Author: Ryan Frydenlund

Ryan Frydenlund

Financial News and Portfolio Management Discussion through March 30th

Global stocks had one of their best weeks ever driven by new fiscal and monetary stimulus measures.  The S&P 500 gained 10% and the Dow rose 13% over the week.  Abroad, the FTSE All World Ex US edged up 10% for the week.  Oil sank for a fifth consecutive week falling 4.9% to end at $21.51 a barrel. Investors continued to move to safe haven assets with the 10-year Treasury yield falling to 0.74%.

The Fed announced it would extend loans to businesses and purchase an unlimited amount of government debt to help support the US economy.

US manufacturing and services activity dropped at its steepest rate since October 2009 implying the US may already be in a recession.

A record 3.28 million people filed for unemployment benefits.

The coronavirus relief bill (CARES Act) was passed into law providing $2 trillion to help the economy combat the virus.

Financial News and Portfolio Management Discussion through April 4th

Global stocks moved lower over the week as the impact of COVID-19 continues to reverberate. The S&P 500 was down 2.1% and the Dow fell 2.7% over the week. Abroad, the FTSE All World Ex US declined 2.2% for the week. Oil surged gaining nearly 32% over the week on hopes of production cuts. Oil ended the week at $28.34 a barrel. Investors continued to move to safe haven assets with the 10-year Treasury yield falling to 0.59%.

The president expanding social distancing guidelines through the end of April, limiting the ability of business it open back up for another month.

Business surveys showed factory activity contracted across the globe in March with the lone exception being China as it began to emerge from the stranglehold of the coronavirus. Activity in the US contracted but was better than projected by economists.

US auto sales sank in March as buyers stayed home and dealers closed.

A record 6.6 million people filed for unemployment benefits last week indicating that 6% of US workers have lost their jobs in the last two weeks.

US employers cut more jobs in March than in any month since the Financial Crisis. There were 701,000 jobs cut in March and the unemployment rate moved from 3.5% in February to 4.4% in March. However, due to the timing of the reading the results likely don’t reflect the full extent of the recent job cuts.

Purchasing managers indexes for the services sector in Europe fell to their lowest level ever.

The Bank of China cut the reserve ratio required for small and mid-sized banks and lowered rates for commercial banks excess reserves to 0.35% from 0.72% to help stimulate the economy.

March Market Commentary

US stocks plunged in March ending the 11 year bull market as the spread of COVID-19 in the US brought the economy to a near stop.  Residents of many states were told to stay home and non essential businesses were ordered to be closed.  Stocks posted their worst month since the Financial Crisis and worst first quarter ever.  In an attempt to blunt the impact on the economy the Federal government passed fiscal stimulus measures, including a package totaling $2 trillion, and declared a national state of emergency freeing up funds to fight the virus.  Economic news released in March did not reflect the full scale of the impact with only a glimpse towards the end of the month.   US companies added 273,000 jobs in February, but the weekly reading of filings for unemployment benefits surged at the end of the month to a record of 3.3 million.  Service sector and manufacturing activity expanded in February, but posted their steepest drop since October 2009 in March.  For the month, US stocks dropped 13.75% and they were down 20.90% over the first quarter.

Foreign stocks plummeted as well in March driven by the spread of COVID-19.  Italy, Iran, Spain and France were some of the particularly hard hit places as the virus spread swiftly across the world and ground economic activity to a halt in many countries.  As a result, central banks around the world announced cuts to their benchmark lending rates as well as other measures.  The European Central Bank offered banks loans as low as –0.75%, increased its bond buying program to $819 billion, and expanded the types of bonds it would purchase.  The Bank of England cut its benchmark interest rate to a record low and said it would buy $232 billion of UK government bonds. Similar to the US, countries all over the world including Germany, Japan, the UK, and France announced significant rescue packages to support businesses and workers.  Early in the month an oil price war broke out between Saudi Arabia and Russia sending oil prices plummeting.  Oil fell 66% over the first quarter to finish at $20.48 a barrel.  Its lowest level since 2002.  The bright spot was China as manufacturing climbed sharply as the country and factories got back to work after significantly recovering from the virus.  Emerging markets trailed developed markets in March and over the year to date.  Foreign stocks dropped 14.42% in March and have declined 23.35% over the quarter.

High quality bonds posted solid performance in March as investors flocked to safe havens over fears of a derailed global economy.  The Federal Reserve took multiple emergency steps during the month moving faster and further than the central bank did during the Financial Crisis.  The Fed cut the Fed Funds Rate to near 0%, restarted their bond buying program pledging unlimited purchases of government bonds, will begin making loans directly to American businesses and injected trillions of dollars into the short term funding markets.  The 10-year Treasury yield was volatile over the month, hitting a record low early in the month, rising sharply before falling to end the month at 0.70%, down from 1.13% to start the month.  For the quarter and month, government bonds were the top performer with longer term maturities performing the best. Most other bond sectors struggled with shorter term maturities holding up better.  In March, the US bond market ticked down 0.44%, but was up 2.40% for the quarter.

 

 

Index Performance  MarchYTDTrl. 1 Yr.
US Stock (Russell 3000)-13.75%-20.90%-9.13%
Foreign Stock (FTSE AW ex US)-14.42%-23.35%-15.05%
US Bond Mkt. (BarCap Int. Gov/Credit)-0.44%2.40%6.88%
Municipal Bonds (BarCap 1-10yr Muni)-2.37%-0.61%2.50%
Cash (ICE ML 3Month T-Bill)0.29%0.57%2.25%

 

Financial News and Portfolio Management Discussion through March 7th

Global stocks had a volatile week driven by the coronavirus and global leaders’ responses. The S&P 500 gained 0.7% and the Dow rose 1.8% over the week. Abroad, the FTSE All World Ex US edged up 0.3% for the week. Oil sank after Saudi Arabia and Russia couldn’t reach an agreement on production cuts. Oil fell 7.8% to finish at $41.28 a barrel. Investors continued to move to safe haven assets with the 10-year Treasury yield ending the week at an all-time low of 0.71%.

The OECD lowered its projection for global growth from 2.9% to 2.4% for 2020.

ISM said its US manufacturing index declined, but remained in expansion terror in February.

Manufacturing activity in China showed its largest slump on record in February and the country’s Purchasing Managers index fell to its lowest level since April 2004.

ECB Chief Lagarde said the central bank was ready to act to support the eurozone against the impact of the coronavirus.

The Fed announced an emergency 0.50% cut to the Fed Funds rate. They now target a range of 1.00% to 1.25%. It’s the first between meeting change to the Fed Funds rate since 2008 financial crisis.

US lawmakers reached an agreement on $8 billion in funds to help contain the coronavirus.

US service sector activity rose in February to the highest reading in over a year.

Mortgage rates hit their lowest level ever with the 30 year mortgage falling to 3.29%.