April 2020

by Dan Zalipski, CFA 

A recession may be likely, but could we see it turn into a depression?  A depression is defined as severe and prolonged downturn in economic activity, lasting three or more years with an annual GDP decline in excess of 10%.  No one expects this to linger three or more years.  A 10% decline in GDP could be possible, but the consequences at this point would have little impact beyond how we label this period in the history books.  Most market participants do not believe we are in for a 1930’s style depression.

 by Scott Rosenquist, CFA​

The markets gained some clarity over the past week as the U.S. Government took unprecedented steps to support a country in crisis.  The virus’s unpredictable impact on the economy translated into extreme market volatility, which in turn threatened the markets ability to operate.  Congress stepped in to address the economic impact by passing the CARES act, while the Federal Reserve enacted policies to ensure the markets continue to function properly.  The CARES act will provide roughly 2 trillion in economic support through a variety of measures.  Both the Fed and Congress have stated additional support may be needed.