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Economic Commentary 2020Q2

The COVID-19 virus has made a brief global recession likely. While the duration of the virus pandemic is unpredictable, policy stimulus, pent-up demand and a lack of major imbalances argue for a solid upswing when the virus threat clears.

The containment measures being taken across the globe to combat the virus will have a large economic impact. Global gross domestic product (GDP) growth will probably be negative in the first quarter and will enter the second quarter at risk of contracting further.  

Provided the virus is transitory—perhaps contained in the second quarter—the global economy should be poised to rebound in the second half of 2020. The combination of monetary and fiscal stimulus on top of last year’s global central-bank easing, in addition to the reduction in China-U.S. trade tensions, argues for a solid recovery when the virus threat recedes.

In the U.S., the government’s virus containment measures mean a technical recession—negative GDP growth in Q1 and Q2—seems likely. Fiscal policy will be important in helping to offset the recession. 

The economic impact of the virus may turn out larger than expected. The shock to consumer and business confidence could generate a self-sustaining economic downturn.
A re-run of the 2008 financial crisis seems unlikely. Tier 1 capital ratios for large U.S. banks are significantly improved from where they were in 2007 and should cushion against the risk of a severe drawdown. Bank mortgage lending has also been prudent, and consumer balance sheets are fairly healthy.

The chief uncertainties are around the length and duration of the virus threat and whether it will re-escalate when containment measures in many countries are reversed. It’s likely that markets will find a bottom when the daily number of new virus cases in Europe and the U.S. begins to decline.

Goldman Sachs has offered a revised Outlook for 2020, with the largest GDP drop in history in quarter two, followed by the best quarter in US history in quarter 3.
JP Morgan also sees contraction in the first and second quarters, with significant growth in the 3rd and 4th quarters.

Ben Bernanke, former Chairman of the Fed, likens the coronavirus outbreak more to a “major natural disaster” than a depression. While he does expect a sharp downturn, he expects a “fairly quick recovery.”

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Economic Commentary 2020Q2

By Lineweaver Financial Group
April 07, 2020 Category: Economic Commentary

The COVID-19 virus has made a brief global recession likely. While the duration of the virus pandemic is unpredictable, policy stimulus, pent-up demand and a lack of major imbalances argue for a solid upswing when the virus threat clears. The containment measures being taken across the globe to combat the virus will have a large economic impact. Global gross domestic product (GDP) growth will probably be negative in the first quarter and will enter the second quarter at risk of contracting further. Provided the virus is transitoryperhaps contained in the second quarterthe global economy should be poised to rebound in the second half of 2020. The combination of monetary and fiscal stimulus on top of last years global central-bank easing, in addition to the reduction in China-U.S. trade tensions, argues for a solid recovery when the virus threat recedes. In the U.S., the governments virus containment measures mean a technical recessionnegative GDP growth in Q1 and Q2seems likely.

HealthWatch: Health and Nutrition Tips

By Lineweaver Financial Group
April 07, 2020 Category: General, Health, Nutrition

With the media being such a large part of society, its hard to know when information is accurate orwhen its a fabrication. This is extremely common in the world of health, and we often receive conflicting information about the best way to maintain a healthy lifestyle. Below are just a few health and nutrition tips backed by science for these difficult times. 1. Avoid sugary beverages Its often convenient to grab a sugary drink when we are in a rush, or even when we are out to dinner. But consuming these drinks can have consequences, such as type 2 diabetes and heart disease. Its best to drink something that is low in sugar. 2. Dont fear coffee While too much of anything is never a good thing, coffee is actually high in antioxidants and can help reduce the risk of Parkinsons and Alzheimers diseases. 3. Get enough sleep Sleep is extremely important for our mind and body in order to function properly. When our bodies dont get enough sleep it can drive insulin resistance, disrupt appetite

Letter from the President

By Lineweaver Financial Group
April 07, 2020 Category: General, Letter From The President

First, let me say the obvious: these are truly unprecedented times we are living through. Second, we appreciate how calm our clients have been. While everyone is feeling the anxiety and challenges of these times, I am truly impressed by everyone that I have spoken with. Please know that we will continue to closely monitor the markets, the economy, and your portfolio, and take action when we need to in order to best protect your hard-earned money. One of the conversations I am having with many of my clients is simply a reminder that the equities part of your portfolio is really meant for a 3-5 year timeline. For immediate money needs, weve layered in other strategies that are much less volatile, and which should offer you protection in the short term. We often hear from clients that other advisors that theyve had are more reactive, while we strive to be more proactive. We think that was the case this time as well. To take advantage of the strong market in 2019, we rebalanced in early January

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