Don't fight the Fed

There is an investment adage that says, "Don't fight the Fed." Put simply, when the Fed is providing liquidity to the markets, it should be an overall positive for the stock market, and you should be invested. Historically, this meant investors should watch what the Fed is doing in terms of interest rate policy. Today, with the Fed already hacking the rate back to zero, investors have to look at quantitative easing and it is truly epic.

Coronavirus: Helpful Links and Resources

The novel coronavirus information and number of coronavirus disease 2019 (COVID-19) cases change daily. Here are helpful links and resources for tracking and keeping up-to-date.

It should also be noted that the New York Times has removed the paywall for all coronavirus articles.

Please mind the (COVID-19) gap

The Senate today agreed to a massive $2 trillion stimulus deal (roughly 10% of GDP) to combat the economic fallout from COVID-19. This is a bigger stimulus deal than the Great Recession. Here are some of the highlights:

What if we are all stuck at home for the next three months?

This week began my family's social distancing, work from home (#WFH), homeschooling experiment. If you're not already doing the same, odds are that you will be soon. Having completed the prerequisite reading (Social Distancing: This is Not a Snow Day,) my wife and I politely turned down invitations for play dates and get-togethers. We remain focused on doing our part toward flattening the curve. This means having three kids (four if you count me) at home with limited contact to the outside world. It's an adjustment for everyone. Whenever the kids start clashing, usually by late afternoon, we take a family walk around the block. On just day five, we find ourselves walking a lot!

Jobless claims just starting to skyrocket

Last week jobless claims rose to 281,000. With the fast moving COVID-19 eviscerating demand, this is just the initial blast off of jobless claims. For those expecting a V-shape bottom, it is just way too early to call. Bill Gates believes the virus shutdown can last 10 weeks. This is going to be incredible strain on businesses.

Fed tries to calm markets but instead triggers panic selling

The Fed Open Market Committee was set to meet this Tuesday and Wednesday and the market was expecting a 100bps rate cut to the emergency zero level. Instead, the Fed shocked the market with a Sunday rate cut of the expected 100bps and surprise announcement of a $700 billion bond buying program, aka Quantitative Easing 4. This certainly feels like a panic move by Chairman Jerome Powell and the Fed. A Sunday afternoon rate cut is unprecedented. The market didn't take it well with US futures opening limit down -5% and then stocks tumbled at the open to trigger a 15 minute pause in selling. What does it all mean for investors?

Europe to surpass China with most active coronavirus cases

Back in January, I wrote a blog post when coronavirus, COVID-19, first appeared on the radar. There were just 600 cases and the Chinese government had already locked down Wuhan and neighboring cities. I was hopeful that with modern medicine and China's quick quarantine that the coronavirus could be contained. While the Chinese appear to have contained their cases, the rest of the world hasn't taken enough aggressive action to stop it in its tracks and now Western Europe is about to pass China in number of active cases! This is a frightening thought as only Italy has gone into lockdown and it did so at over 10k cases. The Europeans aren't taking enough action and this problem is spiraling out of control.

Can central banks fight off the effects of coronavirus?

On Tuesday morning, the Fed stepped in and cut the Fed funds rate by 50bps in an emergency move to try and calm markets over coronavirus fears. Markets immediately spiked up but then sold off throughout the day. The market is expecting more rate cuts this month from the Fed and the ECB. For investors, the question is: can the central banks fight off the effects of coronavirus? The answer is yes and no.

Be Like Warren Buffett and Buy Fear

Right now the media is obsessed with the coronovirus and fear is running rampant. Even my local school district in NJ had to comment on coronovirus despite there being only 60 cases in the entire United States and none in NJ. While we don't take this subject lightly, we do believe that this is providing one of the yearly "buy the fear" points, not a time to sell.

Friday TV Appearances: Strong Jobs Reports, LK, ATVI

Last Friday, Chris Wang talked about the strong jobs reports and growth stocks, Luckin Coffee (ticker LK) and Activision Blizzard (ticker ATVI). Check out the videos to learn more. Hear what the strong jobs report means for the market and importantly what it means for the still very accomodative Fed. Also find out why Chris is excited about the prospects of LK and ATVI.

IMPORTANT DISCLOSURE INFORMATION 

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede.  Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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