Second Quarter 2020

On January 21st, the Centers for Disease Control and Prevention (CDC) confirmed the first U.S. Novel Coronavirus (COVID-19) infection.  A week earlier, the patient had traveled from Wuhan, China where the CDC was monitoring an outbreak of pneumonia related to the virus.  In a press release[1], the CDC noted:

“While originally thought to be spreading from animal-to-person, there are growing indications that limited person-to-person spread is happening.  It’s unclear how easily this virus is spreading between people.”

“While severe illness, including illness resulting in several deaths, has been reported in China, other patients have had milder illness and been discharged.  Symptoms associated with this virus have included fever, cough and trouble breathing.  The confirmation that some limited person-to-person spread with this virus is occurring in Asia raises the level of concern about this virus, but CDC continues to believe the risk of 2019-nCoV to the American public at large remains low at this time.”

A few days later, the CDC confirmed a second COVID-19 infection in a patient who had traveled from Wuhan, China.  In a press release[2], it reiterated its risk assessment: 

“While the CDC considers this a serious public health threat, based on current information, the immediate health risk from 2019-nCoV to the general American public is considered low at this time.”

On January 30th, the CDC confirmed the first person-to-person spread of COVID-19 in the U.S.  In a press release[3], CDC Director Dr. Robert R. Redfield noted:

“Given what we’ve seen in China and other countries with the novel coronavirus, CDC experts have expected some person-to-person spread in the U.S.  We understand that this may be concerning, but based on what we know now, we still believe the immediate risk to the American public is low.”

Truly, hindsight is 20-20.  Looking back, it is clear China and the World Health Organization (WHO) were slow to report the person-to-person transmission, high contagion and severity of the novel coronavirus.  It is equally clear global containment and mitigation strategies depended on the timely and accurate reporting of that information.

As I write these comments[4], COVID-19 has spread to 210 countries and territories around the world.  More than 2.355 million people have been diagnosed with the infection and, of them, more than 162,000 have died.  Here, 740,746 people have become infected and 39,158 have died. 

The Financial Markets:  A Quick Recap

On February 12th, the Dow Jones Industrial Average posted an all-time high of 29,551.42, driven by a successful resolution to the trade wars, Fed rate cuts and historically low unemployment rates.  For the most part, investors were unaware of the looming COVID-19 threat. 

Later in February and March, COVID-19 began spiking in South Korea, then France, then Iran, then Italy, then here and worldwide. As a result, governments ordered businesses to close and implemented “stay-at-home” orders to slow the spread and prevent health care system becoming overwhelmed.  This resulted in an abrupt cessation of most economic activity. 

As awareness of COVID-19 and its economic impact grew, the stock market slid.  On March 9th, it suffered its worst point drop in history, down 2,013.76 (↓7.8%).  Then, on March 11th, WHO declared COVID-19 a global pandemic, causing the DJIA to fall another 297.80 points.  Thus ended the longest bull market in history[5].  By March 20th, the DJIA had fallen to

When the Fed buys securities from banks, it infuses them with cash.  In turn, banks may use this cash to strengthen their capital bases and make loans to those consumers and businesses hit hard by COVID-19. 

19,173.98, down 35.1% from its February 12th high.  And, as the stock market slid: The Fed began taking extraordinary action to stabilize financial institutions.  On, March 15th, it held an emergency meeting to lower its key Fed funds rate to a target range of 0.00% to 0.25% and announcing plans to buy $700 billion in government securities from banks in coming months.  Then, on March 23rd, it held a second emergency meeting, expanding its repurchase agreement programs by $1.5 trillion and broadening the types of securities it would buy.  On April 9th, the Fed announced it would further expand its loan facilities by $2.3 trillion and expand eligible borrowers to state and local governments[6], and medium size businesses.  Collectively, the Fed pumped $4.5 trillion into the economy.   

Congress passed three key Acts to help support consumers and businesses facing sudden financial ruin through no fault of their own.  Here are a few highlights from this COVID-19 legislation:

  • On March 6, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 was signed by President Trump.  This year, it will provide $8.3 billion in combat COVID-19 and its spread.  Specifically, it provides $3 billion for the research and development of diagnostics, therapeutics and vaccines; $2.2 billion in public health funds for prevention, preparedness and response efforts, of which almost $1 billion is earmarked for state and local agencies; almost $1 billion for medical supplies and medical surge capacity; and $1.25 billion to help fight COVID-19 internationally. 
  • On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed by President Trump.  It’s designed to help private employers with fewer than 500 employees offset the workplace impacts of COVID-19 and it applies to leave taken between April 1, 2020 and December 31, 2020[7].  Generally speaking, it provides an employee with:

Up to 2 weeks (80 hours) of paid sick leave at his customary rate of pay if he is quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis; or

Up to 2 weeks (80 hours) of paid sick leave at 2/3rds of his customary rate of pay if he is unable to work because he must care for (a) an individual under quarantine or (b) care for a children whose school or child care provider is closed due to COVID-19; and   

Up to 10 additional weeks of paid expanded family and medical leave at 2/3rds of his customary rate of pay if he has been employed for at least 30 days and he is unable to work because he must care for a child whose school or child care provider is closed due to COVID-19.

In exchange, employers receive a dollar-for-dollar and immediate tax credit (or direct reimbursement) for all such wages paid.  The intent of this legislation is keeping employees “connected” to their employers so, when business resumes, it resumes more quickly.

  • The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law by President Trump on March 27, 2020.  It’s designed to provide fast, direct economic assistance to American workers and their families, businesses, and state and local governments.  Generally speaking, it provides:

American workers and their families with Economic Impact Payments (cash payments), equaling $1,200 per adult and $500 per child subject to certain limitations.  Family income must be less than $99,000 for single taxpayers or $198,000 for married taxpayers.  The family benefit is capped at $3,400 and eligible children must be under age 17. 

Recognizing that not all employers can keep all employees on the payroll, the FFCRA and CARES provide states with flexibility in how they provide unemployment benefits to those impacted by COVID-19.  Under the Pandemic Emergency Unemployment Compensation Program (PEUC), they are permitted to extend regular unemployment benefits for up to 13 weeks.  Whereas, under the Pandemic Unemployment Assistance (PUA) program, they may provide up to 39 weeks of unemployment assistance to self-employed, part-time workers or those seeking part-time employment, and those unable to work because of the COVID-19 pandemic.  The PEUC and PUA programs end December 31, 2020.  Under the Federal Pandemic Unemployment Compensation(FPUC) program, they may pay people receiving “regular” unemployment benefits an additional $600 per week until July 30, 2020.   

Small businesses and eligible non-profit organizations may apply for the Paycheck Protection Program (PPP).  This program loans them up to 8 weeks of payroll costs, of which at least 75% must be spent for payroll costs and up to 25% may be spent for mortgage or rent, and utility payments. Assuming the small business meets all PPP requirements, this loan is converted to a grant at a later date.  Otherwise, it is repaid within 2 years at 1% interest.  As I write this, the PPP has run out of funds and is seeking additional funding from Congress.)  Alternatively, small businesses may apply for an Economic Injury Disaster Loan of up to $10,000 if it is experiencing a temporary loss of revenue due to COVID-19.  This loan does not have to be repaid.

State and local governments (including Tribal governments, and those of U.S. territories) may apply for payments to cover necessary and non-budgeted expenditures related to the COVID-19 emergency.  Payments are based on population defined by the most recent U.S. Census.

Eligible businesses (primarily airlines and related contractors) may apply for payroll support to enable them to continue paying employee wages and benefits.  Also, they may apply for certain loans. 

The intent of this legislation is putting cash into the hands of American workers and their families by keeping them “connected” to their employers and helping their employers remain viable.  Although some have called this a “bail out for Wall Street”, this is short-sighted.  For example, commercial aviation is a $1.7 trillion dollar industry.  It employs more than 750,000 people worldwide and supports more than 10 million American jobs (6% of our total workforce) ranging from air traffic controllers to caterers to online retailers.  Like the rest of us, the airlines are suffering from COVID-19 through no fault of their own and their failure would have a catastrophic impact on an already beleaguered economy.    

The Financial Markets:  What Next?

The reality is … the Federal government cannot “prop up” the economy forever.  American must get back to work or our country will face an economic collapse.  The question is how to do this responsibly. 

On April 16, 2020, the White House Coronavirus Task Force released its guidelines, Opening Up America Again.  It provides basic guidance for state governments and stresses the need for each governor to tailor the reopening of his or her state because on its unique facts.  It is worth reading and a copy is enclosed for your review. 

“When the going gets tough, the tough get going.”  And, our history shows Americans are a tough bunch.  At great sacrifice but for the common good, we are now observing stay-at-home orders and closing non-essential businesses.  Those who can do more are doing more.  For example, Mike Lindell (the My Pillow guy) is manufacturing 50,000 face masks a day.  The Gap and Eddie Bauer are making hospital gowns.  Automakers are starting to manufacture ventilators.  Biotech and pharmaceutical companies are racing to find COVID-19 therapies and vaccines.    

As the Opening Up America Again guidelines are implemented by the states, we should see an stabilization of our economy, then resumed growth.  I have confidence in us and I suspect you do, too.



[1][1] First Travel-related Case of 2019 Novel Coronavirus Detected in United States, Centers for Disease Control and Prevention, CDC Newsroom Press Release, January 21, 2020.

[2] Second Travel-related Case of 2019 Novel Coronavirus Detected in United States, Centers for Disease Control and Prevention, CDC Newsroom Press Release, January 24, 2020.

[3] CDC Confirms Person-to-Person Spread of New Coronavirus in the United States, Centers for Disease Control and Prevention, CDC Newsroom Press Release, January 30, 2020.

[4] April 19, 2020.

[5] The 11-year old bull market began in March 11, 2009.

[6] Counties with population greater than $2 million and cities with population of more than $1 million are eligible to participate.  The intent is providing cash so they can pay for essential services while they are deferring property and other taxes for businesses and consumers.

[7] Employers with less than 50 employees may be exempt from the requirement to provide paid leave due to school or childcare closings if the leave requirement would jeopardize the viability of the business.


Click on the links below to find out more
about Asset Planning & Management's
Form ADV Part 2, Privacy Policy
and Disclosure Statement.

Form ADV Part 2

Privacy Policy


Company Info

Asset Planning & Management, Inc.

422 West Riverside Ave. Suite 722
Spokane, WA 99201
Phone: 509-838-4175 or 888-864-8827
Fax: 509-838-4206