indices finished last week lower, reported CNBC.

We hope you and your family are well and remain so. Please take the precautions advised by your city, state, and federal governments to limit the advance of COVID-19.

FINANCIAL HELP DURING COVID-19 CRISIS. The temporary closing of non-essential businesses, shelter-in-place orders, and other changes that have come with efforts to keep COVID-19 from overwhelming hospital and healthcare facilities are creating economic challenges for many families. Here are four support and stimulus measures that may help.

1. Financial support from banks and financial companies. Americans who find themselves without work or working fewer hours may want to contact their banks. CNBC reported some banks and financial companies are willing to provide support during this difficult time, including:

• Deferring payments on mortgage, auto, and other personal loans
• Deferring payments on small business loans
• Waiving customer overdraft, expedited check, and debit card fees
• Waiving customer fees on excessive savings account withdrawals
• Waiving penalties for early withdrawals from certificates of deposit
• Refunding overdraft, insufficient funds, and monthly maintenance fees for bank and small business customers
• Pausing foreclosures, evictions, and repossessions
• Offering economic disaster loans

Customers must contact their banks to request support.

2. Tax Day postponement to July 15. The Internal Revenue Service pushed the 2019 tax filing deadline from April 15, 2020 to July 15, 2020. The three-month delay is intended to help Americans cope with the financial effects of COVID-19, reported CNBC. If you expect a refund, you may want to file sooner.

It is unclear whether 2019 contributions to IRAs must be made by April 15, 2020. Also, the deadline for filing taxes in your state may remain unchanged. Check with your state’s treasury office.

3. Stimulus checks from the government. The details are not yet available, but it appears the bill currently being debated in Congress may include stimulus checks for Americans. The proposals vary so it is impossible to provide specifics right now, according to Kiplinger.

4. Paid and family sick leave. On March 18, the Families First Coronavirus Response Act was passed. The new law requires employers with fewer than 500 workers to provide up to 80 hours of paid sick leave to employees affected by COVID-19. You qualify to receive your full wages (up to $511 per day) while on paid leave if you are sick or quarantined.

If you are caring for someone who is ill with coronavirus, or you are home caring for children, then you qualify to receive two-thirds of wages (up to $200 a day).

Go to Kiplinger.com to see if any other assistance may apply to you.

Best regards,

John Klevens, CFP®

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This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. This material is for informational purposes only and is not an offer to sell or a solicitation to buy any securities.

Securities and Advisory Services offered by John Klevens through KMS Financial Services, Inc. Member FINRA/SIPC and an SEC Registered Investment Adviser. Klevens Capital Management and KMS are separate and unaffiliated.

Portions of this newsletter have been prepared by Peak Advisor

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The Week Magazine
https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-23-20_CDC-COVID-19_Cases_in_United_States-Footnote_1.pdf)
https://www.barrons.com/articles/washington-must-go-all-in-now-on-fiscal-aid-or-america-will-pay-later-51584746071?refsec=economy-and-policy (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-23-20_Barrons-What_Washington_Needs_to_Do_Right_Now_to_Spare_America_a_Second_Great_Depression-Footnote_3.pdf)
https://www.economist.com/briefing/2020/03/19/governments-are-spending-big-to-keep-the-world-economy-from-getting-dangerously-sick (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-23-20_TheEconomist-Governments_are_Spending_Big_to_Keep_the_World_Economy_from_Getting_Dangerously_Sick-Footnote_4.pdf)