1330 Orange Ave., Ste 302
Coronado, CA 92118
p: 619-319-0520
f: 855-691-0427
Read financial tips and market updates in our weekly newsletter
Copyright © 2002 – 2023 Orion Capital Management LLC • Coronado, CA
Disclosure: Orion Capital Management LLC (“Orion”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC). The firm offers advisory services in the State of California and in other jurisdictions where registered or exempted. Registration does not imply a certain level of skill or training. The information on Orion’s website or in its distributed commentary shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons or entities of another jurisdiction unless otherwise permitted by statute. Orion’s individualized responses to consumers in a particular state in the rendering of personalized investment advice for compensation shall not be made without the firm first complying with jurisdiction requirements or pursuant to an applicable state exemption.
The information on Orion’s website or in its distributed commentary is not investment, tax, accounting or legal advice. Orion is not a tax advisor. For tax advice individuals should consult their CPA. This information is also not an offer or a solicitation of an offer to buy or sell any security, or to be construed as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon in the making of investment decisions. All content on this site is for informational purposes only, and nothing herein should be construed as an investment recommendation. Opinions expressed herein are solely those of Orion, unless otherwise specifically cited. Material presented is believed to be from reliable sources, but no representations are made by our firm as to other parties’ informational accuracy or completeness. All information or ideas described on Orion’s website or in its distributed commentary should be discussed in detail with an investor’s personal financial advisors and legal counsel prior to implementation.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested.
The information on Orion’s website or in its distributed commentary is provided “AS IS” and without warranties of any kind, either express or implied. To the fullest extent permissible pursuant to applicable laws, Orion Capital Management LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Testimonials or reviews on Orion’s website are from current clients. Orion does not compensate for reviews or testimonials and has no material conflicts with clients offering reviews.
Orion does not warrant that the information on Orion’s website or in its distributed commentary will be free from error. Your use of this information is at your sole risk. Under no circumstances shall Orion be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Orion or an Orion authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy or an offer to sell any security, or a recommendation to buy or sell any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
Schedule a quick introductory call with you and see if we would be a good fit for you.
Investing: Virus Response Takes Shape
We would like first to express our deep gratitude to all of the selfless and courageous medical professionals and first responders who are standing in harm’s way while they attack this historic crisis head on. We are also very grateful for all of the workers in the grocery and home goods supply chains that are continuing their great work amidst all of the disruption so that we can put food on the table for our families.
A Biological Crisis
The COVID-19 crisis, at its heart, is a health care crisis. It is rooted in biology, and ultimately it will be constrained or solved with biology. In the meantime, however, it has precipitated an unprecedented shuttering of large parts of our economy and is beginning to clog up the plumbing of our financial system. If we are able to solve the health care problem we face—and in time we will—then our economy will be able to begin healing itself.
A Two-Pronged Response from the Government: Monetary and Fiscal
The economic impact of social distancing will be sudden and deep. The U.S. is almost certainly in a steep economic contraction right now and unemployment will soar over the coming weeks. To help bridge the gap to the other side of the valley, there are two basic ways the federal government can support our economy while we fight the virus. The first way is through the Federal Reserve, which is already acting forcefully. The Fed has dropped interest rates to zero and is now buying both government and corporate bonds in the open market at a rapid rate in an attempt to both keep markets functioning smoothly and to prevent higher borrowing costs. It has essentially said it will do virtually anything to support markets and maintain liquidity. The second way our government can help is through fiscal spending—getting cash quickly into the hands of Americans who are most severely impacted by this crisis via both direct cash payments and unemployment benefits, as well as relief of tax obligations, loan payment forbearance, and extension of paid sick leave provisions, among other things. We are now awaiting passage of legislation—which could come today—for what looks to be a nearly $2 trillion fiscal stimulus package.
In the Coming Weeks . . .
We expect the number of cases in the U.S. to rise dramatically over the next several weeks as the number of tests increases. It will be difficult to gain comfort from these numbers, as they will not be able to indicate if our social distancing strategy is working. Only after many more tests and at least several weeks will we really be able to see if the number of new cases is slowing.
An Economically Painful but Necessary Response
Quarantining large parts of our population puts a massive strain on our economy, but there is apparently no other good way to decrease the rate at which the virus is spreading. As Dr. Anthony Fauci of the National Institute of Allergy and Infectious Diseases (NIAID) says, we all have to work together (or rather six feet apart) in trying to “flatten the curve” of the spread of disease so that we do not have too many cases at one time and overwhelm our health care system.
Signposts to Watch
This crisis, while scary and sudden, will, in the end, be a transitory crisis. Both equity and fixed income markets have of course reacted very negatively to the economic uncertainty the virus has created. We expect investors to begin to regain confidence once we start to get some positive data about the progression of the outbreak. First, a reduction in the number of new cases would be a very welcome sign as would any data that specific infection clusters are being contained. Second, any promising results from the numerous anti-viral and vaccine efforts underway could help investors conclude that we will not be struggling against COVID-19 forever and that we will ultimately return to normal life. Given that this pathogen is single-handedly shutting down our world, finding a way to vanquish it is among the most urgent matters that humanity has ever faced. Thus, we believe it is only a matter of time before effective treatments and/or vaccines become widely available and the COVID-19 crisis is laid to rest.
As always, I welcome your comments and feedback.
Share This!
Join Our list!
Join our email newsletter list to receive more market updates and financial articles like this one.
The Fed and Jackson Hole
Fed to Present Update at Jackson Hole on Friday In the year since Federal Reserve Chairman Jerome Powell’s last speech
Soft Landing Back in Play
Soft Landing Hopes Rising A “soft landing,” a scenario in which the Federal Reserve tames inflation through interest rate hikes
Markets Calm Amid Crosscurrents
Both stock and bond markets seem to be taking today’s many conflicting financial and political cross currents in stride, with
Peter Thoms, CFA, MBA