Yeah, I actually think there are some good reasons for optimism these days. I put out a piece over the weekend, should be out on Monday, called “Four Reasons for Optimism.” It just talks about the country having gone through past crises, so think the great financial crisis, September 11, 2001, past world wars, and how we have always as a country been able to adapt well. So, think about things like the private markets mobilizing to help public officials in moments like this. So, we have automakers who are talking about converting their assembly lines over to produce respirators and ventilators now. We have, for example, the garment district in New York City suspending the making of garments so that they can mass make hospital gowns and masks that are in great shortage of supply. We have pharmaceutical companies scrambling as fast as we’ve ever seen them scramble to develop vaccines and treatments for COVID-19. So, the country is adapting very quickly. I think that’s a great sign that we are attacking this head on and trying to make the best of it. I would also highlight a couple of other things — number one, or number two, markets are functioning well. So, even though they’re down and the mood has been harsh, the reality is the circuit breakers and curbs we’ve put in place have worked. Some of the actions of the Federal Reserve are helping to shore up shallow liquidity pools. Congressional policymakers are working hard as well, faster than we’ve ever seen them work. So, they’ve already passed two stimulus packages — one to directly support a lot of the agencies on the front line like the CDC and the NIH and the FDA. The second one to really help workers with paid sick leave, unemployment claims, things like more testing for COVID-19. And then one that, as we sit here this morning, is currently working its way through Congress, which is probably the largest stimulus bill, could be anywhere up to $1.5 to $2 trillion to really help the economy and small businesses and most affected industries. There will be opportunity on the other side of this, there always has been in past crises, and I think we just need to recognize that it’s OK to be a little patient right now and not get out over your risk skis. But I think it’s important that people recognize that fear and that element that it may be present today, you shouldn’t extrapolate that forward into kind of a forever scenario. We do think this crisis will pass, and there’s already some really good green sheets and signs that the country is working as hard and as fast as it can to meet this head on.

There’s an old saying in this business that nobody ever made a dime by selling out at the bottom and going to cash. That essentially means that if you sell out and abandon your position, yes, you go to cash and you get to freeze your losses at whatever point that was, but you’re not in a good position to emotionally go back into the market later on. And we see this time and time again with investors who go to cash, feel like they made the right decision, but because they feel good about that decision then when the market starts to rise, they don’t trust that rise. They think it’s a fake and the market’s going to fall again. So, they end up sitting on cash for a long period of time while others who remained invested recouped their losses and then some in most market situations. So, that’s what we’re expecting this time. Again, it comes back to do you believe that the U.S. economy’s productive capacity will return once we hit the peak in this virus. We think the answer is most definitely yes. Therefore, we would not be going to cash here. We would be looking to rotate in risk and maintain a full investment position.

So, most of your defensive assets have been the ones that have showed strength up to this point. So, when you talk about defensive assets, we talked about things like your bond portfolio has done really well. Within the equity markets, everything has been down, it’s just a matter of what’s down more or less. Probably your hardest hit areas have been places like energy and the material sector. We think those areas, we have been underweight those and basically had them zeroed out in the portfolio for quite some time. There are parts of consumer discretionary that will get hit during this type of recession. So, the most acute places are going to be places like the airlines, cruise lines, many retail stores that have had to close their doors and may not have as much working capital as they want to get through this type of elongated period without any sales or any openings. So I would say energy, airlines, cruise lines, retail, and probably some insurance companies as well, as they will have pretty sizeable claims on the backside of this type of an event.

Inflation is a tough conversation. So, we know for the better part of 10, 11 years, really since the great financial crisis, that we’ve had less than we would want or less than we expect inflation in the global markets, not just the U.S. In fact, many of the global central bank actions have been, as a way to try and bring inflation up to somewhere around a 2% run rate, and in many cases have not been able to get there. Or, if they are getting there, barely getting there. There is concern that when you add immense amounts of stimulus, that we are doing today, and that at some point when we move through this coronavirus crisis, on the other side, you have this pent up demand from people being locked up in shelter in place or self-quarantines for weeks, if not months. So, that sudden surge of demand coupled with this immense amount of stimulus may in fact prove inflationary, or creating some inflation in the near term. I don’t think that’s a big concern right now, both of markets or even of policy makers at this point. Inflation is something that we have the tools to battle and fight if inflation does start to rise. It’s not unusual. We’ve been through many cycles where that’s been the case before. So, even if inflation does start to move higher on the back side of working through the coronavirus impact, I don’t think it’s a problem for the economy at this point, and we have adequate tools to address that.

Which region is poised to come back fastest? It’s really the region that went through it the first. So, just to put a finer point on that, we know that the coronavirus basically emanated out of China. China’s caseload peaked several weeks ago and is now on the decline. And in fact, their stock market is the best performing stock market in calendar year 2020 so far of all the global stock markets. There’s starting to be signs that their economic engine is firing back up. You can see it in port and trade activity. You can see it in in some of the air quality numbers. So, the faster you go through that, the quicker you get to the other side. There is recovery there and China is proof positive of that. We think Europe is kind of right in middle of it right now. And actually, the U.S. still has probably more to come. We’re later in that cycle as the virus moved across the globe.

So, the bond market is usually your stable force in these types of environments. In fact, as interest rates have dropped, many bond prices have held up very well or have gone up. It’s only been in the last week we’ve seen some of the corporate and municipal markets, so the bonds issued by large U.S. corporations and municipal bonds are issued by state and local governments. And we’ve seen what we call their spreads widening out as the liquidity has been less than needed in those markets. So, I think the important thing is that’s the action the Fed has taken to shore up that liquidity and make sure that people have, or that the markets have what they need there. Bonds tend to be your ballast in the portfolio. Equity prices certainly will give you that growth element, and in times of impaired growth or slowdown in growth, they’re going to come down. So, many of the equity indices are down 20, 25% from their mid-February peaks. The bond market, though, is holding up nicely. So, what you’ve probably seen in many of your portfolios if you’ve had a well-diversified, balanced portfolio is bonds have for the most part maintained their value pretty well through this sell-off and intense time of pressure. Equity prices have come down. At some point, there will be an opportunity probably to rebalance those from higher levels of fixed income into what you’re probably now under-allocated to equities just given the decline in value of equity prices. So, we don’t think that’s quite yet given we need more transparency and we need more kind of surety of the path going forward before we add to equities. But we do think those two play a really important role in a well-diversified, balanced portfolio.

The dollar’s value is a sign here of the shortage of dollars around the world. There are lots of corporations, businesses in other countries, even some governments that have borrowed money in dollars. And so they need to make their quarterly or annual payments in dollars. And if people are starting to hoard cash all around the world, they’re going to be hoarding dollars, which means that dollars will be harder to find. That means that the price of dollars will be driven up. That means that the dollar will be more expensive everywhere. So, the dollar’s surge has been a sign of a shortage of liquidity, a shortage of cash, in particular, dollars. That’s a negative for the market, not only because the markets are afraid of this shortage of global liquidity — they fear it will drive bankruptcies — but also because the dollar’s strength means that earnings coming back home from overseas will be worth less in dollars than they would have been otherwise if the dollar had been cheaper. So for those two reasons, especially the first one, the dollar’s strength here is a worry for the markets.

I’d answer that with a qualified yes. The pattern that we’ve seen in this downturn is very familiar. And while it’s been steeper than most downturns, it really largely mirrors those from history where we get that tremendous volatility in the early stages of crisis, as traders sell first and then ask questions later. And after the big downdraft, markets tend to settle into a trading range. That trading range can still be very choppy, but it tends to be more stable than initial days of the downturn. And, at this point, then, investors can start to sort through all of the emerging details about the crisis. Then they can establish where selling has been overdone and possible bargains exist. And we’ve said many times that bottoming is a process. And we could very well go lower from where we are today, you know, as markets react to this news flow, both positive news and negative news. And this is the point where we expect the huge counterbalancing measures that have been taken by both the Fed and Congress to start to moderate this downturn.

Well, interestingly, this survey was conducted during the week of March 17th through the 19th, so it was during some of the most intense volatility that we’ve seen during this crisis. And yet many investors appear to be staying calm. The investors that we surveyed remain optimistic by and large about their investments. And they see the current environment as a time to either hold what they have or as an opportunity to increase their holdings in stock. The majority of investors, about 90%, said that they’re very confident or somewhat confident that they can weather the current stock market downturn based on their existing allocation or their existing financial plans. And when asked about their views of the current stock market, more than half said that it’s time to hold the stock you have and wait for the markets to come back. About a third said that the current environment is an opportunity to purchase more stock while prices are down. And only 4% of the respondents said that now is a time to decrease your stock holdings in order to help avoid further downturning in their portfolio value. And then, finally, more than half of investors said that they are confident that the downturn is temporary and that the market will bounce back quickly, compared to 45% who said it would take a long time to recover.

We don’t. You know, it’s going to be very difficult. And the level of uncertainty is probably going to stick with us for some time. You know, it’s going to be kind of this touch and go, you know, when can we return to work and is there may be kind of a second resurgence of cases whether it’s here or China or Italy, or some of the places that have been most hard hit. So, we’ll kind of have to wait and see. I mean, the novel part of the novel coronavirus really is what’s going to drive things is the newness of it. So, we would be in the camp that it will probably be more of a U-shaped recovery. So, there will be a short but deep recession in the coming quarters. And then by the fourth quarter of this year, there’s some hope that you’ll start to see stability. And then much of the recovery probably comes in 2021.