The challenge in writing periodic market commentaries is often to make interesting what was essentially more of the same. Not a problem for 2020. It is difficult to overstate how extraordinary the year was. A pandemic, remote conferencing technology, and government economic policies created a sea of change that will be felt for years to come.
On January 30, the World Health Organization declared a medical emergency: a novel coronavirus had emerged in China and was threatening to spread worldwide. The reaction from the administration in Washington was to downplay the potential impact of the coronavirus, thus beginning the politicization of the pandemic that would often pit science versus a public unwilling to acknowledge the severity of the situation. Economic activity ground down, and businesses and governors grappled with how to handle the public health crisis. The term “Zoom" quickly took on new meaning, as office towers emptied and working remotely became the new normal. Fortunately, on March 3, Federal Reserve Chairman Powell announced the Fed was cutting the Fed Funds rate, and within two weeks, rolled out a historic array of monetary policy instruments intended to support the markets and the economy. By the end of March, Congress followed suit passing several relief measures. The most impactful was the CARES Act, which sought to pump more than $2 trillion into the economy. The magnitude of these actions made the response to the financial crisis of 2008 look like child’s play.