Letter to Our Clients – April 1, 2020

April 1, 2020

Dear Clients and Friends,

April has arrived, leaving behind a dramatic and historic month of March.  As the COVID-19 pandemic has continued to spread around the globe, we have seen varied responses from authorities in different parts of the world.  Many places have chosen to mandate stay-at-home orders and other social restrictions, which has been shown to be very effective in slowing the spread of this coronavirus, with the goal of eventually leveling off new cases and mortalities.  Forcing people to be socially distant has not been an easy decision to make, and has essentially brought the global economy to a grinding halt.  

As a result, we have seen dramatic swings in the financial markets, as we have been discussing in our recent updates.  Currently markets are up from their recent lows, but we anticipate more bad news regarding the COVID-19 spread in the coming weeks, so the uncertainty is likely to cause continued volatility for the foreseeable future.  In the short term, economic news and corporate profits are likely to be dramatically worse than would have been expected a few months ago.  However, much of that bad news has already been accounted for in the current price of financial markets.  Whether the actual news will be better or worse than expected will send markets either higher or lower, but we still anticipate that economic activity will eventually return to “normal,” hopefully sooner rather than later. 

In addition to restrictions and preventive measures imposed by national and local governments, we have also seen many governmental attempts to provide relief and assistance in response to this global crisis.  It was announced that the deadline for filing taxes and making IRA contributions has been extended to July 15th.  Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 was signed into law this past Friday.  This act is the largest stimulus effort in the history of our country, and aims to assist some of the most impacted.  While the extensive verbiage is still being analyzed, it seems the legislation will be impactful and could have far-reaching implications.  

The act has many major focuses, including: “Recovery Rebates” intended to directly infuse taxpayers with cash payments, significant expansion of unemployment benefits, significant changes to health insurance requirements/Medicare/medical tax deductions, changes in the rules and consequences of loans and withdrawals from retirement accounts (including completely suspending Required Minimum Distributions for 2020), a moratorium on foreclosures and evictions for Federally backed mortgages, changes to tax deductions for charitable contributions, relief for Federal student loan holders, and relief for small businesses as well as measures to encourage and incentivize them to continue to pay employees.  The final act was 880 pages, so many of the details have yet to be fully understood, but overall it should provide a much needed boost to the countless families directly impacted, and hopefully will help soften the overall blow to the economy that otherwise might have left us in a severe recession or worse.

Globally we have all been impacted by this pandemic, one way or another.  Hopefully the CARES Act will be able to help many in our community who most need it, either directly or indirectly.  Going forward, tomorrow’s headlines and the direction of the markets are as uncertain as ever, but we still believe that the path we are on is sound, and that we will get through this crisis together.  

In times like these it can be easy to be overwhelmed by all the bad news and daily challenges we face.  It is important to try to remember to celebrate all the positives we have in our lives, and to look for silver linings in our current situation.  We strongly miss our old lives and the ability to see our team every day and meet with our wonderful clients face to face.  At the same time, my family has been consciously enjoying the differences in our new reality, such as more meals together as a family, more long walks with our dog, and more scavenger hunts and art projects with our three-year-old son.  We hope that you are able to find unexpected pleasantries in your lives as well.  

As always, we are here to help you and your families as you face difficult decisions or have any questions about your financial health.  If you have any questions about how the CARES Act affects you, or anything else we should be discussing, please don’t hesitate to reach out.  We hope that you all stay safe and well, and we will look forward to talking with you again soon.

Best Wishes,

Theodore R. Haley, CFP® AIF® 
President, CEO