We express our gratitude to you for allowing us to manage your investment portfolio, particularly during this chaotic time of Covid-19. We appreciate your trust and confidence.
Last week we announced our new website www.first-financial-advisors.com and our social media presence. We are pleased with the positive response from many of you. Particularly, clients expressed that they like being able to access their TD Ameritrade account directly from the website by simply clicking the client link. If you have not had a chance to view the website and access your account information, we encourage you to do so. Our market updates that we send through this email will also be available for you to view under the “blog” section so that the website becomes a “one-stop shop” for you. If you have questions regarding this, Alan, Bob, Carson, or Delightra will be happy to guide you through the process.
The coronavirus has created no shortage of scary headlines. It is natural to feel confused and uncertain in times like these. The stock market is likely to remain choppy in the weeks ahead. “What do you think this market will do?’ is a difficult question because really no one knows the exact answer. However, “What do you think this business will do?” is a good question. Some sectors and companies within those sectors have done well during this crisis while others have been hurt. Technology, Healthcare and Biotech sectors have done well. Travel, Dining, and Oil and Gas Exploration have done poorly. A company like Microsoft has grown 39% since the crisis began. Paypal is up 75%, Abbot Lab up 53%, and Costco has held steady up 13%. On the flip side, United Airlines is down 67%, Royal Caribbean Cruise down 71%, and the United States Oil Fund down 80%.
The economic damage from Covid-19 is horrific with historically high unemployment levels. This kind of job destruction will be accompanied by a very large decline in GDP. Economists at First Trust estimate that we could have a contraction at a 30% annual rate in the second quarter. We are however seeing some positive signs. The Payroll Protection Plan is offsetting some of the damage. During the week ending Saturday May 2, 939,790 passengers went through TSA checkpoints at airports. That’s up 26% from the prior week and up 40% from two weeks ago. The amount of motor gasoline supplied has grown three weeks in a row, up a total of 16%. Hotel occupancy and railcar traffic are both up from a month ago. These high-frequency data will give a clearer read on the pulse of the economy as we gradually reopen. Anyone who ventures outside will notice more cars on the road and more activity, including in businesses that are still required to be closed to the public but are preparing for clearance to re-open. Many researchers are using cell-phone location data to track the movement of people. For example, Apple looks at “routing requests” on map applications. In mid-April, both walking and driving requests were down roughly 60% from January 13th. As of Saturday, walking and driving requests were only down 29% and 16%, respectively.
At First Financial Advisors, we continue to monitor the data and manage your accounts in a prudent manner relative to your risk profile. We appreciate your continued support.
