Coronavirus Outbreak [updated]

March 17, 2020

Re: Coronavirus outbreak follow up

These are exceedingly difficult, scary and unprecedented times. Much has been written in the past about the dangers of a global Pandemic and now it is here. Conditions are moving at warp speed and each day brings a new set of circumstances that We the People need to deal with. Given that backdrop we will update our comments in the same format as our prior correspondence on the Coronavirus, (COVID-19) when we summarized our remarks in three categories, Health, Political and Economic.

Health

As was said previously this is a very serious condition that can result in serious illness or death. What was missed was just how serious this can be to a segment of the population, i.e., those over age 60 and/or with underlying medical conditions such as Cardiovascular Disease, Diabetes and other chronic respiratory disease. I am not a doctor nor pretend to be. All we can do is listen to those in leadership positions and trust that they are looking out for our best interest and head their warnings and take useful and sensible precautions. We can analyze numbers all day long but the bottom line does not change. For a segment of the population this is a serious if not deadly disease and the only way it will be stopped is if we all work together.

A good place to follow the global outbreak is the World Health Organization website, https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports. This site is updated daily including a breakdown of new cases by country for each of the past 24 hours. For example, for the 24 hours ended March 16, 2020 there were only 29 new cases reported in China. I believe this drop off of cases in China is directly impacted by the efforts they made last month to slow the spread in China and therefore gives us hope that the dramatic changes in this country with social distancing will have the same positive effect.

Political

With miraculous speed the Washington State Legislature unanimously passed a bill allocating $100 million to fight the outbreak in this State. In my 40 years of following the State Legislature I cannot recall any measure that has passed as swiftly and without objection. Perhaps it has occurred in the past but I am certain such a result is rare. On a National level there has been the expected snipping among the top party leaders but through all that on Saturday March 14 the House of Representatives did pass legislation 363-40 to provide much needed economic support and President Trump tweeted out support of the Bill. Of course, some will argue this particular piece of legislation does not go far enough and that changes need to be made but hardly anyone would have guessed 30 days ago that any legislation could pass the House with such a margin and receive agreement from the President. Truly progress for the American people.

Economic

This is the big area that has so much uncertainty. Events have transpired at such speed that have dramatic impact on local, national and global economies. While the supply chain as previously discussed is certainly an important part of the global economic picture the now overwhelming concern is the impact on our consumer-based economy when consumption at some levels, e.g., dining and entertainment has come to a screeching halt. Government subsidies, loans, tax credits, etc. can only go so far to limit the impact of so many store closures.

However, what is getting missed here is the significant upturn in business for certain aspects of our economy. Look at it this way, it is not just Costco that is benefiting from record sales but every supplier of goods to Costco and not just toilet paper. Canned goods, cereal, produce, cleaning supplies are just flying off the shelf. Who does that impact?  Every company along their supply chain. Not only Costco but so many retailers, Fred Meyer, Kroger and every other retailer of food is reacting to the same outrageously high demand. Of course, this will not last forever but in the short run this uptick in economic activity is helping to some degree to offset the closure of some many other businesses. I saw on TV today a representative of QFC (Kroger Foods) saying they would be holding a job fair on Monday March 16 and applicants need not bring a resume or application. They could come to the job fair and if presented themselves in a reasonable way they could be hired on the spot. Food retailers need help in stocking shelves, filling on line orders and delivery.  Are any of these jobs a lifelong career?  Probably not but certainly a way to help someone get over the proverbial hump.

Last Word

We do believe there will be light at the end of this crisis and there will be recovery. Will this be in 30, 60, 90, 120 or 180 days? Not sure at all but we are very supportive of the steps being taken at all levels of government to slow, limit and eventually corral this virus. As uncomfortable it is to deal with school closures, meeting cancellations, store closures and cancellation of elective surgeries this is what it takes to stop this disease dead in its tracks. This is not easy but nothing hard and meaningful ever is easy. We will as a Nation survive this and as happened in so many other National trials, we have come out all the better.

What to do now? In our opinion this is not the time to make major changes to your investment portfolio.  If you had a asset allocation model that fit your personality going in to this we do not feel that changes in time of crisis are in your best interest. We know this is not easy. Seeing your account fall is not a comfortable feeling. However, as we have seen in other major stock market downturns such as the stock market crash of 1987, 2001 or 2008 those that held their investments recovered and their account balances grew. Can we guarantee this will happen again? No. However, in all probability markets will rebound and the US and global economies will once again grow.

Here at Cashman Consulting we are doing our best to help “flatten the curve”. Our staff is mostly working remotely, but with the same capabilities as they have in the office. This means we have the same access to email, phone calls, voicemails and technology platforms that we regularly use in the office. We have staff that will monitor the mail as well, so any correspondence sent via mail will be received and processed as usual.  If you would like to meet in person or drop off information, please call ahead and make arrangements to meet. With these unprecedented and unpredictable times, we want to ensure a staff member is available to meet you. Please know that the health and safety of our staff, clients and community are the highest of our priorities. We will continue to correspond as we navigate the ever-changing circumstances we are experiencing. As always, please feel welcome to call or email us with your questions or concerns.