Key Takeaways:

There are 4 reasons we became a bit more conservative in our approach:

1. The economy is slowing and many companies are reporting disruption to their work-flow. With many public venues and travel being shut down, this will affect consumer spending. The consumer is 70% of the GDP in the US, so a slowdown here will affect earnings.
2. Spreads for corporate bonds have widened. This is an indicator of risk – the wider the greater the risk. There is more risk showing up in banks, which is not something we like to see since it is the fuel of our economic engine.
3. Oil prices are hitting a new 52-week low – typical of a prelude to a recession.
4. Fed response – they lowered rates by 0.50% and are injecting capital into the economy, but due to the consumer slowdown from COVID, we are not convinced that this stimulus will have its usual correcting effect.

There are 4 key things we will watch for going forward:

1. Will credit spreads narrow?
2. Will we see a global response (not reaction) to the virus?
3. Will global central banks provide a coordinated response?
4. Will the supply chain come back on quickly?

As always, please know that we are watching everything carefully and thoughtfully so that we can take wise action. Thank you for your trust and the opportunity to love and guide you through uncertain times. Please feel welcome to contact us with any questions or concerns.

Best regards,

The Willow Team
+1 413 236 2980