Market Update: Reopening the Economy
Did you think three months ago that by the end of April the world as you know it would have changed drastically? That has become a reality for most people amidst the Coronavirus Pandemic and the drastic measures taken by federal, state, and local governments in an effort to protect the population. With so many people making huge sacrifices to protect their businesses and their families, at what point can we expect some normalcy?
Last week the Whitehouse issued guidelines for the three phases recommended to reopen the economy(1). This week’s Market Update is my interpretation of those guidelines (not a full comprehensive overview), some data around COVID-19, and a snapshot of markets since last month.
Criteria for the Three Phases
One thing I think is prudent to keep in mind is that many of the responses to the coronavirus pandemic have been fluid and can only be based on the information available to us at the time. The CARES act, tax deadline extensions, and small business loans, just to name a few, have seemed to adapt as new information becomes available. It is also important to understand that these are merely guidelines and it is my opinion that the three phases will likely be adopted differently depending on your state or even local governance. According to the Whitehouse guidelines certain criteria must be met before moving from one phase to another, those are below:
Over a two-week period there must be:
Consistent reduction of “Influenza-like illnesses” AND
Consistent reduction of COVID-like symptomatic cases
Consistent reduction of documented COVID-19 cases OR
Consistent reduction of positive tests as a percent of total tests
Hospitals must be able to:
Treat all patients without crisis care AND
Have a program in place to test at-risk healthcare workers, which includes antibody testing
As areas are able to continue meeting these criteria they move through the three phases of reopening their economies and returning to normal life.
The Three Phases
Each phase offers guidelines for opening business that can operate under social distancing and hygiene measures, and recommended practices for individuals as well as employers. It also offers more detailed guidelines for specific types of employers like Schools, Senior Living Facilities and Hospitals, Gym, Bars, and other Large Venues. You can reference the link at the bottom of this article for more detail on each of the three phases.
Most employers and individuals are able to begin resuming work where social distancing protocols are practical under the first phase. Phase two introduces non-essential travel and larger social gatherings. Finally, in phase three, all businesses are able to operate with some social distancing and hygiene protocols. The guidelines also specifically identify “Vulnerable Individuals” as those with serious underlying health conditions and the Elderly, who are encouraged to continue to isolate until phase three.
April Markets
While there is still a lot of volatility and uncertainty in capital markets, one thing that is encouraging is how healthy capital markets have been so far in the month of April. The chart below shows that from the most recent lows on March 23rd both the Dow Jones Industrial Average and the S&P 500 have experienced growth in the mid-20 percent range in this short period of time. This is only about half of the overall losses from the recent highs, and still may go back down to test the lows again, but it is a good indicator that investors are reacting positively to the stimulus, and the most up-to-date economic and coronavirus information.
Pandemic Perspective
You can get up to date testing numbers and case data for your state at https://covidtracking.com/data. Below I’ve included some charts to put some perspective on the Coronavirus numbers for the United States. The first chart compares Coronavirus related deaths and confirmed Coronavirus recoveries. Even one fatal Coronavirus case is too many, but I am hopeful to see how drastically recoveries have outpaced those numbers.
This last chart compares total Coronavirus tests compared to confirmed cases. Understandably, the number of confirmed cases increased dramatically just after testing began to increase, however, as a percentage of total administered tests less than 20% of those are positive. This is even with most areas using strict criteria around the ability to administer tests based on need and severity of symptoms.
I am looking forward to getting back to normal. Enjoying a date night with my wife, dropping the kids off for a sleepover with nana and papa, and meeting with clients face-to-face. While no one can predict the future I think most people can agree that we all are eager to resume life as quickly and as safely as possible.
View related content at the links below:
https://fsgmichigan.com/blog/market-update-oil-prices-the-other-market-story
https://fsgmichigan.com/blog/2020-first-quarter-market-update
https://fsgmichigan.com/blog/the-coronavirus-aid-relief-and-economic-security-act-cares-act
https://fsgmichigan.com/blog/market-update-march-27-2020
https://fsgmichigan.com/blog/what-is-my-advisor-doing-during-a-bear-market
https://fsgmichigan.com/blog/the-dos-and-donts-during-market-volatility
https://fsgmichigan.com/blog/the-anatomy-of-a-stock-market-crash
https://fsgmichigan.com/blog/coronavirus-chaos-thank-you-for-your-confidence
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Written By Justin Meyer