BREAKING: March 24, 2020 - Letter to Our Clients at Jason Howell Company

Jason Howell |

This is the time when our family of clients rely on our expertise, judgment and character the most. And we are happy to serve. If you or a family member has been worried about the markets, feel free to share our most recent message (dated 03/24/2020).

March 24, 2020

 

Dear Family of Clients,

 

1:49 PM EST  Today we are looking forward to the U.S Congress passing the "PHASE III" legislative stimulus bill. It is designed specifically to put our economy back on track. This morning and early afternoon the stock market has been up on the likelihood that something might pass today. The details of this multi-trillion dollar stimulus are important because whether it's your business, your job, your stimulus, your hospital or even your post office, this bill will have an impact.

 

FISCAL RESPONSE REVIEW

For a review of the fiscal legislation, you can read prior letters or just watch this video below:

 

 

TRILLIONS OF STIMULUS DOLLARS

 

Preempting the PHASE III legislation from Congress and the President has been the stimulus from the Federal Reserve Bank (monetary policy). Usually we just hear of "The Fed" lowering or raising interest rates that financial institutions use to lend themselves money. It sounds "interesting" but, actually, not really. The Fed has a lot more powers than that and it's been interesting to see what they can do when they really, really, have a reason. Here's a short list (you can also click here for the full list) of what they announced yesterday:

  • $300 billion in financing for new credit to consumers and employers by funding 
  • Establish a "Main Street Business Lending Program" to support SBA.gov 
  • Financial support for states, cities and counties (municipalities) 
  • Financial support for large business credit markets (i.e corporate bonds)

Taken together, it's an unprecedented, multi-trillion dollar Federal Reserve response to a crisis. It is a bold attempts to ensure that all of our financial markets - including the bond markets - function well so the economy can bounce back. Some could argue that the Fed is doing too much but it's likely a response to the slow pace of legislative action. 

 

THAT PHASE III LEGISLATION

 

To review, the PHASE III legislation (originally called the  CARES Act) was set to include:

  • $300 billion for forgivable small business loans if used for payroll expenses
  • $208 billion for large industry loans or loan guarantees (airline, restaurants, etc.) 
  • $500 billion in checks sent directly to Americans ($1,200 per person making under $75K annually)
  • $300 billion for delaying April 15 IRS tax payments and penalties for 90 days (filing is still required)

 

Much of that will likely be included and more. On background, this is a bill drafted in the United States Senate, then shared with Nancy Pelosi and the United States House of Representatives. When the negotiation of legislative bills doesn't happen concurrently with the two branches of Congress, you end up with a lot of differences to reconcile. That's what happened with PHASE III. Here is what's being ironed out now:

  • Adding language for Inspector General oversight of spending the $500 billion for corporate bailouts
  • Increasing the financial support for state and local governments hard hit by the drop in tax revenue
  • Adding additional protection of workers with OSHA.gov language
  • Increasing support for hospitals and medical professionals
  • Building on PHASE II legislation with additional Family and Medical Leave money
  • Adding financial upport for the U.S. Postal Service that could go bankrupt by June

The House has outlined much of the above (and more) in their own version of a PHASE III bill called the "Take Responsibility for Workers and Families Act (click)." Reconciling that bill with the Senate's "CARE Act" may happen as soon as today. If it does, that will likely be because Pelosi secures what's called "unanimous consent" from the House: meaning everyone agrees to the legislation without having to take a formal vote (just a "voice vote"). 

 

ECONOMICS VS. HEALTH

 

There is now a philosophical debate about whether to send us all back to the office next week or maintain the coronavirus "shelter in place" recommendations. That decision will likely be adjudicated by the White House, Governors and the Mayor of DC. No one knows what will happen with the health crisis we face; especially not "financial experts." But the story that the stock market often tells us is one about the future. We face a health an economic crisis today but if you see the stock market going up, note that it's a bet on the future. That future could be 1 year or 5 years or 10 years from now. In light of that reality, be careful making new financial decisions.

When it comes to your long term goals, revisit the conversations you've had with us and your family about who you are and what you really want to do in your lives. Let your values be your guide.  

And contact us if necessary. We are here and we are paying attention. 
 

 

JASON & DOUG

 

Jason J. Howell, CFP® is a former U.S. Congressional Candidate and in 2019 was listed as a  TOP WEALTH ADVISER by WASHINGTONIAN magazine.​  Jason Howell Company is an independent, family wealth management firm run by two owners who consider it their family business.  Jason J. Howell, CFP® and Douglas W. Tees, MBA are both married to patient wives and are dedicated to their kids. They have built a firm with a great reputation located just outside of the nation's capital in Washington, DC. (Northern Virginia). They hope to honorably serve their growing family of clients for decades.   

To book an introductory call, click this link to choose a day/time: Free Consultation