Each week, Herb Morgan, EMA's Founder, Senior Managing Director and Chief Investment Officer, provides an Economic and Market Commentary that summarizes market activity, news and events from the previous week.

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Off Cycle Commentary -Viruses & Economic Impact – 03-09-2020 – Herb Morgan

March 9, 2020 Commentary , Industry News

By Herb W. Morgan, III, Efficient Market Advisors

Viruses & Economic Impact

What started as a Coronavirus Correction has now spilled over into credit. At this point we just don’t know how much impact the virus will have on the economy. To be sure, there will be an impact. What is particularly frustrating is that this all comes as economic data was accelerating into the new year.

We just had back-to-back months (January & February) of 273,000 gains in employed Americans. Weekly claims remain low and the overall unemployment rate was at 3.5%. We had strong auto and retail sales. All of this occured against the backdrop of a growth friendly policy agenda and an accomodative central bank. Continue Reading Here

Off Cycle Commentary – Nervous Energy Is A Great Destroyer of Wealth – 3-6-2020 Herb Morgan

March 6, 2020 Commentary , Industry News

By Herb W. Morgan, III, Efficient Market Advisors

Nervous Energy is a Great Destroyer of Wealth
-Fayez Sarofim

The financial markets don’t like uncertainty. The current Coronavirus outbreak is no exception, and many investors are tempted by an impulsive desire to “do something.” In our view, this urge is part of the instinctual “fight or flight” in our DNA.

But in times of volatile markets, the best move for long-term investors is often no move at all. While they’re not exact parallels, the stock market responses to the SARS Coronavirus in 2003 and the Zika virus in 2016 offer useful lessons. In both cases, investors who sold on bad news and falling prices missed significant rebounds that very shortly had stock markets back to prior levels. In fact, we believe that adding to portfolios on significant drawdowns or rebalancing portfolios to intended targets can lead to enhanced returns if markets ultimately rebound and achieve new heights. Continue Reading Here

Off Cycle Commentary – Fed Rate Cut – Herb Morgan

March 3, 2020 Commentary , Industry News

By Herb W. Morgan, III, Efficient Market Advisors

This morning the Fed made a very much expected, unexpected cut to the Federal Funds Rate of .50%. We attribute yesterday’s massive rally to the concensus this would happen, and today’s selloff to the realization that monetary policy is not the solution to the now certain negative impact of the coronavirus on the global economy. To be sure, risk asset values had appreciated in an unsustainable way reaching an all-time-high on Februray 19th. The Fed cut this morning because it had to listen to the yield curve. Fed funds futures continue to indicate that another cut this month is more likely than not. Continue Reading Here

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