We hope everyone is doing well. Your health is paramount of our concerns so that is the main thing. There is no doubt as businesses and governments are closing or curbing activities, there is an economic impact. In last several days, I had spoken to people who work at Sam’s Club and Costco in the Baltimore area. The Baltimore Costco had its single best day every with revenue over $700K for the day. Not sure how much of that was in toilet paper but we can assume quite a bit but not as much as food.
In communicating with you, we believe in directness and candor. There is no doubt that the Coronavirus has had severe repercussions. In last week, I have been exposed to Trevor Moawad who is performance coach for college and professional football teams. His most prominent client is Super Bowl winning quarterback, Russell Wilson, of the Seattle Seahawks and Nick Saban and the University of Alabama football team. He has a point of view that I had never heard called neutral thinking. He said that a lot of time people recommend positive thinking. The challenge is that many folks may reject it because it seems false. He also says that it is true negative thinking does work but the trouble is that it works negatively. Therefore, neutral thinking focuses on limiting the negative thinking and talk and focusing on present and what is ahead where we can be proactive. I really like this a lot. Our job for you is to maintain neutral thinking and remain centered and calm during this time.
The following write up from Eaton Vance is incredibly well written. In my opinion, it is comprehensive yet succinct. The main points I hope that you get is that we are relatively at the beginning stages of this and no one knows how it will play out. The key thing is stopping the spread and limiting the adverse health consequences if folks are exposed. That will ultimately determine the economic impact. Terms we often talk about with clients are: Will the recovery be a V-shaped recovery or U-shaped recovery. With a V shape, the economy and markets drop quickly but recover quickly. With U, it takes longer for the economy and markets to recover. Quickly and length are relative terms. Usually, they are talking within months somewhere between 3 to 12 months but it could spill over to multi-year. Like we have talked about in previous emails, there are a lot of similarities between recession/bear markets and recoveries. However, like snowflakes, no two are alike.