The stock and bond markets have continued to stabilize as volatility slowly ebbs away. The returns we have seen recently are unlikely through the remainder of the year as a full economic recovery will take some time. The markets have been buoyant primarily because it is readily apparent that close-to-zero interest rates will be with us for the foreseeable future. The markets also detect that the massive stimulus from the federal government to get us through the epidemic will not be ending abruptly anytime soon.

The abrupt shock to the economy has already caused many dislocations, but this also presents a rare opportunity to re-invest and reconfigure for a future economy in terms of transportation, energy, education, entertainment etc. The market is counting on continuing stimulus and investment going forward. Congress has been talking about infrastructure renewal for many years with no action due to worries about funding. Now we know, quite by accident, that the funding is there and has always been there. Our priorities are changing, in some cases quite dramatically, because social trauma in the form of an epidemic has this way of forcing re-evaluation of our priorities and our place in the world.

Going forward, the economy and the markets will remain highly sensitive to the national epidemic, whether it subsides or expands, and, whether and how long federal monetary and fiscal stimulus remains available to mitigate its effects. We anticipate that the epidemic will eventually subside as individuals will become sensitized to the seriousness of it and individually adopt precautionary preventative measures together with acceptance of governmental measures to control its spread. This proved to be the case in the Northeast where the epidemic has already subsided substantially.

We remain cautious and vigilant. We continue to maintain significant cash balances in most accounts. However, we recently invested some cash in a diversified mutual fund after the market collapse and as it began to recover. We do not anticipate making other targeted or strategic portfolio changes until the economic outlook becomes much more clear. Please also remember that because these quarterly thumbnail sketches are very brief, do not hesitate to call me if you wish to discuss your account or our outlook in greater detail.

Very Best Regards,

Joseph L. Toronto, CFA

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