Pub. 2 2020 Issue 2

15 nebraska society of cpas W W W . N E S C P A . O R G responded numerous times to shore up shallow liquidity pools andkeepmarkets functioning properly. Just to illustrate the speed of response, the Fed forcefully acted in a mere two weeks to the most recent threat. In contrast, it took them months to do so in 2008. Some have suggested closing markets down until this pandemic passes, but we believe open and functioning markets remain essential for companies, investors, and liquidity. 3. Policymakers are acting. While often accused of being slow to engage, Congress appears to be doing the right thing so far. Winston Churchill once said that America “can always be trusted to do the right thing, once all other possibilities are exhausted.” But to its credit, and with all due respect to Sir Churchill, Congress is proving him wrong these days. Fully recognizing this is an election year, when partisan politics run deep, Congress has acted with surprising speed. It already has passed an $8.3 billion fiscal spending package to provide direct resources to the agencies closest to the frontlines, including the Centers for Disease Control (CDC), National Institutes of Health (NIH), and U.S. Food and Drug Administration (FDA). A second bipartisan deal architected by U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi—valued at $100 billion— recently passed. It includes funding for additional coronavirus tests, paid sick leave, expanded food services, expanded unemployment insurance, aid to states, and tax credits for affected employers. The third and largest deal, $2 trillion of economic stimulus, will send checks directly to Americans, help small businesses, and direct aid to impacted industries like airlines, retail, and manufacturing. During these critical days, speed can be more essential than exacting policy, and fortunately Congress is not letting “the perfect be the enemy of the good” as it forms policy. 4. Opportunity on the other side The U.S. economy came into this crisis the strongest in the world, and we believe that bodes well for how we will emerge. This crisis, different from past ones, is not the making of extreme financial excesses that often took years to work through following prior recessions. As the number of coronavirus cases eventually begin to decline, economic activitymay resume quickly. That activity will undoubtedly be different in ways that are difficult to precisely predict. However, sizable pent-up demand fromweeks or months of inactivity—coupled with large degrees of monetary and fiscal global stimulus like the world has rarely witnessed—could create an economic payback with tremendous potential for growth. Investors should consider this wisely as they make portfolio changes. Often the best days of stock market return come during some of the darkest hours. For example, looking back over the past 25 years, eight of the 10 best days for the S&P 500 Index came during the 2008-2009 Great Financial Crisis; the other two also came during recessions. Looking through this volatility, there are likely to be large opportunities on the other side, in our view, just as there have been following past crises. This pandemic will not be easily conquered, but neither will America’s spirit and tenacity. We have prevailed before during periods of great tragedy and crisis, and we will again. It will undoubtedly have a large economic cost, one that we must collectively pay, as the alternative is far worse. However, the most infectious virus still remains human optimism, determination, and innovation. Markets and our economy have always shown great resilience. They will recover, and so will our country. t Reprinted with permission of Wells Fargo Investment Institute. Originally printed on March 23, 2020. Darrell L. Cronk is the president of Wells Fargo Investment Institute, which is focused on delivering the highest quality investment expertise and advice to help investors manage risk and succeed financially. Cronk leads global investment strategy and research includ- ing equity, fixed income, real assets, and alternative investments. He also serves as chief investment officer for Wealth and Investment Management, a division of Wells Fargo & Company that includes Wells Fargo Private Bank, Wells Fargo Advisors, Wells Fargo Insti- tutional Retirement & Trust, and Abbot Downing.