We must accept finite disappointment, but never lose infinite hope. ~ Martin Luther King, Jr.
Last week, my closing remarks were that we’d look at how artificial intelligence (AI) is revolutionizing our lives and the economy. Because AI is here to stay, let’s put that on hold for a week, and instead to try and answer a few questions on the Coronavirus outbreak this week.
Coronavirus affects the upper respiratory system of animals and humans causing symptoms like stuffy nose, cough and sore throat. People with compromised and weakened immune systems are more susceptible to the virus spreading to the lungs and turning into pneumonia. The virus spreads the same way as colds. Be mindful after touching objects and being near infected people who may sneeze or cough.
Wuhan City Hubei Province in China reported to the World Health Organization (WHO) on December 31st, 2019, several cases of pneumonia. Since that time, there have been partial and full lockdowns in Chinese cities as the government stepped up response to the growing number of cases and fatalities. This outbreak began during the Chinese Lunar New Year when millions of Chinese were traveling which contributed to the virus spreading current levels. Since there is a time lag from when I’m writing this to when it appears in the paper, we’ll focus on trends rather than actual numbers of cases and the unfortunate fatalities.
In our office amongst clients, the concern and discussion typically focus on safety, travel, economic activity and financial markets. While not losing sight of the tragedy for this pandemic, our goal today is to discuss potential implications.
Certainly, China and Asia as a whole were slowed regarding travel and spending. The ancillary impact first appears in the obvious areas of consumer spending such as hotels, airlines, casinos, theme parks, movie theatres and restaurants. U.S. companies with strong ties and presence in China may be at greater risk. Oil and copper are also likely to remain depressed. However, China has committed to stimulating their economy to counter the slowdown. Conversely, health care stocks may benefit for obvious and logical reasons.
Key issues to focus on include the extent of travel restrictions and how long this traumatic tragedy may last. Historically, unfortunate circumstances such as this may have the potential to create meaningful investment opportunities.
The relationship between China and our global economy is far different than it was during past epidemics. Central banks are coordinating efforts utilizing monetary policy to support and slow and steady growth. This fact, along with many other unknowns regarding the new Coronavirus suggests that if you are concerned, having a conversation with your CERTIFIED FINANCIAL PLANNER™ professional to evaluate and review your portfolio diversification may be appropriate. Stay focused and plan accordingly.
Asset allocation and diversification do not guarantee a profit nor protect against loss. The opinions expressed are those of the writer as of February 11th, 2020, but not necessarily those of Raymond James and Associates, and are subject to change at any time based on market conditions and other factors. Information has been obtained from sources considered reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned. There is no assurance any of the trends mentioned will continue or that any of the forecasts mentioned will occur. Economic and market conditions are subject to change. Investing involves risk including the possible loss of capital. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. Past performance may not be indicative of future results. There is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct. There is no assurance that any investment strategy will be successful. All investments are subject to risk. The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index. Past performance may not be indicative of future results. “Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239–389-1041, email firstname.lastname@example.org Website: www.raymondjames.com/Darcie.