The financial situation continues to be challenging.  Here are key takeaway points:

1. We continue to take a more conservative stance with our investments.
2. We think Treasuries are becoming the safest place to be right now based on what we are seeing with REPO and money markets.
3. Our indicators tell us a “bounce” is coming (market going back up temporarily), and when it does, we will move even more to treasuries to protect your assets in the near term.
4. IMPORTANT: We are seeing high risk indicators in the banking sector and recommend that none of our clients keep more than $250k in cash savings at banks right now (this is the max protected by the FDIC).

Here are things we are currently watching:

1. We are paying attention to the flattening of the virus spread in China and a returning to work. We are hoping that this continues and becomes global, which could signal a return in our economy (and global health recovery!)
2. We are watching the government’s response in terms of bailouts, etc and monitoring that impact on the economy.
3. We are closely watching REPOs and overnight cash markets, as well as bond spreads.

We hope you are staying safe and calm. In this time of social distancing, we also wish you comfort and authentic, loving connection.

We continue to watch the markets carefully and thoughtfully, taking action based on 33 years of riding economic waves. 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

We have implemented several protocols:

1. The office remains open, but we have closed the door to outside visitors. All deliveries are being left outside and we are regularly sanitizing and cleaning the environment around us. 
2. Employees who are feeling sick, vulnerable or showing signs of illness are working remotely and practicing self-quarantine.
3. We are requesting that all client meetings move to phone and video conference for the time being.
4. We have limited all corporate travel and events.

Health and safety of ourselves, our families, our clients and the world around us is #1. By doing this, we ensure that we are here to protect and manage your money.

There are 4 key market updates for today, March 16, 2020:

1. Fed lowered rates to nearly 0% over the weekend. We see this decision (and the weekend movement) as an indicator of heightened stress in the financial system – more than the media is indicating.
2. Charts and data are beginning to also show significant stress in the economy.
3. Feds increased their REPO position (they upped their repurchasing volume) which did cause markets to respond favorably, although minimally.
4. We took advantage of this bump to raise more cash in our portfolios. We are now operating at roughly 45% equities across our entire portfolio.
5. If there is no continued relief and improvement tomorrow, we will continue to become more conservative in our investment strategy.

We continue to watch everything carefully and thoughtfully, with “ice in our veins,” so that we can take wise, calm and non-reactive 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

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

 

Key Takeaways:

Here is our analysis. We are not yet tempted to purchase in this dip until we have some data to support stabilization. Stabilization can be found when we have a greater understanding of the severity of the spread of the Coronavirus and the potential for it morphing into something more complex or not.  Simply stepping back, the statistics are all over the map but the data suggests that infections are actually slowing and the death rate is maybe half a percent higher than the common seasonal influenza.

One of our jobs is to remove emotion based reactions to market moves and look as objectively as possible at all the facts. When we look at past outbreaks (SARS, ZIKA, H1N1) markets have typically entered into 9-12% correction periods but then quickly recovered. Markets were greatly over-extended and this pull back provides an opportunity for valuation metrics to cool down – which is healthy as the market breathes in and out.  

On the flip side, the market does not like uncertainty of this magnitude. Clearly there will be economic repercussions due to China’s shut down – this will affect our supply chains. Post the 2008/2009 crisis, our supply chains for manufacturing small parts has become quite dependent on China. Slowly, companies are posting warnings about not meeting earnings expectations, which is yet another concern for financial markets, but could also be setting them up for future earnings beats. 

As far as positioning, while we are participants in the market, your portfolio continues to be well diversified with an overall lower risk measure to the market. Our current diversification makes sense in our eyes. Corrections of this magnitude are not uncommon after such a strong performing 2019. We tend to be defensive managers with a strong eye for risk, so if we see that these factors begin to affect some important risk indicators, we will act accordingly.  

Please call us if you have any questions. It is our pleasure to diligently navigate these situations and provide you the best possible service and confidence.

Best regards,

The Willow Team
+1 413 236 2980