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May 2020
Market Update
(all values as of 04.30.2024)

Stock Indices:

Dow Jones 37,815
S&P 500 5,035
Nasdaq 15,657

Bond Sector Yields:

2 Yr Treasury 5.04%
10 Yr Treasury 4.69%
10 Yr Municipal 2.80%
High Yield 7.99%

YTD Market Returns:

Dow Jones 0.34%
S&P 500 5.57%
Nasdaq 4.31%
MSCI-Europe 2.05%
MSCI-Pacific 1.82%
MSCI-Emg Mkt 2.17%
US Agg Bond 0.50%
US Corp Bond 0.56%
US Gov’t Bond 0.48%

Commodity Prices:

Gold 2,297
Silver 26.58
Oil (WTI) 81.13


Dollar / Euro 1.07
Dollar / Pound 1.25
Yen / Dollar 156.66
Canadian /Dollar 0.79

Macro Overview

Markets were encouraged with the announcement of reopening plans by various states and the possibility of reigniting economic activity. Individual states started to ease restrictions and allow certain businesses to reopen for the first time since the Federal government declared a state of emergency on March 13th. Analysts and economists agree that reopening the economy may be a drawn-out process as normalcy is gradually restored.

Congress voted to inject an additional $484 billion into the original Paycheck Protection Program passed in March. The program ran out of its initial allocation of $350 billion in stimulus funds in mid-April with over 1.6 million loans approved. Smaller businesses with fewer than 500 employees, rather than larger corporations, are the intended target for the stimulus payments. Funds critical to keeping small businesses open have often failed to reach smaller neighborhood establishments in time, prompting the increasing likelihood of a multitude of bankruptcies and business closures.

Labor Department data revealed that nearly all the jobs gained since the recession of 2008-2009 were essentially lost, at least temporarily, in three weeks. Revised unemployment claims through the end of April showed over 30 million people filing for unemployment since the pandemic shuttered the economy in mid-March.

Supply chain disruptions throughout the food industry are leaving grocery store shelves barren as shoppers horde perishables, toilet paper, flour, and cleaning products. Dramatic shifts in consumer behavior have stirred shortages and inventory challenges for retailers across the country. Rationing of various products including pork, beef, toilet paper, and hand sanitizers is expected to continue according to the U.S. Food & Drug Administration.

Economists suggest that a lack of consumer confidence, along with the lingering fear of another virus outbreak in the fall, will hinder consumers from spending freely. Consumer confidence and retail sales bore the wrath of the virus outbreak as stores were shuttered across the country, with the Federal Reserve reporting that retail sales fell a record 8.7% in March.

Crude oil production in the U.S., which is measured by West Texas Intermediate (WTI), traded as low as negative $40 per barrel in mid-April. The sudden collapse in prices was the result of excess global supply in a recessionary global economy, creating a shortage of storage for oil worldwide. Optimistically, lower gasoline prices may help propel the U.S. economy as economic activity slowly resumes.

(Sources: Labor Department, SBA, Federal Reserve, Bureau of Economic Analysis)

oil traded below $0 per barrel for the first time ever in history

Rates Stabilize Due To Stimulus – Fixed Income Update

The Federal Reserve pledged its continued support for the economy in the form of fixed income purchases including government bonds, mortgages, and various fixed income funds. The Fed also resorted to buying junk bonds in the open market, as well as continuing to buy unlimited amounts of U.S. government bonds and mortgage-backed securities. Lending facilities were also extended to corporations and municipalities helping to support the corporate and municipal bond markets. An increase in the money supply, as measured by M2, rose to over $17.2 trillion as of April 20th, up from $15.5 trillion on February 24, 2020. The rapid increase is a result of the massive fiscal and monetary stimulus infused in order to stem the recessionary effects of the pandemic.

Both short-term and long-term yields fell as massive stimulus efforts buoyed the bond markets. The yield on the 10-year Treasury bond ended April at 0.64%, with the yield on the 2-year Treasury ending the month at 0.20%. All bond sectors are positive for the year, outperforming all equites indices since the beginning of 2020. (Sources: Federal Reserve, U.S. Treasury)

Earnings Are Focus For Equities – Stock Market Review

Equities rebounded in April, recapturing some of the losses suffered in March. Stock prices were supported by prospects of economic reopening and stimulus efforts targeting businesses. All eleven sectors composing the S&P 500 Index were positive in April, a strong reversal from March. Healthcare, technology, and consumer staples were among the top performing sectors for the month. The collapse in U.S. oil prices, as measured by West Texas Intermediate (WTI), drove energy-related stocks lower due to dismal revenue and profit expectations.

Earnings dominated equity markets as corporate earnings have become a barometer for the impact that the pandemic is having on the economy. Some analysts have difficulty explaining the discrepancy between the economy and the stock market, with equites propelling higher in April as dismal economic data points to subdued growth. (Sources: S&P, Bloomberg)

Oil Prices Drop Below $0 In April – Oil Industry Update

Oil’s plunge in April was of historic proportion, falling below $0 per barrel for the first time in history. The collapse in U.S. oil prices, as tracked by WTI, fell as storage for crude oil became almost completely unavailable worldwide. The economy may experience an indirect boost with the price of gasoline expected to subsequently drop to new lows. Lower crude oil prices have historically led to lower gasoline prices nationwide as product costs have dropped exponentially. Some states like California and Hawaii may not experience the full benefits of lower oil prices due to additional excise state taxes, refining costs, and distribution expenses.

Storage for crude oil became increasingly scarce as the virus outbreak led to falling global demand and major oil producers failed to limit supply, creating a glut of oil with few potential buyers. (Source: Department of Energy)

The IMF projects that inflation in the U.S. will increase in 2021 to 2.4%.

How The Housing Market Is Affected – Housing Update

A drop in mortgage rates to near historic lows has not been enough to offset a decline in demand for home buyers. The ongoing travel and social distancing restrictions are inhibiting would-be home shoppers from viewing and buying properties. Of the various factors influencing the housing market, employment is the most significant. No matter how low mortgage rates are, if someone is unemployed they face difficulty making a mortgage payment at all. Historically, rising unemployment rates have been detrimental to the housing market. The last housing contraction, as measured by the Federal Reserve’s House Price Index, occurred in 2008 and 2009, when unemployment peaked at 10% in October 2009. Some economists believe that an extended period of elevated unemployment will negatively impact the housing market.

In addition, the onset of forbearance allowance for homeowners as enacted by the CARES Act has put lenders in precarious positions. The Federal Housing Finance Agency estimates that roughly one million mortgages were in forbearance at the end of April, representing 7% of government-held agency mortgages. Lenders are highly sensitive to a deteriorating economic environment that may lead to additional foreclosures and bankruptcies. (Sources: Federal Housing Agency, Fannie Mae, Federal Reserve)

How Inflation May Eventually Return – Consumer Sentiment

The International Monetary Fund (IMF) estimates inflation for countries worldwide based on various factors. The IMF projects that inflation in the United States will increase through the remainder of the year and reach 2.4% in 2021. The enormous monetary and fiscal stimulus actions launched by the Federal Reserve and Congress entail billions of dollars in newly-issued government debt, potentially driving down the value of the U.S. dollar. When countries issue and carry significant debt, the value of their currency tends to devalue relative to other currencies, making imports more expensive. A weaker U.S. dollar makes U.S.-based companies more competitive as U.S. exports become less expensive worldwide.

Two macroeconomic occurrences currently signal a probable rise in inflation. The first is the rapid increase in the U.S. money supply, also known as M2, which includes money market funds, checking deposits, and actual cash. Historically, an increase in the M2 has often led to inflationary pressures. The second occurrence is the potential unwinding of globalization with a renewed focus on domestic production. Globalization is now in danger of retracting, as trade fears among countries are mounting due to the extensive spread of the COVID-19 virus worldwide. Heightened tensions between the United States and China have created the possibility that U.S. imports of low-cost Chinese imports may decrease. (Sources: FDA, U.S. Dept. of Agriculture, International Monetary Fund)

nearly half of the nation’s workforce is employed by a small business

Typical Scams Surrounding Coronavirus – Consumer Awareness

The Federal Trade Commission (FTC) identified a number of scams circulating throughout the country as a result of the coronavirus outbreak. Scammers are exploiting fears and paranoia by targeting victims via email, phone, and text messages.

Below are various scams to be aware of and avoid:

1. Don’t respond to texts, emails or calls about checks from the government. It is very rare that government agencies contact consumers directly.
2. Ignore online offers for vaccinations and home test kits. There are no products proven to treat or prevent COVID-19 at this time.
3. Hang up on robocalls. Scammers are using illegal robocalls to pitch everything from low-priced health insurance to work-at-home schemes.
4. Watch out for emails claiming to be from the CDC or WHO. Use sites like & to obtain the latest information. Don’t click on unknown links.
5. Be wary about charitable organizations claiming to need assistance due to the coronavirus.

(Source: FTC:

Why Small Businesses Are So Important To The Economy – Domestic Economy

The U.S. economy boasts millions of small businesses, from home-based consultants to hair salons and manufacturing companies. As defined by the SBA’s Office of Advocacy, a small business has fewer than 500 employees and operates independently, not under the control of another entity.

As of 2018, the SBA estimated that there were 30.2 million small businesses in the U.S., 22 million of which were individually operated with no employees other than the owner. Nearly half the nation’s workforce, 49.2%, is employed by a small business, representing roughly 120 million employees.

The SBA reports that small businesses have historically accounted for 60-65% of net new jobs nationwide every year, amounting to approximately 2 million jobs per year. Data compiled by the Census Bureau in 2014 identify that roughly 50% of all net jobs created nationwide were from small business employers. With over 30 million newly unemployed Americans since the outbreak, small businesses are expected to eventually hire many of the recently unemployed.

The Paycheck Protection Program is highly impactful for small businesses because of the financial burden precipitated by mandatory closures. Of the various industries affected, restaurants have been one of the hardest hit nationwide, as business owners have been forced to lay off employees and limit sales to take-out menus in order to survive to pay rent and utilities. The SBA’s data shows that about 60% of all small businesses either are operating at a loss or merely breaking even. (Sources: Labor Department, BLS, SBA)