In today\u2019s Steady Investor, we look at key\nfactors that we believe are currently impacting market volatility and what\ncould be next for the markets such as:<\/p>\n\n\n\n
The Likelihood of Recession Rises \u2013 <\/strong>What started as a supply shock from disrupted supply chains in China has now fed into a global demand shock as the world economy hits the \u2018pause\u2019 button on growth, spending, and investment. Restrictions on travel, going into work, and activities in public spaces have put the economy on virtual lockdown, and the downstream effect of sharply lower spending is likely to soon result in job losses \u2013 particularly in the airline and hospitality industry. Many readers may wonder: if we are near certain a recession is imminent (if not already underway), then why not sell stocks and wait for the situation to improve? The answer is that bull markets almost always start when the economic situation looks most dire. In March 2009, job losses were rising, bankruptcies were continuing apace, and corporate earnings were in the gutter. But that\u2019s when the new bull market started \u2013 even though the recession didn\u2019t end until July 2009.1<\/sup> <\/em>It is impossible to say when the virus will come under control and when consumers will return to normal behavior, but it does seem clear that stocks will make their move well before any of that happens. <\/p>\n\n\n\n ____________________________________________________________________________<\/strong> If you have $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today! ____________________________________________________________________________<\/strong><\/p>\n\n\n\n The Federal Reserve\nResponds \u2013 <\/strong>Last weekend, the Federal Reserve made an unprecedented second\nemergency rate cut over just a two-week period, bringing the benchmark rate to\nnear zero. Quantitative easing is also back on, with the Fed pledging to buy\n$700 in Treasury and mortgage-backed securities as a means to keep long rates\ndown and provide liquidity into capital markets. But they didn\u2019t stop there \u2013\nthe Fed also said it would launch the \u201cPrimary Dealer Credit Facility,\u201d which would\ngive the 24 biggest banks access to short-term loans at very favorable rates.3<\/sup>\nBanks were well-capitalized going into the crisis, but with this facility it\nseems to us that the notion of a credit or financial crisis has low likelihood\n\u2013 at least for now. While Fed stimulus cannot facilitate a return of demand to\nthe economy and stabilization of global supply chains, it can at least ensure\nthat there is ample liquidity in the market until that normalization happens. <\/p>\n\n\n\n The Federal\nGovernment Aims the Stimulus Cannon \u2013 <\/strong>The federal government is inching\ntowards what could ultimately be a $1 trillion stimulus package to support\nAmericans during this crisis. The Trump administration proposed two rounds of\ndirect payments to US households totaling $500 billion, which may look\nsomething like getting a $1,000 check or deposit.4<\/sup> The amount of the\ncheck \u2013 if the stimulus happens \u2013 would depend on the family size and income.\nThe Senate is also looking at proposals to provide aid to airlines \u2013 which have\nbeen tapping credit lines and taking in loans \u2013 and to provide paid sick leave\nfor those who need to miss work. <\/p>\n\n\n\n Don\u2019t Expect Market\nVolatility to Let Up Anytime Soon \u2013 <\/strong>It appears that we are still in the\nearly innings of winning the battle against Covid-19, and the stock market is likely\nto remain on edge as good and bad \u2013 but mostly bad \u2013 news floods the airwaves.\nInvestors should remember two things in the coming weeks and months: 1) big\nmarket rallies often happen very closely \u2013 if not the day after \u2013 big selloffs.\nIn other words, volatility works both\nways; <\/em>and, 2) the market has a long track record of staging its comeback well before the news gets better and the\nsituation improves<\/em>. Throughout history, new bull markets have started when\nthe economy feels like it is in complete meltdown, so remember that bad news\ndoes not necessarily signal that the market is heading for another big down\ndraft. Bull markets often start when people least expect it. <\/p>\n\n\n\n While\nthere are still many unknowns surrounding Covid-19, it is important to remember\nthat volatility is a normal part of the ebb and flow of the markets. In times\nlike this, the key is not to let fear drive your investment decision, but\ninstead develop a mental approach to dealing with market volatility. If you have $500,000 or\nmore to invest and want to get answers to the questions above, click on the\nlink below to download this guide today!<\/p>\n","protected":false},"excerpt":{"rendered":" Volatility is here for a while, recession likelihood rises, Fed and US government respond<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-8566","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8566"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8566\/revisions"}],"predecessor-version":[{"id":10623,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8566\/revisions\/10623"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Handling Volatility \u2013 What You Should Do<\/a>!<\/strong>
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Sudden market declines often result in emotional decision-making. For example, many investors rationalize that selling out of stocks is the surest way to avoid incurring further losses, but selling in many cases just locks those losses in.
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The real challenge is not in finding a way to eliminate volatility\u2014it is developing a mental approach to dealing with it. Our guide, \u201cHelping You Manage Market Volatility,\u201d will provide you with insights and tips to do just that. Get answers to questions like:<\/p>\n\n\n\n
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Download Zacks Volatility Guide, \u201cHelping You Manage Market Volatility.\u201d<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n
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\nOur Volatility guide, \u201cHelping You Manage Market\nVolatility,\u201d5<\/sup> will provide you with insights and tips to do\njust that. Get answers to questions like:<\/p>\n\n\n\n