A carousel is a rotating set of images, rotation stops on keyboard focus on carousel tab controls or hovering the mouse pointer over images. Use the tabs or the previous and next buttons to change the displayed slide.
In just 3 trading sessions, the S&P 500 fell 4.7% from its all-time high, largely on fears of the expanding impact of the coronavirus. In particular, when the virus finally entered a phase where it is transmitting in the developed world, markets appear to have rapidly developed a decisively “risk off” stance. This is the story being told by the financial media. We are not convinced this is the whole story, but rather, think that it is a convenient reason to take off some risk, a justification for
investors to pare back holdings in an environment that is expected to be more modest than last year. The markets have been very strong since early last October, with the S&P 500 rising 17% in that period, until the most recent pullback. Measures of volatility expectations have been rising, while expectations for GDP and corporate profit growth have been reduced. All of that sounds rather negative, but we do not see a long-term decline in stocks. Instead, we view current market action as a normal correction in a longer term upswing. While the virus may cause temporary hits to profits for a number of companies or economies, this is expected to be short lived. It is important to remember that corrections (up to 10% declines) are a regular occurrence, even in the most robust markets. We have not seen enough evidence to change our view that overall fundamentals remain solid with room to improve over coming quarters.
Interest rates are at generational, if not all-time lows. To put this into perspective, at the close of 2008, at the height of the great financial crisis, the 10-year Treasury was yielding 2.21%. As of this writing, 2/25/2020, it is yielding 1.36%. For now, we do not see rates getting much lower than current levels, but real risk of higher ones. As such, we remain biased toward short duration in our bond holdings.
The US economy appears to be on solid footing, and is likely to remain so. The rest of the world may not be so lucky, due to economic impacts from slowdowns and even outright shutdowns related to the coronavirus. GDP growth is expected to come in around 1.8% -2% for 2020, which is lower than the 2.3% last year and 2.9% in 2018; but this economy is still growing. Further, consumer spending drives approximately 2/3rds of GDP growth, and spending appears to be strong. Bolstering this are the strong labor market and low energy prices which appear to be leading rising consumer confidence. There is chatter of potential rate cuts to stimulate the economy in the face of the risks associated with coronavirus, and we see a potential for overshooting the mark if this is done. Current conditions certainly do not appear to warrant such an action, and there is risk that doing so could awaken inflationary forces.
During business hours: 352-383-2111
24 hour customer service: 800-261-8072
Lost or stolen debit card
During business hours: 352-383-2111
24 hour customer service: 800-236-2442
Credit card issues
24 hour customer service: 800-883-0131
Your privacy is very important to us. We would like to advise you that Internet email is not secure. Please do not submit any information that you consider confidential. We recommend you do not include your social security or account number or other specific identifying information.
You are leaving First National Bank of Mount Dora's website and linking to a third party site. Please be advised that you will then link to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of First National Bank of Mount Dora. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. First National Bank of Mount Dora assumes no liability for the content, information, security, policies or transactions provided by these other sites.