Biden’s pen (what’s in it for you)

I hope you’re well.

After months of election uncertainty, Joe Biden was inaugurated as our 46th president, bringing the peaceful transfer of executive power that defines us as a democracy.

President Biden’s pen has been busy, busy, busy so let’s dive into some new policies that could impact you.

Student loan freeze: The Department of Education extended the suspension of federal student loan payments through September 30, 2021, giving borrowers some extra breathing room this year. No interest will accrue during that period, and each month will count toward public service loan forgiveness as well as student loan rehabilitation. Unfortunately, private loans are again excluded from the freeze.1

Foreclosure and eviction moratoriums: The CDC extended the federal eviction moratorium through March 31, 2021, preventing renters from being evicted for non-payment of rent. Fannie Mae and Freddie Mac also extended foreclosure and eviction moratoriums until February 28, 2021.2

Rental assistance: Under a program passed in December, states will begin disbursing $25 billion in rent assistance to help tenants pay rent and utilities. Funds can be accessed locally through housing groups, 211/311 information lines, and local representatives.3

Will Americans receive more stimulus checks?

I think that’s likely, but it’s not yet clear who will get them or how much they’ll be. The new $1.9 trillion stimulus program Biden has proposed offers $1,400 stimulus checks, enhanced unemployment benefits, a $15 minimum wage, aid for states and local governments, money for COVID-19 vaccines and testing, as well as help for parents and schools.4

What will the final bill look like once Congress finishes negotiating? Unknown.

Opinions and criticism abound. Some think the proposal is too big, too costly, and risks overheating the economy. Some believe it doesn’t do enough to address the real pain many Americans are experiencing. Others think that getting it done (and done quickly) is more important than getting it perfect.

What do you think? Hit “reply” and let me know.

Tax season starts later this year, but the filing deadline is still April 15 (for now).5

The IRS has pushed back the start of tax season by several weeks, delaying the acceptance and processing of tax returns until February 12. Currently, the tax filing deadline is still April 15, but that could also change.

I’ve had some questions about how the 2020 stimulus payments could affect taxes, so I’ll answer a few right here:

Do I owe taxes on my stimulus money? No, the IRS does not consider stimulus payments to be income.

I didn’t receive my money (or the correct amount of money). Since stimulus payments were based on prior year tax returns, you’ll receive any money you’re owed when you file your 2020 return. If you think you may have received too much based on your income, you’re in luck. It doesn’t look like you’ll have to pay any back.6

So, that’s a lot of information to digest. And more will be coming as the new administration settles in and starts working on what’s promising to be a big agenda for the first 100 days.

If you have questions or need help figuring out assistance for yourself or someone you love, please reach out. It’s what I’m here for.

P.S. Will all the political back and forth trigger a big correction? With markets at highs, a pullback is always possible. As long as progress is made toward getting control of the pandemic and supporting the economy, a serious correction seems unlikely. However, setbacks or a sudden loss of investor optimism could definitely cause a sudden drop. Let’s be prepared for volatility.

1https://www.washingtonpost.com/education/2021/01/20/biden-student-loan-payment-freeze-extension/

2https://www.cdc.gov/media/releases/2021/s0121-eviction-moratorium.html

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-Foreclosure-and-REO-Eviction-Moratoriums-1192021.aspx

3https://www.cnbc.com/2021/01/22/states-will-soon-start-giving-out-25-billion-in-rental-assistance-.html

4https://www.nytimes.com/2021/01/14/business/economy/biden-stimulus-plan.html

5https://www.foxbusiness.com/money/stimulus-checks-and-your-2020-taxes-all-of-your-questions-answered

6https://www.cnbc.com/2020/05/29/heres-what-the-irs-is-saying-about-inaccurate-stimulus-payments.html

Season two of 2020?

Does it feel like 2021 yet?

The twists and turns so far make it seem like 2020 is dragging into a second season.

As an American, I’m shocked and worried, and I’m wondering how political disagreements turned into excuses for violence.

As a financial professional, I know that the politics, protests, and rioting in DC are just one factor affecting markets.

I honestly don’t know what will happen over the next few weeks, but I can help you understand how it affects you as an investor.

Why did markets surge the day the Capitol was attacked?

While the world watched the violence in DC with horror, markets quietly rallied to new records the same day.1

That’s weird, right?

Well, not really.

I think it boils down to a few things.

  1. Computers and algorithms are dispassionate, executing trades regardless of the larger world.
  2. Markets don’t always react to short-term ugliness. Instead, they reflect expectations about economic and business growth plus a healthy dose of investor psychology.
  3. With elections officially at an end, political uncertainty has dissipated.

Overall, I think investors are looking past the immediate future and hoping that vaccines, increased economic stimulus, and economic growth paint a positive picture of the future.

The Democrats control the White House and Congress. What does that mean for investors?

If you’re like a lot of people, you might think that your party in power is good for markets and your party out of power is bad.

That makes for a stressful experience every four years, right?

Fortunately, that’s not the case at all. Markets are pretty rational with respect to politics and policy.

While businesses and investors generally dislike increased taxes and corporate regulation, the Democrats hold such slim majorities in the House and Senate that it limits their ability to pass many big policy changes.

Also, the Democrats’ immediate agenda is very likely to be focused on fighting the pandemic and passing more stimulus aid, both of which should support stock prices.

Does that mean markets will continue to rally?

No guarantees, unfortunately. With all the frothy market activity and rosy expectations about the future, bad news could knock stocks down a peg or two.

A correction is definitely possible, and some strategists think certain sectors are in a bubble.

Bottom line, expect more volatility.

Well, what comes next?

I wish I could tell you.

I’m optimistic that the light at the end of the tunnel is getting closer and we can start going back to normal.

I’m proud of what scientists and medical professionals have been able to accomplish in such a short amount of time.

I’m grateful for the folks around me.

I’m hopeful about the future.

How about you?

What’s your take? I’m interested to hear your thoughts.

Stimulus bill (what’s inside)

I’m dropping you a quick note about the new economic relief package that was just signed into law.

What’s in the box?

The rescue package includes:1

  • $600 direct payments to adults and dependent children
  • An extra $300/week in unemployment benefits through at least mid-March 2021
  • $325 billion in small business aid
  • Vaccine distribution funding
  • Food assistance for low-income households
  • Emergency rental relief

Who is eligible for the stimulus payments?

It appears that lawmakers are following slightly different income limits than they used for the CARES Act. Individuals who earned less than $75,000 in 2019, heads of household earning less than $112,500, and couples earning less than $150,000 are eligible for the full $600/person payment. The payment starts phasing out after $75,000 and disappears entirely for individuals earning more than $87,000 (or couples earning over $174,000).2

While dependent children under 17 will also receive $600 each, it doesn’t appear that adult dependents like college students or elders qualify for the payments.

If your family added dependents in 2020 or you earned too much in 2019 to qualify (but would qualify in 2020), you may not receive full payments immediately but can request additional money once you file your 2020 taxes. If you qualified based on your 2019 income but your 2020 income would have reduced your payment, you won’t have to pay it back; nor will it count as taxable income.

How do I claim a stimulus payment?

Like the CARES Act payments earlier this year, the stimulus payment should end up in your bank account or arrive in the mail. If you’ve moved or changed bank accounts since you filed your taxes, you can update your address with the IRS here. It appears that you can’t update direct deposit information due to fraud risks.

While the IRS hasn’t released a timeline for sending out payments, it’s possible electronic payments could start before the end of the year. When the last round of stimulus passed, the IRS began distributing payments two weeks later; however, plenty of eligible folks still haven’t received them many months later.3

What else do I need to know?

Small business relief: Congress included another round of relief for small business owners by extending the Paycheck Protection Program with another $284 billion in forgivable loans. Some of the funds will be set aside for very small businesses, and the PPP is now available to nonprofits and local media outlets.4

An extra $20 billion has also been appropriated for Economic Injury Disaster Loans for businesses in low-income communities, and $15 billion more is earmarked for live venues, movie theaters, and cultural institutions that have been financially damaged by the pandemic.

The deal also clarifies that PPP borrowers will be able to deduct expenses paid for with forgiven loans, clearing up a potentially nasty tax issue.

Unemployment benefits: The package also extends unemployment benefits of $300/week for another 11 weeks, beginning as early as December 27 and lasting at least until March 14, 2021. A benefits program specifically for contract and gig workers that was slated to expire at the end of the year is also extended through March.

What should I do with my payment?

If you’re one of the millions of Americans struggling to stay afloat right now, please use the stimulus payment to pay for your three basics: food, shelter, and medicine. If you’re in a better place, I’d recommend paying down any high-interest debt you’ve accumulated or beefing up your emergency savings.

If you’re among the very fortunate who don’t need to shore up your finances, I’d recommend putting it toward your retirement savings, other financial goals, or investing it in yourself through a course or hobby.

That’s it for now. I hope you and your loved ones are safe, warm, and well.

Questions? I’m here. Reach out at (307) 352-9330

Happy Holidays and Warmest Wishes!

Election worries?

2020 has already had more twists and turns than an HBO series.

And in last week’s episode, the president contracted COVID.

Yikes.

I did not see that coming. Did you?

I’m not being flippant about the president’s diagnosis — his case is potentially serious and I wish him well in his recovery.

Let’s talk about what could happen next.

[Warning, long email ahead. Jump to the P.S. for something relaxing.]

A lot of things could happen, depending on how widespread the White House outbreak is and how severe the president’s illness becomes.

As I write this, it doesn’t look like the president has become unable to perform his duties. (Fortunately, there are legal mechanisms to pass executive power to the Vice President if the president becomes incapacitated.)

Though no president has ever contracted COVID-19, America has had multiple ill or incapacitated presidents. There’s a roadmap.

However, the situation injects uncertainty into the election, Supreme Court confirmation, and the new stimulus bill.

Not to mention, folks were already worried that the election might not be decided on November 3. A high number of mail-in ballots means the drama could realistically play out for weeks after election day.

Could President Trump’s illness postpone the election?

That seems unlikely. Technically, Congress could decide to delay the election, but I doubt they’d be able to make it happen before November 3.1

Will there be anarchy in the streets if there’s no clear winner on election day?

No. We have legal and democratic means to resolve a contested election.

If no candidate receives the majority of electoral votes (270 or more), the election moves into overtime and a “contingent election” is held by the House. 

Two presidential races (in 1800 and 1824) were decided by the House.

In 1876, a bipartisan commission reviewed ballots in three too-close-to-call states and awarded enough electoral votes to give Rutherford B. Hayes the win.2

In 2000, the Bush/Gore election went to the Supreme Court, which ended a Florida recount and gave George W. Bush the presidency.3

Will markets react to new election uncertainty with volatility?

That’s highly likely, especially if the president’s illness doesn’t resolve quickly.

You already know that markets hate uncertainty and traders are revising, hedging, and re-hedging their bets as they digest this evolving situation.

As a historical example, here’s how markets performed during the 2000 election recount drama. In a word, volatility.

Let’s keep in mind that markets have already been volatile with a stalling economic recovery, election season, and a continuing pandemic that will drag into 2021.

I think that business and economic fundamentals are currently driving markets, not election-related fears. We’ll see if that changes as the month progresses. While I do believe the presidential election is important for the overall direction of the country, let’s not forget the smaller races in the area. Though national races get the headlines, local officials often have a greater impact on our day-to-day. Please vote.

[CONTACT_FIRST_NAME], please pay attention to the headlines you read and the news you consume in the coming weeks.

Be especially cautious about media that makes you feel anxious, angry, or afraid. Election cycles always bring heightened emotions and more negative news than usual.

Take a deep breath and step back if you need to. Call a friend. Call me.

Are you really worried about what the election could mean for you? Thinking about moving to Canada and/or an underground bunker? Please hit “reply” and let me know.

Warmly,Aaron Schuler, CDFA®

Securities offered through Securities America, Inc., Member FINRA & SIPC.   Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm.  BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated entities.
Trading instructions sent via email may not be honored. Please contact my office at 307-352-9330 or Securities America, Inc. at 800-747-6111 for all buy/sell orders. Please be advised that communication regarding trades in your account are for informational purposes only. You should continue to rely on confirmation and statements received from the custodian(s) of your assets. The text of this communication is confidential, and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the communication without copying or further dissemination.

P.S. Need some extra help keeping your cool in these times? Watch these Alaskan brown bears fish for salmon.

1https://www.newsweek.com/after-donald-trump-contracts-covid-19-can-election-postponed-1535921

2https://history.house.gov/Institution/Electoral-College/Electoral-College/

3https://www.marketwatch.com/story/2000-redux-stock-market-election-fears-have-traders-revisiting-bush-gore-battle-11600967011

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Frothy, Bubbly Stocks

Aaron Schuler, CDFA® here.

I’m not writing to you about cappuccinos, champagne, or bubble bath.

We’re talking stocks.

You may have noticed that the shortest bear market in history is over, and markets recently hit new record highs.

Will stocks keep going higher? Will they stay volatile?

Is another bear market around the corner?

Maybe. Maybe not.

As is pretty common in these situations, market strategists are split.

Some see a new bull market that reflects a recovering economy.1

Others see troubling signs of a bubble that could burst.2

What could push stocks higher?

  • A market-ready COVID-19 vaccine or major treatment breakthrough that reignites optimism.
  • More government stimulus that supports consumers and businesses.
  • Good economic numbers that suggest we’re on the other side of the recession and the recovery continues.

What warning signs are flashing?

  • A rally mostly powered by tech mega stocks that isn’t reflected in the broader market.
  • Uncertainty around a November election that’s already contentious.
  • A possible “Minsky moment” market collapse fueled by the Fed’s easy money policy and unsustainable stock prices.3
  • Predictions of a second wave of infection that could provoke more shutdowns.

Bottom line, we can’t predict what comes next, and it’s too soon to claim victory for markets. Maybe we’re on a new bull market run. Maybe we’re facing a second correction.

Since we can’t predict the future, we’re focused on helping our clients cover their financial bases for the next year by having a financial plan. 

As the pandemic continues to drag into the fall, we’re thinking a lot about how to fit regular activities into a “risk budget.” For example, we can group multiple low-risk activities into a bi-weekly budget (go for walks, shop for groceries, etc.) but only one higher-risk activity (like eating out or socializing).

What’s your take? How are you reintegrating normal activities into pandemic life?

The Economy & Sharing Good News

Hi All!

I hope you’re well.

How’s your summer?

In our world, we’ve been enjoying time with the kids and visiting family. With everything going on around the world, I’m grateful that we’re safe and well.

I hope you are, too.

So, what’s going on with the economy?

Well, hopes for the “V-Shaped” recovery economists wanted seem to be fading.1  Though businesses reopened and millions of people got their jobs back, millions more are still unemployed.2 And more layoffs are coming.3

Does that mean we’re still in a recession? Technically, we won’t know until Q2 and Q3 economic data are released.

Best guess? We’re probably still in a recession.

The more optimistic recovery scenarios depended on containing COVID-19 infections so Americans could safely get back to business.

That…didn’t happen.

The question now is whether rising infection rates will put us in a “W-Shaped” double-dip recession, or a slower “L-Shaped” or “Swoosh-Shaped” climb back.

That’s all very interesting, but how does it affect us in Utah and Wyoming?

In many ways, our local economy is a microcosm of the larger state of affairs.

As COVID-19 cases have increased in our area, we’re hopefully on the other side of the crisis/we’ve still got a ways to go before we’re on solid ground.

Our ability to bounce back depends on a few things: 1) keeping infection rates down; 2) workers keeping the jobs they have and returning to the ones they lost; 3) folks shopping, eating out, and spending money locally.

In terms of markets, the recent gains make it clear that traders are looking past the current gloom to a hopefully rosy future.

Are they clairvoyant? Foolishly optimistic? Not optimistic enough?

I agree with Yale economist Robert Shiller’s take: he thinks this is a FOMO market driven by the Fear Of Missing Out. Many traders regret not jumping into the 2009 rally and are determined not to miss out again. That psychological narrative is pushing up the market even in the face of bad news.4

Will it continue?

We’re in earnings season and investors are waiting to see how badly U.S. companies were damaged last quarter. Since many companies have refused to release earnings forecasts, we’re prepared for surprises. Positive and negative.

Bottom line: Buckle up, I think we’re in for a choppy ride.

Ok, so where’s the good news you promised? (It’s the only reason I even opened this email.)

When times are tough and headlines are overwhelmingly negative, it becomes harder to find the good news. But it’s there.

A New Jersey hospital once described as a “war zone” now has zero COVID-19 patients.5

17 COVID-19 vaccines are in human trials. At least one may be ready for approval by the end of 2020.6

2 million folks gathered to plant trees in Northern India (while maintaining social distance).7

A young man who lost hope of attending college is headed to Harvard Law after the good people he met as a sanitation worker took him under their wings.8

Uplifting stories are out there if we look for them.

What good news do you have to share? Hit “leave a comment” and let me know.

P.S. A new round of stimulus may be coming, but we don’t know when, where, how, or even if it’ll arrive. I’ll reach out when we know more.

1https://www.washingtonpost.com/business/2020/07/11/after-fastest-recession-us-history-economic-recovery-may-be-fizzling/

2https://www.marketwatch.com/story/jobless-claims-tell-us-30-million-people-are-unemployed-but-many-doubt-its-that-bad-2020-07-08

3https://www.businessinsider.com/coronavirus-layoffs-furloughs-hospitality-service-travel-unemployment-2020

4https://www.project-syndicate.org/commentary/understanding-us-pandemic-stock-market-by-robert-j-shiller-2020-07

5https://www.nj.com/coronavirus/2020/07/once-called-a-war-zone-this-nj-hospital-now-has-zero-coronavirus-patients.html

6https://www.wsj.com/articles/german-biotech-sees-its-coronavirus-vaccine-ready-for-approval-by-december-11594373400

7https://apnews.com/f1d41fd4772742279da89e972dd8493d

8https://www.cnn.com/2020/07/07/us/sanitation-worker-harvard-law-trnd/index.html

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. Securities offered through Securities America, Inc., Member FINRA/SIPC. Aaron Schuler, Registered Representative. Advisory services offered by Beam Asset Management. Aaron Schuler, Investment Advisor Representative. Mountain West Wealth LLC, Beam Asset Management, FIT Divorce Planning and Securities America, Inc. are separate, unaffiliated entities. (website) Securities offered through Securities America, Inc., Member FINRA & SIPC. Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm. BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated entities. 

Paradigm shifts (and how to keep up)

Life has changed; how do we adapt without losing sight of what we want to achieve?

As you’ve heard me say before, no one knows how the future will play out, but we should still look ahead and think through the consequences of what’s happening. (More about this kind of second-order thinking ahead.)

I believe that our society and our economy are experiencing a massive paradigm shift.

We will never go back to the world we had before COVID-19, and the lens that we used to evaluate ideas, markets, economies, and personal choices over the last decade may not be sufficient for the next decade.

Here are just a few things that I see changing as a result of what’s going on now:

Social Support: 36.5 million Americans have become unemployed in two months, and the effects are rippling through families, communities, and the economy.1 The government has responded with trillions of stimulus dollars to individuals and businesses. More relief is likely to come. What does this mean for our society? Who should get a helping hand in tough times? Will we permanently expand the social safety net?

Work: Thrown into the largest work-from-home experiment in history, more workers and employers will transition to remote work post-pandemic. This shift in work has major implications. Which places will be a draw if workers can live anywhere and employers can have their pick of a nationwide (or global) workforce? Will those who must physically show up demand different compensation?

Education: Students, parents, schools, and universities are being forced to re-evaluate the definition of education (and its price tag) now that the on-campus experience has gone online. What’s missing if you attend from home? How much should education cost? What alternatives to a traditional four-year degree will arise?

Shopping & Entertainment: Brick-and-mortar retailers may never recover from the body blow dealt by pandemic lockdowns. Online shopping, grocery delivery, and digital services may finally overtake offline channels. What will the retail landscape look like when it’s easier (and maybe safer) to eat, shop, and watch at home?

What do you think, [CONTACT_FIRST_NAME]? What do you see changing in the world? Please hit “reply” and share your thoughts.

No one has all the answers about the new world and things are not always what they seem.

Though it appears that the stock market has moved past the pandemic, we shouldn’t celebrate just yet.

Why?

Much has changed in the world and we’re still playing out first-order effects. More consequences are coming.

“What are the second- and third-order consequences of this?” is a question big thinkers like Ray Dalio (manager of the largest hedge fund in the world) ask about complex scenarios.

Here’s what they mean:

First-order thinking is fast and simple: B is the logical outcome of event A.

But then what? What happens as a consequence of B?

And what happens as a result of that? And what is the follow-on effect of that?

Second-order thinking is about interactions and complex systems. It’s slow and hard (but mastering it can put us steps ahead of the crowd).

Understanding the new world that’s growing out of the pandemic requires thinking through these higher-order consequences and developing a new lens to navigate the uncertain waters ahead.

How can we adapt? How can we still pursue our goals in a totally different world?

We think it through with humility and an open mind.

We hone our second-order thinking skills by asking: what could happen? And then what? How likely is it that I’m right? What could happen if I’m wrong? How do I position myself?

We’ll do it together.

COVID-19 is going to be with us for the rest of 2020 and possibly into 2021. So we’re adapting.

At Mountain West Wealth, it means we will hold virtual client meetings and limit our in-person office visits to an as-needed basis.

We’re taking it day by day and thinking through those higher-order effects.

How about you? What changes are you making to your plans this summer and fall?

Be well,Aaron Schuler, CDFA®Mountain West Wealth
Phone. 307-352-9330
Mobile. 801-694-9305
www.mtnww.com

Securities offered through Securities America, Inc., Member FINRA & SIPC.   Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm.  BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated entities.
Trading instructions sent via email may not be honored. Please contact my office at 307-352-9330 or Securities America, Inc. at 800-747-6111 for all buy/sell orders. Please be advised that communication regarding trades in your account are for informational purposes only. You should continue to rely on confirmation and statements received from the custodian(s) of your assets. The text of this communication is confidential, and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the communication without copying or further dissemination.

P.S. A number of clients and friends have reached out to talk through options around a potential lay-off, buy-out offer, or early retirement. If this is on your mind, please let me know. We can work through it together.

P.P.S If you’ve got a kid in college this fall, I have a question for you: is virtual university still a compelling offer? Are you and your student considering a gap year or some alternative? Please hit “reply” and let me know. I’m interested in learning from your experience.

1https://www.washingtonpost.com/business/2020/05/14/unemployment-jobless-claims-coronavirus/

Chart source: https://www.artsci.com/studentpoll-covid-19-edition-2

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. Securities offered through Securities America, Inc., Member FINRA/SIPC. Aaron Schuler, Registered Representative. Advisory services offered by Beam Asset Management. Aaron Schuler, Investment Advisor Representative. Mountain West Wealth LLC, Beam Asset Management, FIT Divorce Planning and Securities America, Inc. are separate, unaffiliated entities. (website) Securities offered through Securities America, Inc., Member FINRA & SIPC. Advisory Services offered through BEAM Asset Management, LLC, an SEC Registered Investment Advisory Firm. BEAM Asset Management, LLC and Mountain West Wealth and Securities America, Inc. are separate, unaffiliated 

5.4.20: The Economy & Some Virtual Fun

I hope you’re safe and well.

It’s been weeks since we shuttered the office and started working from home and, like many, I’m feeling the strain of upended life.

How about you? Are you ready to venture out again?

In this letter, I thought I’d give you a rundown of some of the latest economic projections as well as a sneak peek of what post-lockdown life could look like for us soon.

(Ready for a break from COVID-19? No worries. Scroll down to the P.S. for some wonderful distractions.)

On to the economy.

You may have seen a headline showing that U.S. economic growth dropped -4.8% in the first quarter after posting 2.1% growth in Q4 2019. That’s not a surprise.1

Unfortunately, worse news is ahead since widespread layoffs and shutdowns didn’t hit until late March. Here’s a projection of what the next few quarters could look like for the economy.2

You can see in this chart that the coronavirus hit the economy like a tsunami. Q2 could be the worst quarter since the Great Depression.3

The arithmetic of recovering from a 30%+ drop in economic growth means that it could take many months (maybe even years) to return to pre-pandemic GDP levels, especially if we face multiple waves of infection.

Let’s mentally prepare for that.

April 2020 is likely to be one of the worst months for the economy in history; contradictorily, it was also a blockbuster month for stocks.4

Why are stocks so disconnected from the economic data?

Fundamentally, a stock’s price is an attempt to put a value on the underlying company’s earnings now and in the future. Complicating the calculation are factors like fear, greed, uncertainty, and movements in the overall market.

While economic data looks back at what has already happened (or is happening now), the stock market looks forward at the trajectory of the business environment. Framed that way, the rally isn’t so unusual since investors are expecting things to get better, not worse.

Will the rally continue? Hard to say. Volatility is very likely to be the name of the game for months.

Economists are predicting a rebound in Q3 2020. Are they right?

You know by now that we can’t perfectly predict what the recovery will look like; all economic estimates are based on educated guesses about spending, business investment, trade, and other factors. The biggest unknown is “personal consumption” by folks like you and me. Our spending drives 70% of economic growth.

The pace of the recovery depends on how quickly businesses reopen and consumers go out to shop, eat, travel, and spend money. If people don’t feel safe going out or don’t feel confident enough to open their wallets, growth could take longer to come back.

What do you think? Will you go back to your pre-coronavirus routine? Hit “reply” and let me know. I’m interested in hearing your perspective.

What could life look like as our states reopen? While America is just now taking the first tentative steps toward reopening, many countries around the world are farther along, offering us a glimpse of what daily life might look like in a world where the coronavirus still remains a threat.5

Hong Kong: Restaurants are open but tables must be spaced farther apart.

South Korea: Pro sports are back but athletes play to empty stadiums. Temperature screening is in place in many buildings.

Taiwan: Schools are in session but assemblies are canceled and students wear face masks in class.

Australia: Beaches are open but sunbathing, picnicking, and large gatherings are verboten.

How long will coronavirus precautions overshadow our daily life? Realistically, some restrictions are likely to drag on until a vaccine or breakthrough treatment becomes widely available.

What do you think? What will our “new normal” look like?

Warmly,

Aaron Schuler, CDFA®Mountain West Wealth
Phone. 307-352-9330
Mobile. 801-694-9305
www.mtnww.com

P.S. I promised you some distractions from the coronavirus, and here they are:

Watch jellyfish float at the Monterey Bay Aquarium (includes relaxing music!).

Dream of a Caribbean vacation with the beach cam at the Soggy Dollar Bar on Jost Van Dyke.

SCUBA dive vicariously in a kelp forest off Anacapa Island.

Watch the live cam at Tembe Elephant Park.

Take an hour-long walking tour around Paris.

Enjoy!

1https://www.bea.gov/news/2020/gross-domestic-product-1st-quarter-2020-advance-estimate

2https://www.cbo.gov/publication/56335

3https://www.marketwatch.com/story/echoes-of-the-great-depression-us-economy-could-post-biggest-contraction-ever-2020-03-19

4https://www.marketwatch.com/story/after-a-blockbuster-april-for-the-dow-and-sp-500-is-sell-in-may-in-the-coronavirus-era-a-smart-strategy-2020-04-30

5https://www.nytimes.com/2020/05/02/world/asia/coronavirus-china-hong-kong-south-korea-australia.html

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