Barbara Shapiro 333 Elm Street Suite 210 Dedham,MA 02026 bshapiro@hms-financial.com 781-251-2655 Welcome to HMS Financial Group We are a full-service financial planning and investment firm located in Dedham, Massachusetts. Life brings many opportunities and challenges and we are here to help our clients navigate through both the positive and negative times. HMS Financial Group works closely with our clients to create a personalized plan to fit their current and future needs. Our willingness to listen, educate and empathize with our clients sets us apart from other firms. Barbara Shapiro, President EdM2 MSF CFP® CFS CMC CDFA CeFT®

April 21, 2020

Watching The Curve

For those attempting to predict the length or the depth of the current economic slowdown, we have all turned into medical prognosticators. Every day charts depicting the growth of the virus are published. The growth started slowly and then accelerated with lines showing the number shooting straight into the air. But as we found with housing prices during the boom times of the early 2000s, exponential growth does not usually occur forever.

Housing prices were going up 15% to 25% per year in some places at that time. Imagine how expensive homes would be today if that type of growth continued? Likewise, because of our seemingly effective social distancing measures, the curve of virus growth is slowing. From doubling every couple of days to every six days and so on. First, we needed to see the curve flatten and then we need to see the curve head back down.

We will not know how deep the recession will be, how long it will last or how long the recovery will take -- until we know how long it takes to bring the virus under control. If businesses reopen sometime in May, the recovery could be quick. If it takes until July, the recession will last longer, and it will take longer for the recovery. Any prediction will be predicated upon the curve. And the "back in business" sales may start in certain parts of the country quicker than others. Here is to a quick and sharp downward curve.

After starting the week on the downside, stocks turned positive on Tuesday with less volatility than has been the norm recently -- before the March data started coming out on Wednesday. Depressed earnings reports also were on tap for release. For the week, stocks were higher again with a rally on Friday to finish out the week. Gold prices fell.  Interest rates and oil prices also eased, even OPEC came to an agreement to limit production.  Retail sales and industrial production were reported sharply lower as expected. Housing starts were down sharply as expected, but building permits fell less than expected. This week we will see releases on existing and new home sales, as well as orders for durable goods.  Next week's releases will include the first measure of economic growth for the first quarter, as well as personal income and spending. 

Current Financial Indices
Updated April 17, 2020

 Two months ago, the big question about the economy was: Will we have a recession? How quaint that seems now. That was before airlines canceled thousands of flights, sports leagues paused their seasons and restaurants and retailers shut their doors. Schools and day cares hadn't closed down, and social interaction was not yet limited to 6-foot distances and Zoom conference calls. Now, Americans are holed up inside their homes, and millions have filed for unemployment benefits. So the question is no longer — will we have a recession — but how deep will it be? And how quickly will the economy recover? You'll hear economists throw around phrases like V-shape, L-shape and U-shape to describe the range of possibilities. The shape of the recession and its duration — is highly uncertain. And it depends on one big unknown: the course of the virus. In a recent report, McKinsey consultants and economists from Oxford Economics laid out nine different economic scenarios. In one of the rosier outcomes, in which the virus is successfully controlled and economic restrictions are lifted after two to three months, economic activity falls 8% in the first half of the year, but then rebounds to its pre-pandemic level by the end of 2020. However, if the virus is not contained within the second quarter, and social distancing measures continue into the summer, McKinsey expects GDP could take more than two years to climb back up to to its pre-coronavirus level. Source: CNN/Money

Bailout is a dirty word. The Merriam-Webster dictionary defines bailout as "a rescue from financial distress." So it is accurate to call the $2 trillion-plus package a bailout. But let's not call it that this time. During the 2008 financial crisis, after the world economy was brought to its knees, the federal government had to prop up U.S. banks despite their destructive behavior. Hundreds of billions of dollars of taxpayer money flowed into the financial system to prevent a total collapse. Millions of people lost homes, jobs and their livelihood. An entire generation is still trying to come to terms with the repercussions of that time. Even in general use, the word bailout isn't associated with anything positive. But since the financial crisis it has acquired a truly negative meaning. It stirs up images of greedy businesses acting recklessly, enriching themselves, and then asking the government for money. But let's be clear. This time, the business community bears no responsibility for the coronavirus, the suddenness of its appearance and its spread. Companies, large and small, are not to blame for the millions of people who are losing their jobs, the mortgages and rents they will not be able to pay, or dreams being cut short. In fact, this time, the government bears responsibility. Local and federal governments have asked businesses like bars and restaurants to shut down. Let's call it a rescue. It's much-needed support that the American economy needs now. Source: NPE

With over 10 million Americans filing for unemployment in March, April 1 was always going to be a difficult day for US renters. Now we know just how difficult: Nearly a third of American renters didn't pay their rent this month. That's according to data from the National Multifamily Housing Council, a trade association for the apartment industry. Of more than 13 million units in the US that the report covered, 69% of renters paid their rent between April 1 and 5. During the same period in April 2019, 82% of households paid their rent on time, the report said. It's evidence of just how the coronavirus pandemic is devastating the US job market, and as a result, Americans' financial health. The federal government's $2 trillion stimulus bill will pad some Americans' falls: Renters in federally subsidized affordable housing can receive aid, including a 120-day moratorium on evictions and late fees. But most rental properties are owned by private landlords and therefore aren't eligible, though some multifamily landlords with federally backed mortgages may receive a forbearance on their payments as long as they don't evict their tenants. Ahead of the steep uptick in unemployment claims, at least half of states and dozens of cities temporarily halted evictions in March, but rent was still due. And while missing a payment may not immediately result in eviction, continuing to skip them would. Source: Forbes

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