From Our Investment Committee: Economic & Market Commentary

We are pleased to bring you our bi-annual Economic and Market Commentary, authored by our Investment Committee, which provides a high-level summary of the current economic environment.

Executive Summary

  • The novel Coronavirus (COVID-19) and associated “lock-down” wreaked havoc on the global economy, labor markets, and added extreme volatility to asset class returns during the first quarter of 2020.Starting from all-time highs in market indices, economic indicators, and employment, the crisis caused these recently positive trends to reverse, though they have started to recover in recent months.
  • Large scale monetary and fiscal stimulus have been implemented in the form of lowered interest rates, increased purchasing from the Federal Reserve, and multiple rounds of stimulus, like the CARES Act, coming out of Congress, with more likely on the way. The fixed income markets have seen vast swaths of liquidity return as the Federal Reserve took unprecedented steps to purchase a multitude of assets including high yield corporate bond ETFs. Also, long duration treasuries have outperformed, due in part to the swift lowering of interest rates and the mad dash by investors seeking safe haven assets.
  • Following a market bottom on March 23rd, 2020, a strong rebound in domestic, international developed and emerging market stocks have offered solace to investors.This may appear as a “disconnect” between the underlying economy and the stock market; however, the market is forward looking, and processing the timing of when global economies will return to normal. This is certainly linked to improved treatments and the availability of a vaccine, with recent announcements creating some optimism.
  • Private Ocean’s Investment Committee successfully made changes to the alternatives allocation in the first quarter that have outperformed the prior allocation.
  • Many markets have recovered significantly, though most asset classes remain in negative territory year-to-date.

Read the full summary here.


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