Newsletter 07/17/2020

In a world where events seem out of your control it is important to find decisions in your life that you can control. Examples would be wearing a mask, social distancing, washing your hands and being prudent in your behavior. Maintaining your discipline in regard to your behavior is a daily challenge. 

The initial shelter in place order at the beginning of the pandemic was easier than it is now. It was new and we could feel its importance as we watched the Northeast succumb to a horrendous situation. Once conditions began to ease and efforts to reopen commenced we lost our opportunity to get in front of the pandemic. Now that cases are surging it is even more important to find elements of your life you can control. My latest example is controlling my weight. I try to eat healthy and not put on weight. I might be losing that battle at the moment. Daily exercise is another example. My focus on behavior and decisions in regard to my overall health enable me to control what I can. Controlling what we can helps us persist during these challenging times.

Most of us remember the financial meltdown of 2008-9. The Federal Reserve had a similar reaction to reducing interest rates to zero and maintaining those very low rates for a long period of time. Congress also passed fiscal measures(TARP) to help the economy recover. The result of monetary and fiscal measures during that time period were to encourage investors to take more risk with their funds, meaning the stock market, where dividends were higher than safer fixed income investments.

Today we’re seeing a similar phenomenon with fixed income investments having lower income than the S&P 500 with bond yields of 1.85% and 10 year US Treasuries paying .6%. This climate explains part of the rebound in the stock market from the March lows. This along with the Federal Reserve providing monetary stimulus and Congress providing fiscal stimulus.

2nd quarter earnings season has started with analyst’s earnings expectation reduced by a record amount. What often happens is companies exceed these reduced expectations and stocks rise. Based on historical valuation it is hard to see how stocks could go much higher but analysts expect big earnings improvement by the beginning of 2021. We shall see. No changes recommended currently regarding our portfolio management.

Unemployment claims stayed above 1 million again this week and retail sales grew nicely in June but that was before the 2nd wave of shutdowns began. One day at a time.

As we head into the weekend remember to find joy where you can. Monique and Elizabeth have been home with their young children during his time. Working and parenting and living, trying to stay sane... many of you are juggling the same. As challenging as this time may be, we remind each other to seek joy in these moments spent close with loved ones.

Both Monique's and Elizabeth’s children are young enough that they have little idea a pandemic is happening; today’s little kids are in part immune to the stress of being aware of current events and unknowing of what is happening in the outside world. It’s in many ways a huge blessing. The children’s energy, curiosity and disposition are a wonderful distraction from the world’s current chaos. It’s still chaos, and demanding. All that time spent together has also made them more acutely aware of changes in their children’s personalities and abilities.

Zeni’s (3) increased agility on her balance bike for example and her interest in mixing paint with her fingers on construction paper, balancing on one foot and chasing bubbles in the yard. Leah (4) is avidly planning and building Barbie villages out of every toy and material available in every nook and corner and Roy (1.5) is discovering his booming voice and his extended left hand block when running to play keep away with his ball.

Thank goodness for all of the reminders to put aside the day’s headlines! That’s what it’s all about these days. Focus on things that are in your control. Disconnect from the headlines. Find those silver linings. They sure are helpful.

Kindest,
Ira Fateman and The SAS Team