James Mayer:


I hope you are doing well during this unprecedented time. As the social distancing rules

continue to stay in place, our office will remain closed. Therefore, we will not be able to hold

any in-person office meetings at this time, but our team members are available to speak with

you over the phone. If you should need to contact us, our phone lines are open from 9:30 AM

until 4 PM. As we continue to navigate through this new normal, I wanted to share some of

our market comments with you.



90% of the companies in the S&P 500 have reported results for the first quarter of 2020. And

the results have been largely poor as expected. On average, sales have increased 0.6%

versus the first quarter of 2019, while earnings are down 13.6% on average. According to a

recent FactSet report, companies that report worse than expected results are not being

punished as harshly as usual. Declining 1.1% on the day that they report versus a historical

average of 2.8%.



In our opinion, this reflects investors trying to look through this period of weakness, and

focusing on longer term value. For context, much of the first quarter results occurred before

COVID-19 was a significant problem in the United States, as the first major cities did not issue

shelter in place orders until mid-March. Global stock markets plunged dramatically throughout

most of March before rallying late in the month, due to an unprecedented scale and scope of

stimulus packages. Absent a breakthrough in COVID treatment, we think further gains will be

difficult to come by in the near term as the markets appear already pricing in short term

interruption to businesses.



While we are heartened to see the recovery in prices, we continue to believe that there are

reasons to be skeptical of a V-shaped market move, given the job losses, the drop in

consumer confidence, and the fact that we are not yet rid of the virus. Ultimately the US

consumer makes up around 70% of the US economy, and it is how we all feel and behave that

will determine the next direction of the market. The last three months are unprecedented in

the past century, both for the scope of the health crisis and the sheer amount of money that

the governments have devoted to addressing it.



It has required all us to alter our routines in ways we hadn't anticipated, and maybe led us to

appreciate some things we'd previously taken for granted. We look forward to the time where

we can sit across the desk from our clients again and have a normal conversation. In the

meantime, we will do our best to maneuver through this environment. We hope that you are

staying safe and healthy. If you need anything from us, please don't hesitate to reach out to

us. We appreciate the trust you have placed in us. Thank you.