February was a down month for the markets.  The DOW lost 5.7%, the S&P lost 4.45%, and the NASDAQ registered a loss of 2.6%. These results were driven by the evolving uncertainty and fear posed by the coronavirus. This major drop came after all time market highs were registered in January. For the year to date, the DOW is now down 6.76%, the S&P 500 is down 4.76% and the NASDAQ is down 0.97%.

We continue to remain vigilant for economic signs and data indicating a market adjustment is in the cards, but continue to see no such factors which would lead us to that conclusion. This February was a “black swan” type event with all the surprise, shock and fear which normally accompanies such happenings. Traditional economic signs remain mixed, suggesting the economic slowing. On the positive side, earnings and jobs are still solid. Negatively, manufacturing activity is less, as is business spending,  housing starts, as well as consumer confidence. Revenues are for the moment steady but that is likely to edge downward. This factor will hurt small business the most. This month the leading economic indicators fell 0.3%, reinforcing the slowing theme. Positively business starts were strong in February.  So, what is factual is that the overall expansion is slowing not ending, and has forward momentum. This factor provided fewer resiliencies to absorb the shock, especially as the market was in such an extended condition. Wages continue trending upward, and retail sales continue to be positive. The outlook for the world economy remains better, especially in Latin America and India, absence the virus shock.

As we enter March, we feel that this will be a flat month at best. There will likely be historic strength in weeks one, two, and three and week four has been historically flat. The historic probabilities are 64% for the Dow to be positive; 64% for the S&P, the NASDAQ probability is 63%, and the probability for the smaller capitalization Russell 2000 is 70%. The virus shock will depress these historic averages but their underlying strength will reduce the likelihood of further market value erosion. Based on that fact, 2020 should still be positive, but not strongly so. For 2020, S&P is still projecting that the S&P index will advance 7.4% for the year; that sounds optimistic to us. We will maintain a steady course; remain constructive on the markets, and vigilant for opportunities.  We have attached our assessment of the corona virus, and its likely evolution and implications as an enclosure…


Dwight W. Galda, ChFC, CLU, AEP


These are the opinions of Crescent Wealth Counsel and are based on information from sources believed to be reliable, however, these

Opinions may change as information becomes outdated. Indexes mentioned are unmanaged and cannot be invested in directly. Past performance does not guarantee future results.






The coronavirus was first reported in the United States on January 21, 2020, amidst the peaking of US equity market indexes. Consistent with the history of such virus, the markets were up 1.5% during that initial nine day period after that event. This was consistent with the past history with SARS, HINI, MERS, Ebola and Zola. As the impeachment circus winded down, gradual media attention was shifted to this event, yet for the first thirty days of this occurrence, conditions seemed to be within the grasp of the Chinese to manage this public health crisis.

Fear is always a magnifier of reality. Virus spread exponentially, and when there are no immediate tools to deal with a new situation, the mind lifts off to the stratosphere of horrible thoughts. Yes, the virus is infectious, but at this points seems less deadly than SARS, which killed about 10% of all those who contracted it. Further, more people are likely to die from seasonal flu than the coronavirus. Despite these facts, it is the psychology which matters to us, especially when repeated daily by every news service closing in on deadlines.

Absence a scientific identification method or cure, we still have ample tools to nail this thing effectively. There is of course common sense — basic sanitary steps learned as children, and technological solutions which minimize the need for meetings/crowding. Business will clearly slow but not stop, and the chances of an induced recession are very small. The Federal Reserve has cut interest rates already and four more cuts are at least 50% probability in the month of March. We would be surprised if there were that many, but initiatives like that are being discussed. What are also likely are a program of subsidies to highly impacted groups, and the re-thinking of the globalist mindset which was the vogue in the early 2000. Supply chains must be secured and controllable, and that is also common sense. It is likely that China will continue to emerge out of the virus shock, and slowing will bring those sectors of their economy back on line. Their methods were draconian, but personal discipline and behavior modification can go a long way in the US. We believe that most of this situation should be in the proverbial rear view mirror by the end of May, and that the impact here in the US and its markets is temporary, and will pass without major revisions to earnings and business debt service capabilities. We personally see this as a “gift”, in that it is another opportunity like 2008, to load up on over sold, quality equities, and ride off into the financial sunset.

References: Kiplinger Letters, February and March 2020

The Economist, March 2020