Coronavirus: How Serious Is It, and How Does It Affect Your Plan?

The Situation

It has become apparent that Coronavirus isn’t just a Chinese problem as some U.S. policymakers finally admitted that the epidemic will damage the outlook for U.S. and global growth in the foreseeable future. Federal Reserve Board Chair Jerome Powell said this month that there will “very likely be some effects on the United States.” As of February 7, the number of passengers flying between North America and China was down 75% compared to a year earlier. Thousands of Chinese factories have closed, which has disrupted supply chains in the U.S. and other countries. According to Dun & Bradstreet, the Chinese provinces most affected by the outbreak are home to almost 50,000 subsidiaries of foreign corporations, including almost 9,500 American operations. Shipping rates are down 25% already on some routes out of China. While global stock markets have remained relatively calm, they could be tested as more data becomes available over time. If consumer and business confidence declines, then investors will likely flock to US Treasuries and other safe haven assets – driving up the U.S. dollar and causing tighter market conditions.

The Big Picture – What Should You Do?

Earnings growth has slowed down while economic and profit expectations have been somewhat subdued in 2020. Consumer spending and the job market is still very strong, however, and is the main reason why the current bull market has outlasted previous bull markets. Employment data and the direction of interest rates will provide clues over time on the continued strength of consumer spending and overall impact on the U.S. economy. There is no need to change the course. You have a well-thought-out investment plan, carefully designed to endure unpredictable markets. We’ve also measured your risk tolerance, making sure your portfolio is positioned to perform in line with your expectations under various market scenarios. Make no mistake, the money managers responsible for your direct investments are capitalizing on opportunities while minimizing risk exposure. We’re committed to keeping in front of the information on your behalf, which is coming fast and furious. Maintaining a disciplined, balanced approach will help your plan remain successful over the long run. We’re running a marathon with you – steady wins the race!

Sources: Nationthailand, American Century

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