In a different world we would be writing happily about the February Jobs Report, which absolutely blew past expectations. The Department of Labor reported the US economy added 273,000 jobs last month (versus expectations for 175,000 new jobs). The unemployment rate fell back to a generational low of 3.5%. Employment is of course the foundation of the economy, growth, and consumer spending. Unfortunately, few people noticed the report, and fewer cared as that is all in the rearview mirror now. The market is forward looking, and right now it is all about the coronavirus – COVID-19.
Investor and market sentiment is being weighed down by the spread and implications of the virus. Italy essentially locked down its northern region, numerous schools in the US have closed, and large scale social gatherings have been cancelled in response to the coronavirus. The market is in the process of “pricing-in” slower growth and recession. Also in play and related is a plunge in the price of crude oil. Oil prices are sharply lower after Saudi Arabia surprised the market by initiating a price war. Bottom line, the market has a virus and oil problem, and looking ahead it sees an economic slowdown.
We cannot tell you what path COVID-19 will take or what the ultimate outcome will be. However, as we mentioned last week we don’t believe this is the end of the world (or of the investing world). Times like this are when it is especially important to maintain a long term view. The market is inherently volatile. It is important not to get too exuberant during the good times, or too pessimistic during the bad times. Additionally, making sure your investment allocation is in line with your goals/objectives/risk tolerance and cash flow needs provides the core of a long term plan. We advise not letting short term market volatility interfere with your long term plan!
As this is a general market memo, please feel free to give us a call if you have any questions or would like to set up a meeting to discuss your specific portfolio or circumstances individually.
All the best – Southport Station Financial Management, LLC