Dan Groben

Phillip Menard

Servant Advisors

1028 Oakhaven Road

Memphis, TN 38119



March 2020
Market Update
(all values as of 06.28.2024)

Stock Indices:

Dow Jones 39,118
S&P 500 5,460
Nasdaq 17,732

Bond Sector Yields:

2 Yr Treasury 4.71%
10 Yr Treasury 4.36%
10 Yr Municipal 2.86%
High Yield 7.58%

YTD Market Returns:

Dow Jones 3.79%
S&P 500 14.48%
Nasdaq 18.13%
MSCI-Europe 3.72%
MSCI-Pacific 3.05%
MSCI-Emg Mkt 6.11%
US Agg Bond -0.71%
US Corp Bond -0.49%
US Gov’t Bond -0.68%

Commodity Prices:

Gold 2,336
Silver 29.43
Oil (WTI) 81.46


Dollar / Euro 1.06
Dollar / Pound 1.26
Yen / Dollar 160.56
Canadian /Dollar 0.73

To our valued clients:

Over the past 3 to 4 weeks the world certainly feels like a different place; most of us are “sheltering in place” at our homes and getting use to our new normal.

The outbreak of the Corona virus has also created a bit of volatility  in the financial markets; causing the VIX (volatility index) to set new records along the way. While this can be uncomfortable, it also creates opportunities. Along these lines, we have added new positions to our accounts and will continue to do so in a cautious manner as good values present themselves. Below is our latest monthly news letter recapping the last month at a macro level and sharing some insights.

Macro Overview

Equities Technically End Eleven Year Bull Market Run – Domestic Stock Market Overview

Equity markets experienced volatility in March not seen since the 1930s, with daily declines so sharp that rarely-used mechanisms to halt trading were activated by the exchanges on multiple occasions. The S&P 500 Index saw an average daily change of 5.2% in March, the most extreme volatility since November 1929.

Stocks fell into bear market territory and then out of it in technically the shortest bear market in history. The last time the Dow Jones Index went from its bear market low to a bull market in only three days was in October 1931. Stocks had their worst quarter in years, with the S&P 500 Index losing 20% for the quarter ending March 31st, and the Dow Jones Industrial Index surrendering 23%. The bull market that began in March 2009, officially came to an end in March, after an 11-year run. The Dow Jones Industrial Index went from its high on Feb 12th to bear market territory in only19 trading sessions.

Signs of resilience at the end of March suggest that equities may regain their footing sometime soon. Overall valuations on stocks have fallen to levels that warrant accumulation of certain companies and industries. Eyes will be on earnings and quarterly performance releases over the next few weeks, as analysts determine how much of an impact the pandemic has thus had.

Sources: S&P, Dow Jones, Bloomberg



the flu will cost the healthcare system and society $11.2 billion this flu season

 April 2020

With the coronavirus continuing to wreak havoc on markets and economies worldwide, governments and businesses are confronting an unprecedented environment. In response, massive fiscal and monetary stimulus efforts put into motion by the administration and the Federal Reserve are expected to provide unparalleled economic stimulus.

The World Health Organization (WHO) declared the COVID-19 virus a pandemic on March 11th, sending global equities further down and ending the longest bull run in U.S. history. The 20% plus decline for all three major equity indices, from record highs set in mid-February, qualified the rapid descent as an end to the bull market that began in March 2009.

The International Monetary Fund (IMF) determined that the global economy has fallen into a recession, due to disrupted global supply chains and a drop in commerce induced by the virus outbreak. Economists believe that international markets may eventually rebound should governments around the world effectively mitigate contamination.

The $2.2 trillion stimulus plan passed by Congress, known as the Cares Act, was the largest in U.S. history, providing critical funds to small business owners and individuals nationwide. Massive federal borrowing will fund the program in the form of U.S. government debt issuance expected to exceed $2 trillion in short-term Treasury bills this year alone.

Many economists and market analysts view this pandemic as a health crisis at its core, not a financial crisis, which has preceded nearly all previous recessions. Atlanta Fed President Raphael Bostic said that “this is a public health crisis and different from a typical recession”. Dallas Fed President Robert Kaplan expressed some optimism by commenting “we’ve got a great chance to come out of this very strong”. Some view government restrictions and mandatory closures as the reason behind crippled businesses and the economic contraction, not the coronavirus itself.

It is too soon to determine as to what the overall impact will be to the multitude of industries and companies over the next few months. Globalization is in question as global commerce has dwindled due to supply chain constraints, along with varying rules and restrictions among countries involving cross-border transactions.

The Federal Reserve took unprecedented steps to stabilize bond markets and maintain liquidity following dramatic volatility amid continued uncertainty. The Fed committed to spend nearly a trillion dollars for the purchase of Treasury bonds, municipal bonds, corporate bonds and agency bonds in order to support the bond markets. The purchase strategy is reminiscent of Quantitative Easing (Q.E.), which was initially utilized during the 2008-2009 financial crisis.

As recession has become more of a probability, some economists are projecting a V-shaped recessionary environment, where asset prices may bounce back sooner rather than later in the second half of the year. Historically, the U.S. has never entered a recession with interest rates as low as they are now.

Sources: IMF, WHO, Fed, Treasury, IRS, Dept. of Labor


the SARs virus resulted in 774 deaths in 17 countries

Past Pandemics & What Came Of Them – Health Overview

Over the decades, pandemics have evolved and lasted for varying periods of time, yet always culminating with the containment and/or elimination of a virus. Should history repeat itself, a vaccine will eventually emerge to combat the COVID-19 virus, thus alleviating the threat of further immediate contamination.

Even though scientists have not identified how to stop a virus outbreak before it starts, advancements in medical technology over the past 17 years have drastically reduced the time it takes to develop and implement a vaccine after a new virus emerges.

The current coronavirus outbreak has been preceded by two similar outbreaks since 2003, Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS). SARs originated out of China in 2002, spread worldwide and was contained within a few months. The World Health Organization (WHO) tracks deaths related to pandemics globally. The organization found that the SARs virus resulted in 774 deaths in 17 countries. MERs, also known as the camel flu, resulted in 862 deaths.

Joint efforts among international governments and nonprofit research entities have allowed extended research on emerging infectious diseases worldwide. Several groups and scientists from various countries are already underway trying to develop a vaccine for COVID-19. (Sources: The National Center for Biotechnology Information, WHO)

China’s Share In The Global Economy – Global Trade

The global spread of the coronavirus has affected consumers in countries across the globe, curtailing demand for products mainly manufactured in China. It is expected that as worldwide demand for Chinese products decreases, the country’s primary economic component, manufacturing, will abate, thus hindering the country’s economic expansion.

Based on 2019 data, the top five economies in terms of GDP are the U.S., China, Japan, Germany, and India. These five alone account for 55% of total global GDP of $86.31 trillion. China accounts for roughly 16.3% of global GDP. China is referred to as “the world’s factory,”producing a broad range of items from shoes and socks to hammers and computers. The country’s enormous manufacturing base allows it to export massive volumes of goods globally, meeting demand from nearly every consumer in the world. China has experienced exponential growth over the past few decades, from a GDP of $305 billion in 1980, to over $14 trillion this past year, making it the second largest economy after the United States. The difference in GDP between the two nations’ economies has been shrinking over the years, as Chinese economic growth has consistently outpaced that of the United States. (Source: World Bank)


China accounts for roughly 16.3% of global GDP

Oil Has Worst Month In Years – Energy Sector Update

Extreme volatility appeared in the oil markets as prices fell to their lowest levels since 2002, tumbling to $20.37 (WTI) in mid-March, then rebounding 25% on March 19th, the largest one day rise in oil’s history. Prices collapsed when Russia and Saudi Arabia signaled an increase in production as demand fell worldwide due to the virus outbreak.

Saudi Arabia and Russia engaged into an oil price war, which also contributed to oil hitting multi-year lows. In an aggressive attempt to capture market share from Russia, Saudi Arabia dropped their oil prices and ramped up supply to over 12 million barrels a day, 2 million more than previous supply levels. The newly launched oil price war cratered global stock markets with the largest one day decline since 2008.

Many oil industry analysts believe that both Russia and Saudi Arabia are trying to dislodge and eliminate U.S. producers by inhibiting their margins and drive them out of business. Fortunately for U.S. oil drillers and producers, a resilient and responsive strategy has allowed them to combat price manipulation efforts numerous times over the past few years.

Crude oil markets were in contango in March, a phenomenon when oil price futures are priced higher than current prices, thus enticing oil producers to store oil obtained at current prices for sale in the future at higher prices. The abundance of crude oil supplies globally has also led to a shortage of storage, which is necessary for oil producers in order to continue production.
Sources: U.S. Energy Information Administration

In Closing:

On the lighter side, there has been a few helpful things that have occurred do to Covid 19. This includes lower gas prices and a tax filing deadline extension until July 15th, not to mention less traffic on Poplar avenue.

The Corona virus situation is serious and we hope everyone is taking all the recommended precautions to stay safe & healthy. The best thing that can happen is that we all do everything we can to flatten the curve and get back to some sense of normalcy as soon as possible.

We expect that the financial markets will continue to have volatility in the coming weeks and be assured that we will be managing accounts closely. Additionally, we will continue to invest in companies at a discount as the opportunities arise.

We wish all of you a pleasant Easter weekend and please feel free to call us to discuss your accounts or other related matters that are on your mind. Philip and I are working normal hours out of our offices and are available to meet.

Stay tuned, more to come.

Dan & Philip