 Before, giving a brief update on the markets. I wanted to start with a quote from Dr. Martin Luther King as here in NYC and in many other cities throughout the country tensions have reached a boiling point.
“I refuse to accept the view that mankind is so tragically bound to the starless midnight of racism and war that the bright daybreak of peace and brotherhood can never become a reality… I believe that unarmed truth and unconditional love will have the final word.” Now to the week that was in the markets, the S&P 500 closed above 3,000 for the first time since early March. The Nasdaq ended the month less than 4% below its all-time high. The Russell 2000 small-cap index, which was slow to join the market rally, ended up gaining more than 6% in May. Markets continued to positively greet every bit of optimistic news on vaccine and therapeutic developments. As more businesses reopen continuing jobless claims actually fell from 25 million unemployed to 21 million. Amid the positive news there remains many reasons to be cautious. We still have seen no sign that the economy is improving, the latest reading on first-quarter U.S. GDP showed a decline of 5%, the worst quarterly performance since the Great Recession. The President was careful with his speech on Friday about China and White House officials maintain that the rising tensions haven’t yet affected the U.S.-China trade deal reached at the end of 2019, which has been reassuring markets. But with tensions rising, a market response could happen suddenly, causing the markets to give back some of their recent gains. Stephen Caruso is a Financial Advisor and here to help! I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am hoping to begin having face to face again starting the week of June 22nd. https://booknow.appointment-plus.com/b8hh5y90/ This week the market has had some of its biggest rallies since the 1930's. The Dow Jones Industrial Average on Tuesday bounced more than 11% in its best day since 1933. This generated optimism that the bottom is in. More likely, the market is going to bottom when the number of Covid 19 cases starts to peak, and between now and there will be a lot of volatility. Those who want to invest money at these reduced levels should do so in a disciplined manner investing in indexes not individual companies and smaller fixed increments. The next few weeks we will see more terrible news from a public health standpoint and terrible news from an economic standpoint as well. We saw the beginning of that bad economic news this week with the largest number of new unemployment claims ever recorded. Warren Buffett famously wrote: “Only when the tide goes out do you discover who's been swimming naked. ” We are seeing this currently playing out with businesses and no doubt companies with too much debt and not enough cash will fail and the government can't bail them all out. Mr. Buffett's logic can also be applied also to individuals during this tumultuous time. To protect yourself when the tide goes out it's important to also look at your cash on hand and your spending and make sure you are also well insulated. Cash on hand or your liquid bucket allows you to ride out this storm without having to sell stocks at an inopportune time. Keeping tabs on spending is also critical. It is easy to rack up credit card debt in difficult times being disciplined about spending is essential in times of uncertainty. Finally, If you suddenly find yourself with more time on your hands use that time to organize make sure your important documents are in order, review your beneficiary designations, wills, health care proxies, etc. We are all trying to stay safe but with this virus our health can change in an instant as I have unfortunately seen in my own family as wife's cousin is currently hospitalized with the virus. Senior Wealth Manager, Stephen Caruso is there to help... anytime! If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ To add a little levity this week as we enter month 3 of shelter in place I have broken down the market news using quotes from Game of Thrones (a worthwhile binge watch if you haven't seen it). “No one mind me. All I’ve ever done is live to a ripe old age.” — Ser Davos  Legendary investor Warren Buffett and his company (Berkshire Hathaway) continue to sit on a record stockpile cash, Buffett says he has not been on a buying spree, because there hasn’t been anything “that attractive.” He went on to say "the best thing to do is owning the S&P 500 index fund, If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities, or far better than following people ... Perhaps with a bias, I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year,” In his 89 years on this earth Buffett has more often been right than he has been wrong, we should probably pay attention when he speaks. “If you think this has a happy ending you haven’t been paying attention.” — Ramsay Bolton  Trade war part two? Tensions with China continued to flare, with the U.S. Senate unanimously passing a bill requiring companies to certify that they are not owned or controlled by a foreign government as a condition of listing on a U.S. exchange. The bill would also limit foreign companies’ access to U.S. financial markets if they fail to meet certain accounting and auditing standards. While the legislation would affect any foreign company, China is seen as a main target. “Winter is coming.” — Ned Stark   Government officials continue to try to temper the market expectations for economic recovery. Federal Reserve Chairman Jay Powell told senators on Tuesday, “The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II.” He suggested again that another round of fiscal stimulus may be necessary. Other Fed officials echoed his view, including Boston Fed President Eric Rosengren, who said in a speech, “Now is the time for both monetary and fiscal policy to act boldly to minimize the economic pain from the pandemic.” The Treasury Secretary, Steve Mnuchin warned of “the risk of permanent damage” if businesses remain closed for an extended period of time. Amazon Best Selling Author, Stephen Caruso is ready to meet with you. I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ The shift to caution that I discussed in my previous emails is starting to occur. Equity markets slid this week as concerns about the outlook for the U.S. economy moved to the
foreground. Markets continued to be pushed and pulled by the conflicting forces of unprecedented monetary and fiscal stimulus versus difficult underlying economic conditions and staggering job loss. Here's what you need to know from the week that was. Interest Rates Not Going Negative Federal Reserve chairman Jay Powell pushed back on the prospect of negative interest rates. The Fed chairman will be on 60 minutes this evening and his comments could potentially move markets on Monday. Cases Not Spiking But Caution Still Necessary Health Secretary Azar delivered some positive news this morning saying "We are seeing that in places that are opening, we're not seeing this spike in cases." Though, Dr. Anthony Fauci took a more cautious tone warning states against reopening economies too soon. Stephen Caruso is a Senior Wealth Manager at Laurel Wealth Management and here to help at any time. If you would like to schedule a financial consultation phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ Equity markets looked past historically bad employment data and ended the week in positive territory. The S&P 500 rose 3.5%, and the Russell 2000 and Nasdaq were both up over 5% for the week. While I am ecstatic that the markets are coming back with such ferocity I remain cautious. I have broken down what you need to know from the week that was categorized by old sitcoms, hopefully it adds some levity. Temporary lay offs. Good Times.  U.S. Department of Labor reported April’s unemployment rate at 14.7%, the highest level since records began in 1948 and well above the previous high of 10.8% in 1982. Separately, the government reported another 3.1 million initial unemployment claims, taking the total over 33 million in the past seven weeks. Remarkably, the S&P 500® index is now at the same level it occupied last summer, when the U.S. unemployment rate was 3.7%, indicating that equity markets have discounted negative near-term data. Thursday, Friday, Happy Days  Health news is pushing markets higher. Stocks rose on Thursday and Friday following an announcement that pharmaceutical company Moderna’s potential COVID-19 vaccine is moving quickly to a phase 2 and, potentially, a phase 3 trial. The positive reaction was similar to last week’s encouraging news about a potential therapeutic from Gilead. Market optimism could be tested, however, if negative results emerge from the dozens of vaccine and therapeutic trials currently underway. Technology stocks have been clear near-term winners, the Nasdaq is now positive for the year. Danger Will Robinson!   When you have drastic out performance by one market segment it is tempting to chase performance and move a substantial amount or your stock allocation into that sector. Don't do it. I believe there is a real danger in abandoning long term disciplined principles like diversification to chase returns in Nasdaq stocks like Netflix, Zoom, Tesla and Shopify that appear to be in vogue at this moment. Watching the Nasdaq continue on its torrid pace higher reminds of 1999-2000 in that the move seems disconnected to the economic reality. Today’s winners may not continue their persistent outperformance, as people are paying for unrealistic earnings growth on these stocks. The 1999 bull run in tech ended 2 months after AOL purchased Time Warner a move which at the time had people like myself scratching their heads wondering how it was AOL became more valuable than Time Warner? A similar head scratcher happened in March of this year when Netflix became more valuable (higher market capitalization) than Disney. On Friday, Disney passed back ahead of Netflix in terms of overall value but the fact that they have roughly the same overall value makes no sense to me. Disney consistently earns over ten billion dollars a year.
Stay Safe and Schedule a metting with your Financial Advisor Stephen Caruso! As always, stay safe and I look forward to meeting with you once things get back to normal. I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/  Wednesday, we learned that the U.S. economy in the first quarter shrank at its fastest pace (-4.8%) since the last recession, ending the longest economic expansion on record. It is an obvious point to state that 2020 has been a period of extreme financial market volatility. During this time, it is necessary to believe your beliefs and doubt your doubts. Meaning you already know that the bestway to navigate a choppy market is to have a good long-term plan and a well-diversified portfolio. But sticking to these fundamental beliefs is sometimes easier said than done. When put to the test, you sometimes begin doubting your beliefs and believing your doubts. Fear can lead to short-term moves and bad financial decisions that divert you from your long-term goals.
Market sentiment reflects human sentiment, which lately has been quite negative—understandably so. However, I can almost begin to sense sentiment changing. New drug therapies are being announced and dozens of vaccines are in development. This change in sentiment, combined with government action creates more confidence, so we see stocks rising. It does not mean we are out of the woods, likely more challenges and perhaps market drops lay ahead, but we are seeing a return of optimism. If, the states that are reopening do so without a large spike in cases and we see some of the lost demand return, then we may be on our way to talking about this bear market in the past tense. I am hopeful but cautious that we can build on this positive sentiment. Until things get back to normal, schedule a meeting with financial advisor Stephen Caruso! As always, stay safe and I look forward to meeting with you once things get back to normal. I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ |
Stephen Caruso
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STEPHEN CARUSO
President & Founder
Laurel Wealth Solutions
President & Founder
Laurel Wealth Solutions
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Licensed Insurance Professional.
Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11
Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11