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Our Latest Thinking on the Economy and Your Fidelity Go® or Fidelity® Personalized Planning & Advice Account

BY STRATEGIC ADVISERS INVESTMENT TEAM - May 4, 2020



Key takeaways

  • We believe that the U.S. economy is at the onset of a recession, as efforts to curtail the spread of COVID-19 have led to a drop off in U.S. and global economic activity.
  • Swift and significant actions by U.S. policymakers, including the Federal Reserve and the federal government, could mitigate some of the effects of this slower economic backdrop.
  • Within Fidelity Go® and Fidelity® Personalized Planning & Advice accounts, we are actively looking for opportunities to rebalance your account through volatile markets, to help keep you on track toward your financial goals.
  • At the same time, we are seeking to avoid rebalancing after every large move in the market, as that can lead to additional volatility in your account.
  • While the current situation is stressful, we believe that investors will be better served by sticking with their long-term investment plan: market recoveries can be swift and catch investors off-guard.

A challenging health situation with economic repercussions

The coronavirus pandemic continues to be a tragedy for millions around the world, as it has led to significant health issues and loss of life. To combat the spread of the virus, governments around the world have enacted restrictions on daily activities, and hundreds of millions have stayed at home. This has unfortunately prompted businesses to furlough or lay off workers. These developments are why we believe the U.S. economy has moved to the onset of a recession.

The sudden economic downturn has led to some of the most volatile markets we’ve seen in more than a decade. Quite simply, the unknowable path of the economic contraction has made it extremely challenging for investors to have views on the outlook for corporate earnings.

While we expect to see more grim news headlines, U.S. policymakers have already taken aggressive and large-scale actions to help support workers and businesses, as well as help ensure markets behave more normally. These actions may help soften the blow to the economy, and encouragingly, there appears to be a propensity to do more as needed.

What we're watching

While it may not feel like it now, we believe that markets will eventually stabilize. To that end, here are just a few things we're keeping a close eye on:

COVID-19 Virus: We're closely following worldwide efforts to develop better therapies or an eventual vaccine for COVID-19. Any breakthroughs could sharply accelerate an improvement in the global economic outlook.

High Frequency Indicators: Globally, we are tracking high frequency economic indicators like coal consumption, traffic congestion, railway activity, vehicle sales, and restaurant volumes to assess the pace of economic improvements and impact to corporate earnings.

U.S. Weekly Initial Jobless Claims: The record surge we've seen in U.S. jobless claims, which we expect to stay elevated in the coming weeks, highlights how various government restrictions and stay-at-home advisories have impacted employment. However, the eventual peak in claims may help signal better times ahead. That's because a decline in new jobless claims may signal a slow resumption of economic activity, like consumer spending, and it has historically coincided with more stable stock markets.

We are here for you

While you may be dealing with the stress of what this virus outbreak could mean for you, you can rest assured that we will seek to navigate your critical assets through this challenging and complex situation. We have the resources, experience, and dedicated team of investment professionals to unemotionally evaluate investment opportunities for you, as we seek to take prudent actions that align to your investment goals and preferences. This has been, and will always be, our number one priority. We wish you good health in these very trying times.