Good morning everyone and welcome to today's insights from Northern Trust presentation. This is Mac McClellan, president of Northern Trust Central Region. I'll be the moderator for today's program. We are experiencing unprecedented times both in our everyday lives and as investors due to the outbreak of covert 19 as the global pandemic. The result has been a 30% decline in equity prices over the last four weeks, which puts us into bear market territory for the first time in over a decade. And it's also resulted in a period of historic volatility, which is seen the S&P 500 swing up or down by more than 4% today for the last six trading sessions, including. Swings of over 9% each of the past three days. We know how unnerving at the events of the past month have been for you, so we will continue to have these insights presentations on a BI weekly basis until the fog of uncertainty clears and we return to more normal times in our lives and in the markets. Until then we want to keep you as informed as possible. On our current thinking related to the economy, financial markets, anwalt planning. So with Maine by phone today. Uh is Northern Trust chief economist Carl Cannon bomb. And Oregon trust chief investment strategist Jim McDonald, and they're going to provide their latest views on the economy and markets. After we hear from Jim and Carol were going to go to a Q and a discussion, which we would encourage you to participate in, and you can submit questions using that QA box on your screen. If you're worthless by web access, or you can send us your questions to contact northern at northerntrust.com. So Carl as is our custom. Let's begin with you and your current insights into Kroger 19's impact on the economy, which appears to be fairly significant at this point. Charles, thank you Mac good morning everybody and we saw certainly hope that you're staying safe in this in this very challenging time. Like Jim, I am working from home today. That is a new experience for me. My wife, who is also forced to work from home, has noted that while the chances of mortality for the coronavirus are pretty scary, that there is a non zero chance of mortality from the two of us being in the home. Together for such an extended period of time, so we'll have to work to mitigate that risk as well on Mac, but let me die for Iden and on my first slide I want to offer disclaimer I am not a medical scientist or a an epidemiologist, but I wanted to talk a little bit about the virus, how it spreads, and its impact on the economy. On the left you can see the trajectory that the infection has taken in a number of countries. One of the things I point out on charts like this, everybody. Is if you look at the Y axis it is geometric so at in the early stages it rises very quickly and that's really to be expected. The thing I worry about a little bit is on the right and that is that many who observed that the United States has tested many fewer of its citizens for the virus than other countries have is likely to experience a further rise in cases as testing becomes more widespread. So I wouldn't be alarmed or surprised if the cases. Go up, but hopefully the steps that we are taking to deal with the Contagion from here will limit the spread going further. What happens once infection as identified though everyone is that public, health officials and those in the private sector take some sensible steps to keep us away from one another, and that in turn as an impairment on all kinds of Commerce. When this first got started, the feeling was that this might be isolated to the Far East, that this was largely what we call a supply shock, where production would be interrupted for a time, but once it got back on to line. That we would make up for any economic losses in the first half of the year with over performance in the second. Well, now that the virus has spread beyond its origins in the Far East, were saying broader interruptions and manufacturing, and there's also has carried over into service businesses with travel and hospitality being the most prominent, but not the only examples. And so in this case we have both a demand and supply shock, and it's the combination of those two that it's been so threatening to the economy. The good news Mac is that so far the economic numbers that we've gotten have not really reflected much as a toll that that all of this will take on economic activity. They are, after all, retrospective. I just want to prepare those of you listening for the fact that in the upcoming week some of the economic numbers are going to be much more challenging. Then obviously we need mentally to be prepared for that outcome. I have been asked a lot what are the leading indicators that we ought to be following. We do get manufacturing surveys on a regular basis and those will start to Cascade out some regional, some Nash. And then really the key is going to be how businesses react to this in the way that they make their decisions on investing and hiring. Conservatism is likely to take deeper root, and if we begin seeing a rise in claims for unemployment insurance or the unemployment rate itself, then the issue that we're dealing with certain will certainly broad. That's one of the reasons why we do need a conclusive fiscal response to this in order to put a floor under what might be ahead of us. If we moved to my second chart, it discusses some of the policy actions that have been taken and the ones also that we desperately need to take going forward. I should note, and I suppose this illustrates a little bit of. I'm sorry, I'm still on my second page that says two kinds of shocks, so forgive me now. This is really illustrates both supply and demand shock that we've had. Certainly the shut down to that we've seen in the travel and hospitality industry are dire. Certainly there is hopefully going to be some assistance forwarded to some of those bigger industries and companies. There is precedent for doing that. Those of you who are living in communities which have. Restricted movement or gone to shut down as the Bay Area has in San Francisco will know that businesses, small businesses, many of them are not able to operate. There are many women and men who work in those establishments who are not covered by. Salary arrangements, many of them don't have complete health care coverage and then you have those with variable compensation like Huber drivers and waiters and waitresses and the like. Those are the ones who are going to be particularly impaired here and the ones that should be the target. As I've mentioned earlier of some support from the governments, both federal and state. And now let me turn to the page on policy responses and I'm sorry to have. Mr. Step here. So the good news. Everyone is that around the world. Central banks who do have the ability to move with speed and size have taken full advantage in most cases of their ability to do so. Even though we had to submit these slides that late last week, I had anticipated that the Fed would not delay in getting rates down to their zero lower bound. I hadn't thought that it would happen on Sunday afternoon, but certainly the move there was not without its president. They are seeing. Things down the road that they want to get out in front of and In addition everyone they're seeing some phenomenon in the financial markets that I'm sure Jim will discuss that they want to try and ameliorate before they become more lasting problems. In addition to cutting interest rates, the Federal Reserve made a number of other movements that are designed to help the credit markets and credit flows continue to operate as they would normally. They have broadened the collateral that's available for borrowing at their discount. Window and they have lengthened the time that banks can I borrow against it. They have announced a renewal of their quantitative easing program, where they will be buying both government bonds and also mortgage backed securities. There have been challenges in the mortgage market with long-term rates. Falling mortgage underwriters have had very hard time keeping up with the demand for refinancing. the Fed does stepping up to buy some of that paper will provide a little bit of help to those consumers who are refinancing an are hoping to get. I read it on their monthly payments. They have reopened international swap lines with other central banks in order to try and ameliorate some of the pressure that foreign countries are seeing in their funding markets. And just today, the Fed took a step along with the Treasury Department to begin offering some support. For short-term commercial paper, which, as was the case in 2007 and eight and had been under a little bit of pressure as investors reallocate their funds and portfolio managers adjust their Holdings accordingly, I think that central banks around the world have essentially done almost everything that they can. And as we've discussed more broadly, Mac now when crisis comes, especially when you're starting from rates that are very low, it really has to be the fiscal side that responds with with good design. And with adequate size, I show on the right the fiscal responses that were implemented in response to the last financial crisis in 2008 and 2009, just to give you a sense of how large these things need to be. So far the government has directly appropriated the federal government here in the United States are very modest sum of money, and they have been discussing something larger and broader for a number of weeks. It has been frustrating, I'm sure for many investors that as something more concrete has not been forthcoming. Events in Washington or changing very quickly and will try and cover them interactively for you and are writing and are speaking, but I would certainly feel more reassured if we were able to arrive at a package that was of substantial size, so there's talk that the one being considered could be as large as a trillion dollars. That might be what's needed to get his by both the financial and psychological challenges that we have in front of us and with long term interest rates low, it is certainly something that we can readily afford to finance. Finally Mac I have been asked frequently whether this is a replay of 2008 and for many reasons I still don't think that's the case. There's always the bromide that the next crisis doesn't look like the last one, and because we do have many professionals in the markets who don't remember that time, this is their first experience with a situation like this, and so it's natural to look at the most recent analog, but for a variety of reasons, from the way certain instruments are traded to the solvency of many world financial institutions, there is certainly. Good reason to expect that we won't have the world wide contagion amongst financial companies that we had back then and again with policymakers, central banks and others. Having learned from that experience, hopefully they will take the steps to get out in front of it so the damage if if any is short and shallow, and that's a view from here. OK Carl, thanks for that economic update and will go now to Jim. Jim. How does all this translate to the financial markets? All right, Carl Mack. Thanks a lot so will be kickoff on slide #7 where I review the pace of the decline that we've seen in the equity markets, which has been of historic level equities. With the current decline have gotten back to 2018 December levels depending on whether you look at the Dow Jones or the SNP 500, it was either the second fastest or the fastest at bear markets decline of 20% or more in. History why was it so fast? Why think? Primarily? Because it wasn't discounted into the market. Investors were surprised at the pace of the spread and the impending economic impacts in that it hasn't just been the equity markets we've seen an increase in credit spreads. High yield spreads at now 830 basis points are back at 2016. Highs and investment grade spreads now at 225 basis points are above the highs of 2016. Where they just got to about 2% and then his Karl mentioned liquidity across the markets has been strained and we do expect through the programs to try and address that. So what was the primary catalyst for this? Of course, the the coronavirus into a smaller extent they will price war, but I would say that it's been exacerbated by a couple of things. First off, the uncertainty and inability to confidently forecast when we're gonna see a peeking in the virus cases has been a significant feature of this. I would also say that it has been accelerated by the nature of trading and investing in the markets today. The Wall Street Journal highlighted this and they apparently had as much of a challenge is I've had in trying to specifically quantify the impact of algorithmica or program traders, but is Mac mentioned the three days of volatility we've had over the prior three days, to me seem quite disproportionate from the significant, but not a global financial crisis level challenges that we are facing here. You also look at positioning data and what you find is. That traditional investors, while they've gotten more defensive, have not gotten anywhere near as defensive as they have over the last 20 years. During other periods of market upset. So one way to read that is that the declines have not been led by traditional investors much more by program trading out oriented investors. The risk to this is that that may mean the traditional investors are still out there to sell, but to fill out some Carl's comments that we don't think this is the global financial crisis. Or the Great Depression. And if you look at the dates on the chart that I've got showing other rapid declines, many of them were during the Great Depression. But comparing the current situation of the global financial crisis, the amount of leverage in corporate America is much lower. It is currently below medium levels versus elevated before the global financial crisis. Household debts, which was elevated at 95% of GDP prior to the global financial crisis. Is it 75% today so households are in better shape and the core academies things as the labor market? I were stronger going into this episode, so how will we assessing the outlook here? We've been talking about the need for policy response. This really is a significant external shocks to the economy in the markets. Similar in many ways to a natural disaster. So you've got monetary, fiscal and health policy responses. Carl's covered the monetary policy. Up front, we take the Fed did not blow it with the moves that they did, it was discounted at the market. We do have an upward sloping yield curve, which is a constructive sign and reinforces the value of what the Fed did. And we do think that there is increased likelihood that the Fed will start to put additional liquidity into trying to address some of the illiquid at corners of the markets from the fiscal policy standpoint. The way I'm thinking about it as there's two things that need to be addressed. Income replacement that is a bipartisan issue. And then Secondly, there needs to be a focus on providing credit support to the industries that are being hurt by this through no fault of their own. Now the word bailout will come out. That's a bad word. After the financial crisis, but that's primarily because voters viewed some of the people being bailed out as the culprits for the problem, and this time around, I think what they will do if they're smart. Is talk about credit support being given to companies to help support employment and that will increase the odds that they can get this done. From a political standpoint, the areas that we feel or best position to deal with fiscal response starts with the US. We're starting to see color around this happening in Europe with Germany and the Netherlands, indicating that they're going to attack this aggressively. Let's go to slide 8 where I talk about the third policy. Response calls covered some of this. This is around. The health powers the outlook and we have had the great advantage or opportunity to Tampa and internal resource or senior healthcare analyst Eric known see is a PhD from Johns Hopkins and has been a great resource for us and trying to understand as a path forward here. And we are very much focusing on the rate of spread and containment because you've learned flattening the curve or trying to reduce the overall level of cases will be critical to manage the impact on the hospital system. So what is critical is social distancing has been talked about and it also Interestingly in the press conference yesterday, the head of the task force talked about one of the things they found most important in containing the spread is that if a single family member is sick, all family members should be staying home with them. So as the market sometimes is reacting negatively to news such as Illinois, putting insignificant bands on public gatherings, restaurants, school Closings. Cetera. My take out it is the worst. It kept, the better the outcome will be. Meaning the worsted constraints are in the greater forced social distancing. The increased odds are that we get this done, and we've certainly seen evidence of that across what's happened in South Korea. What's happened in China? Interesting story, and again, I hate to quote the Journal so much, but this morning they had a very good story talking about the different impact in Italy between different cities, those that really forced containment had a freely Clock down and have already seen cases. A declining. Progress had testing will be critical. We're hearing good stories. The evidence will be critical on that front, but our expectation I is that we will see a peak in the data of infections across the USA and Europe sometime in April or may. That's actually more conservative than what has been seen in some other countries, and then the plateau and decline in overall cases would occur sometime this summer. But Lastly, on the health side, the vaccine will be important. You might say what good is that gonna be? The market will want to see progress on that because that will help the reduce the risk of a recurrence next year. So let's go to slide 9 now to talk about the outlook. So again, this is something that we're thinking about is being a sharp exogenous shock, and this is going to lead to Softap GDP numbers and company earnings in the first quarter and very tough numbers for the second quarter when the impact of shutdowns will be the most significant in some respects. I think discussion of a recession now is moot in that the markets have already priced this in. And it seems very clear we're going to have a very sharp contraction in economic activity. The stock market will anticipate a recovery, and I'll talk about the markers that will be looking for on that front. It clearly, volatility is going to remain very high. It's we've got said greater certainty in this environment. We favor US assets and interest rate sensitive assets from an asset allocation standpoint. This month in our asset allocation meetings, we did make a change in the global policy model where we further reduced our exposure outside the US in the equity area re allocating to high yield bonds, which I'll touch on and also investment grade bonds, and then for our goals driven wealth management clients, we did activate the portfolio reserve this month, which means that we are now going to be funding spending needs out of the risk control portfolio. In reaction to the significant decline we've had in the risk markets and a desire not to reduce exposure there after, we've already seen this decline. So 2 final things were the markers were gonna be watching for and what are some opportunities that have been created so from a marker standpoint, fundamental markers and market based from a fundamental standpoint, we will be watching what happens on the fiscal policy front and will be watching what happens from the health data standpoint. Wanting to see a peeking in new cases are being a critical critical thing. The market will be focused on from a market based Sandpoint. One thing this qualitative is does the market stop going down on bad news? That's an indicator that people have reduced risk to the level where they now can. I stepped in the sidelines in the market so it's got a better chance of appreciating. Will be paying close attention to credit spreads and liquidity and investor positioning. So let me wrap up with some opportunities that have been created here. Volatile markets like this create good tax planning opportunities and we have the fortune of getting guidance from the sun. Suzanne Shire, whose are cheap wealth strategist and tax planning strategist who's talking about opportunities in areas like. The grant market, so the grantor retained annuity trusts. I area where you can set up a new Gratz I with lower priced assets. Also talking about the potential to consider converting traditional IR as into Roth Iyere's, amongst other opportunities that these lower asset prices of created and then from an investment standpoint, the high yield market looks attractive to us with a 9% yield to worst and in the search for yield that will resume. We think that they will be a beneficiarii and then Lastly in the municipal market which has been under pressure of late, are ahead of municipal bond management team McGregor has been highlighting that the 10 year triple aim unity is now yielding double the 10 year Treasury yield. You all credit risks of rhythm and the importance of credit research remains critical. That does look like an opportunity for us. So with that macro throw it back to you for some Q&A. Yeah, OK, Jim and Carl as always, thank you for those insights before and he's ever controlling the slides. If you could go to slide 10 I appreciate it. Before we move to the Q and a portion of our time together, there should be a pop up survey that appeared on your screen for those of us, or for those of you with us by Webex if you could. Complete that, that would be appreciated and we do want to hear from you and anyone not with us by Webex. You can go to northerntrust.com/insights feedback and we'd appreciate your comments. To the next slide and we can start our Q&A session and as you can see and as I mentioned before, to submit a question, go to the Q and a block on your screen or send us an email. A contact northern at northerntrust.com. And we do have a lot of questions so. Let me start. With you Jim. Uh market valuations. I know that they're moving all over the place with this volatility, and, uh, I think you covered it somewhat. But just to take a little bit deeper with this sharp drop that we saw 19 days from peak of the S&P on February the 19th to bear market within 19 days as the market overreacted to this outbreak and the damage it will do to the economy in corporate earnings. And, uh, you know anything in terms of. You know why that happened? Is there is? This is the key issue here is really how long is this gonna last? I do think that is the key issue. How long is it gonna last and how bad is the hit to earnings gonna be in the path of recovery? From there? The declines because earnings are going down to the clients have not created an overwhelming value case for the market. So using our expectations currently for 20 and 21 earnings, the markets trading at about 14.7 * 21 earnings and the median since 1970s, about 15. So interest rates are a lot lower than they've been since 1970, so you could argue for a higher PE the medium, but it's not a screaming buy valuation Wise Just because of the client in stock prices. And then Carl, moving over to the economic impact than you know, we'd like to hear your opinion in terms of is a recession now fate, accomplis, and the combinations of demand and supply shock coming at once. And the you know, fairly profound contraction that we're going to see an economic activity from all of this social distancing. Best practice that were engaging in how deep could the damage be to economic input and how quickly can we recover once the threat of the virus subsides? This isn't like a hurricane where demand picks right back up again, is it? Firstly, they certainly the odds that will have a recession sometime this year have risen, and I know that that term Mac sometimes raises people's anxiety just by itself. But as we've written many recessions in the United States anyway, are shallow and short, and I think the key that will be looking for and I'm sure Jim will agree, is what steps policymakers do to kind of put a floor on what's going to be coming in front of us if that floor is well designed. And of substantial size, there's every reason to hope that we will have. If we if a correction comes that it will be, it won't be anything near what we had 11 years ago, and so I really try and think of it in those terms is it's not, you know, are we going to have a recession? But really, what is that going to look like in how fast we will recover? I think Jim made an important point which is there is there was a belief that once the warm weather comes at, this virus would just disappear like. Any other flu bug? Well, this isn't any other flu bug and I would note that even the regular flu Mac can, you know, show it's show itself again once the next flu season starts and so the work that is being done now on testing in vaccination and secure ative measures, it's going to be really important so that if the coronavirus does reappear later on this year, it won't create the same kind of public health and private sector responses that have been so pronounced this time around. And I guess you know for a couple questions we've had just regarding. China and what we could potentially learn from what they did to lock down large purchase country. In late January and early February, and it looks like their economy now is ramping back up, and I think both of you text applying this a little bit, but lock down of cities that appeared to be very draconian in China like a month or month and a half ago, it seems to have worked in terms. Of removing the grips from the virus, but is there anything that we can learn from China's experience that will be helpful for us here to learn about our economic recovery? All started that shame if you'd like to chime in I'd I'd welcome it first. There is. The caveat is always Mac with the Chinese data. There are some who suspect that we might not be getting the correct version, but I do think that's steps that they've taken which are now being emulated in Europe and in parts of the United States have proven remarkably effective in Democratic societies. We are not used to being told to stay at home, but if in the long run that ends up allowing us to get back out. And about as soon as possible. That seems to be the best possible remedy for dealing with this with regard to China's economy. That's going to be very interesting the first quarter because of their production shutdowns is going to be very, very severe. And now that they're ramping back up slowly, the question is who's going to be there to buy all the stuff? Because you do have these demand shocks that are appearing in other parts of the world. And if China is fortunate, they will be again these, these quarantines and these these economic consequences in the West will be small. But if they are not, then China's economy is also looking at a little bit more of a durable problem, Jim. Yeah, America, I would just add that to the success of social distancing is actually been pretty well known. People have gone back and studied the Spanish flu and looked at different cities and states that conducted significant shutdowns versus those that didn't and there was a dramatically improved results in the cities and school districts that did shut down and the article that I mentioned earlier in the journalist morning about Italy's experience, there is just demonstrable evidence that. Distancing is the right path here to get the number of virus cases to plateau and then start to decline. Another question, and both of you, I think, covered the comparison between the financial crisis and now, and that this is very different. That was more of a shock to the financial system and the banking sector. 12 years ago this is different. But one of the things that we saw at 12 years ago during the Great Recession is a lot of companies were forced to either cut or eliminate their dividends. And so the question is, what could we think? You know? What should we be thinking about in terms of? Um, dividends can we expect to see? Some companies have to slash or to even eliminate them and the forthcoming months and quarters ahead. Jim, yeah, so I would say that the energy sector is already experiencing. That's because of the distinct fall in oil prices. I would say that a broad major cutting of dividends across the S&P 500 is not the likely scenario. One of the reasons companies have been paying lower dividends the USA 2% versus 3 1/2 percent in Europe is because they preserve the flexibility to do what they want. I would share buybacks. So there could be a reduction in share buyback activity without question. But I think a broad a significant decrease in index level dividends is not the likely case. Thanks Jim, Yeah lots of questions and scanning these as best as I can about central bank action and clearly the Fed has taken dramatic action over the last couple of weeks to help markets deal with the current volatility. But so far, Carl, it doesn't appear to have had the intended effect. And does that mean that the central bank policy today and some of their maneuvers like liquidity injections and lower interest rates? Uh, after 12 years of a pretty easy monetary policy may no longer be as effective. First I think to judge the effect of Apolosi you you have to compare it to what would have happened without that policy. And of course that's always very difficult to do. It's hard to know how the markets would have reacted last Monday morning. Mac, if the Fed hadn't come out on Sunday and did what it had. I believe they felt that they needed to use their ability now and not wait in order to get out in front, especially if some of the financial dislocations that Jim did a good job of describing. And while they haven't had that effect. Uh, that the successful affect yet that's not to say that they won't in time once things settle down a little bit. That said, I think Christine Lagarde, of the European Central bank. There president said it well in her press conference fiscal first and foremost, monetary policy for all of its quality usually works very gradually and indirectly. Fiscal policy Mac has the ability again, it properly constructed to really have an immediate and powerful impact. Among the measures that are being debated in Washington, for instance, is a rerun of what we did in the early 2000s where checks were mailed to people as a part of a payroll tax rebate. An in an effort to try and get them to go ahead and spend, which is going to be some of the high powered short-term stimulus that we're going to need. And so I think monetary authorities around the world Mac have made reference to the importance of policy collaboration between fiscal and monetary. I believe that monetary officials have. Done what they need to do, and now it's really incumbent, not legislatures around the world to follow suit. And before we get to fiscal policy, because lots of questions on that too. But you know the last time, Carl, that the Fed funds rate was in this range of 0 to 25 gifts where it is. Now it you know it stayed there for Seven years and we did not see the Fed moved to negative interest rates like we saw in Europe and Japan and other developed regions. So with that in mind, because it appears like the Fed does not want to go negative with rates. It is it. Is it time to brush up their understanding of modern modern modern monetary theory and Mt or a so called helicopter money? Do you? Do you think that would be the next action that the Fed could take? Personally, everybody I do want to reiterate that both when I was at the Fed in 2008, then from recent statements I do not think the Federal Reserve has any appetite to take its official rates negative. I believe they understand that that would create perhaps more problems than it would solve, and they watch the experience in Europe and found that that has ended up on really not working very well by taxing the banks and taxing favors overlay. And so I don't think they're going to go there. What is left for them to do though, is. Expand their balance sheets through quantitative easing and if at the same time Mac the government is increasing its spending and issuing more debt in a way that combination of that purchases of government bonds and the government's issuance of them might look akin to what some people call modern monetary theory, I think it's fine just to think of them separately as a coordinated effort that hopefully, if the economy shows good results will not have to last forever. Mac I would just I would just put the monetary policy in the context of necessary but not sufficient. They needed to make the action. It is helps restore some upward slope to the yield curve. But as Carl and I both mentioned, there still is a lot of requirement for fiscal and for health policy going forward. So let's move to fiscal policy and you know Jim will stick with you here to start. What's the market really looking for from the administration and Congress in terms of the stimulus? You know, I've heard as much as a trillion dollars. I mean, we already have a trillion dollar deficit. So another trillion would make it a two trillion dollar deficit. So there's some worries about the impact there. But it's Carol mentioned we have these ultra low interest rates, so if we're ever going to have a big fiscal stimulus, this is the time to do it. But you know, can the White House and Congress come together in this time of, you know, pretty extreme polarization and get something done in terms of a mask of, you know, a massive fiscal stimulus. So the way I think it's important to think about it is not necessarily that the dollar number is the critical thing, because they could do a trillion dollar stimulus in this, spend it with more important is to address 2 things. Income replacement for people that I've been disrupted by the coronavirus. And there are some stories out that they are exploring some efficient ways. And it's a secretary. Mnuchin has been in discussion with small business leaders about the most efficient and effective way. To provide relief, such as delaying the required tax payments that companies have to make at the end of March, so that is a potentially reassuring approach and the 2nd is the issue of providing support to those businesses that, through no fault of their own, have been hurt by the disruption to economic activity. So I'm more focused on addressing those two issues that I am that it's gotta be 500 billion or 750 billion aggregate. Yeah, but it has to be spent the right way and then you know, Carl. You know to find to just finish this conversation about monetary and fiscal policy are the real. Participants in this battle to settle markets down, you know, maybe the scientists and the public health officials who are needed to help fight this whole. You know, flatten the curve of the viruses growth. In other words, The Cure for the market here, maybe as much scientific as it is monetary or fiscal policy. Mac, I don't think I could say it any better than that. I really don't. I think the uncertainty that surrounds both the medical in the economic aspects of it is a real enemy of market performance and anything that we can do to take an edge off that, I think would be very much welcome as anyone who has been to a grocery store in the last couple of weeks will know that kind of behavior that uncertainty can unleashes is not productive at all. And again, as soon as we can get back to normal patterns of Commerson analysis, the better off will be. OK, we're approaching about 5 minutes from the universe call scanning the questions that have come in and we're looking at really appreciate the listeners sending those then and we do have a few Carlin Jim regarding the election. What impact could social distancing? And the damage that that can short-term have to the economy have also on the 2020 election cycle we have. Primaries that are being postponed that happened today in Ohio. We have rallies that are being cancelled. There's even some talk of the risk of the summer conventions being postponed. Does any of this dad more certainty for the market? The gym will start with you. Well, I can't. I can't be any more concrete than saying we were moved. Election risk is one of our primary risk cases in this month's investment strategy meeting, and that's primarily because it looks likely that we know who the candidates are that we're not gonna have a surprise Super Liberal candidate on the left, and we know who the candidate is going to be on the right and the markets are going to be relatively comfortable with either of those outcomes, so the election process. Could be a little bumpy, but I think that the risk around the election has been reduced. And just chat Mac. I read it a good piece. Just there was a question that came up with the the National Election November. The delayed good Lord Willing. The virus is not going to be as pressing eight months from now as it is today, but the legalities of that make that outcome entirely unlikely. So unfortunately everybody you're going to have to make a choice. OK, so uh, for both of you, let's end with the The Path forward. Let's talk about green shoots down the road. So what would we need to see for a clear path forward? You get a set of this current Quagmire and what should our listeners be doing in the interim? German and Carl. Well so the green shoots that will be looking for market signals. I did cover before but so that's given to you quickly. Market based. We're going to want to see the market not going down a bad news we're gonna wanna look at credit spreads were gonna wanna look at the the health data what should the investors be doing right now? Well the objective of our portfolio construction processes to make sure that there is sufficient risk control assets to get people through periods of volatility like this. So you're not selling. Search at the wrong time and hopefully there are opportunities for some of the clients to be able to use the volatility in prices to take advantage of some tax planning that these lower asset prices are going to give opportunity for. Thanks Jim Carroll. Last word to you. Sure it. On the economic side, everyone. I don't know how how many recessions people on the call I've lived through. But during the depth of each of the ones that I've experienced, it seems like the problems are intractable. That things will last forever and and lo and behold, the resilience of our markets in our economy show themselves. So it may seem challenging now, but you know we are a resilient economy and again, given proper policy impetus, there's no reason why we can't show that resilience again this time around. OK Jim, Carl, thank you for your time today. I know they're both extremely busy. Let me just end with my own comments in terms of the current time frame and to reiterate a couple things that Jim said. This is an excellent time to consider various wealth planning techniques that work best when asset prices are lower and interest rate their low and get mentioned. A couple of them already, but you know, convert a traditional IR A to a Roth Iyere If you haven't done that. To fund the grantor retained annuity trust, look at tax loss harvesting the offset future capital gains because you know the market will recover at some point in time and several other techniques. So In other words, as painful as the past month has been, there are ways to take advantage from the recent sell off, and something certainly worth discussing with your relationship team at Northern Trust. So unfortunately we run out of time for today's call. If I could have who's ever controlling the slides, move to page 12. And, uh, if you missed any part of today's remarks and you would like to access the replay meeting tomorrow, it'll be available at northerntrust.com/financial market updates. And going on to the next slide. You will see that our next insights from Northern Trust, the call is on Friday, March the 20th. I I do want to say thank you for listening to today's insights presentation. The health and welfare of our clients of our professional partners. Our employees all are on this call. Today is our greatest concern. While we continue to serve clients through this period of uncertainty in along those lines, we have engaged at Northern Trust in several. Social distancing best practices, including having as many of our relationship managers. Professional advisors like Jim and Carl, another Northern Trust employees working from home. Therefore, our interactions with clients may temporarily change in the foreseeable future by becoming more telephonic or email in nature as we avoid business travel an reduce the number of in person meetings that we have with you. But the important thing for you to know is that Northern Trust is open for business. And we are here to support you and your families until things moved to a more normal working condition again. And what's up at that time comes soon. So again, our next insights program will be held this Friday, March 20th. Please dial in. Katy Nixon will host that call, will have her head of fixed income, Carl Robinson on that call, as well as doctor Myles Barn. Who is the CEO's clinical care and a medical expert who can provide more insights into the virus and what we're doing to. Latin occur, so we hope you'll join us again on Friday. In the interim, be safe and thank you for your trust and confidence in Northern Trust. _1596775606240
Title:Insights From Northern Trust
Date: Tuesday, March 17, 2020
Time: 10 AM CT
Duration: 45 Minutes
Tune into the Insights From Northern Trust webinar to hear updates, analysis and advice surrounding the global response to coronavirus.