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Advisors - April 1, 2020

Resources for Client Communications in a Bear Market

On February 19th, the S&P 500 set a new all-time-high. The Nasdaq Composite also set a new high that day, while the Dow Jones topped out a week earlier on February 12th. Since then, we’ve witnessed some of the worst sessions in stock market history.

It’s worth saying that first and foremost, there are more important things than the stock market right now. Our thoughts are with those around the globe most impacted by the coronavirus (COVID-19) outbreak. And to those that are healthy and working from home or quarantining, please continue practicing healthy habits.

Beyond health concerns, investors are also feeling the shock of coronavirus in their portfolios. As a financial advisor, this is an opportunity to show your clients exactly why they hired you. Client questions and requests can add up and become overwhelming, but with the right resources you can be the source of knowledge and comfort your clients are looking for.

At YCharts, we aim to arm advisors with the resources they need to build and sustain strong client relationships. With this goal in mind, we’ve compiled articles and visuals to help you more effectively communicate. They break down three major factors in the current economy: impacts of the global coronavirus crisis, an ongoing oil price war, and measures taken by the US government.

Economic Impacts of Coronavirus

The United States, among the rest of the world, is adjusting to working from home, being in quarantine, and even “sheltering in place.” With less people (and businesses) travelling for work and pleasure, airlines, hotels and casinos are among those hit the hardest.

The effects of coronavirus are not limited to those industries, though, as many public companies have begun to adjust their earnings guidance for the next couple quarters.

Articles to inform you and your clients:

Understanding the Economic Shock of Coronavirus: Details from Harvard’s experts about V-shaped, U-shaped, and L-shaped recessions.
Goldman sees 15% jobless rate and 34% GDP decline, followed by the fastest recovery in history: Revised projections indicate an even bigger impact on US unemployment and GDP growth.
There’s an unlikely beneficiary of coronavirus: The planet: World economies have scaled back production and travel of every sort, leading to better air quality around the globe.

Helpful YCharts visuals (feel free to share with clients!):

s&p 500 vix coronavirusClick Here to view in YCharts

xle sectors coronavirusClick Here to view in YCharts

world economies coronavirusClick Here to view in YCharts

The Russian-Saudi Oil Price War

In response to coronavirus and decreased energy consumption in China, Saudi Arabia insisted to partner Russia that both countries should reduce their daily oil production. When Russia disagreed, Saudia Arabia began ramping its production, with more hikes planned for April and May, and sent oil prices to record lows, instigating an all out price war.

Oil’s price per barrel is back to its 2016 lows and analysts say that rising supply and limited demand imply further price reductions.

Articles to inform you and your clients:

5 charts that explain the Saudi Arabia-Russia oil price war so far: Oil prices are down some 60% and increased production levels are expected through the summer.
Saudi-Russia oil war is a game theory masterstroke: The timing of this oil price war could spell long-lasting changes to the energy industry and OPEC+.
Oil-Price War Batters Poorer OPEC Members as Coronavirus Looms: The Saudi-Russia dispute is leaving other OPEC nations without options while facing the coronavirus crisis.

Helpful YCharts visuals (feel free to share with clients!):

wti brent crude oil coronavirusClick Here to view in YCharts

major energy stocks coronavirusClick Here to view in YCharts

US Treasury Department & Federal Reserve Countermeasures

In efforts to support businesses, consumers, and the overall US economy, the Federal Reserve and Trump Administration are resorting to drastic measures. The Fed can’t directly buy corporate debt or lend to households, so they’re using commercial paper (think corporate IOUs) to extend short term credit to businesses, hoping credit will extend throughout the economy.

Meanwhile, the Trump Administration is exploring options that include sending cash directly to citizens, as well as corporate bailouts for airlines and others, but Democrats and Republicans are struggling to find a plan they agree on.

Articles to inform you and your clients:

What the Federal Reserve has done in the coronavirus crisis: Including slashing rates to zero and relaunching large-scale asset purchases, the Fed is rolling out new relief efforts every week.
Coronavirus Task Force Details ‘Sobering’ Data Behind Its Extended Guidelines: Estimates of 100,000 coronavirus-related deaths in the US prompted The White House to update its guidance.
Coronavirus checks, direct deposits are coming. Here’s everything you need to know: Get answers to all your questions about coronavirus relief for individuals, courtesy of the US government.

Helpful YCharts visuals (feel free to share with clients!):

fed funds rate coronavirusClick Here to view in YCharts

financial stocks coronavirusClick Here to view in YCharts

corporate debt premiums coronavirusClick Here to view in YCharts

Keeping Things In Perspective

While the articles and charts above are certainly cause for concern, now is not the time for investors to lose their cool. After all, we’ve been in bull-mode for the past 11 years, and the S&P 500 is at the same level now as it was at the start of 2019.

The next few quarters will make or break a lot of companies, both public and private; however, the recent sell-off has presented those with a long-term outlook (especially new and younger investors) with an opportunity to invest in stocks at a relative discount.

Even moreso, there are some businesses and industries that will benefit from efforts to curb the virus’s spread. Not surprisingly, cleaning products from Clorox (CLX) and online collaboration software from Zoom Video (ZM) are in high demand.

It’s not easy to “grin and bear it” through current market conditions. But again, long-term investors would argue that a bear market should scare people into hasty decisions. The illustration below shows the hypothetical performance of a $1,000 investment if it weren’t fully invested for the best trading days between 2008 and 2017.

resources for client communications bear market coronavirus

Do you have a communications strategy for Bear Markets?

YCharts’ Advisor-Client Communication Framework gives advisors a guide to strengthen their client touch points and engagement.

The current market downturn has created an “Ad Hoc / Broadcast” communication opportunity. Are you being proactive with your client communication? Do your clients know your plan for navigating market uncertainty?

See the following resources we’ve put together to enable you to better connect with clients and use this bear market as an opportunity to continue to earn their trust:

How To Create Better Touchpoints with Clients
A Video Guide to the Communications Framework from YCharts CEO Sean Brown
Survey: How Can Advisors Better Communicate With Clients?

resources for client communications bear market coronavirus

Client communications are in the spotlight

No one can predict the markets.

The stock market’s historic bull run has caused complacency among both advisors and investors; however, this downturn will shine a spotlight on advisors who aren’t making the time and effort to properly communicate with their clients.

With YCharts, thousands of advisors and planners are using visual analysis to make smarter investment decisions and demonstrate the value of their portfolio strategies. If you can benefit from improved communication with clients and prospects, visit ycharts.com, request a demo or call us at (866) 965-7552 to learn more.

Disclaimer
©2020 YCharts, Inc. All Rights Reserved. YCharts, Inc. (“YCharts”) is not registered with the U.S. Securities and Exchange Commission (or with the securities regulatory authority or body of any state or any other jurisdiction) as an investment adviser, broker-dealer or in any other capacity, and does not purport to provide investment advice or make investment recommendations. This report has been generated through application of the analytical tools and data provided through ycharts.com and is intended solely to assist you or your investment or other adviser(s) in conducting investment research. You should not construe this report as an offer to buy or sell, as a solicitation of an offer to buy or sell, or as a recommendation to buy, sell, hold or trade, any security or other financial instrument. For further information regarding your use of this report, please go to: ycharts.com/about/disclosure

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