COVID-19 & the CARES Act: What ... - BNY Mellon Wealth

Friday, April 3, 2020

COVID-19 & the CARES Act: What Business Owners Need to Know

Presenters Jeff Mortimer Director of Investment Strategy

Jere Doyle Senior Tax and Estate Planning Strategist

Boryana Zamanoff Family Wealth Strategist

John Winchester Head of Private Bank Structural Funding

Host

Ben McGloin Managing Director ? Advice, Planning, and Fiduciary Services

Questions

Email: WMmarketingmailbox@

Markets and Investment Update

Jeff Mortimer Director of Investment Strategy

History of Bear Markets

S&P 500 cumulative performance during bear markets of -20% or more, indexed to 100 at peak prior to beginning of bear market

1 17 33 49 65 81 97 113 129 145 161 177 193 209 225 241 257 273 289 305 321 337 353 369 385 401 417 433 449 465 481 497 513 529 545 561 577 593 609 625 641 657 673 689 705 721 737 753

11/29/68 - 5/26/70

1/11/73 - 10/3/74

100

8/25/87 - 12/4/87

7/16/90 - 10/11/90

10/9/07-3/9/09

2/19/20 - present

90

80

70

60

50

40

# Trading Days into Bear Market *Dashed lines correspond to non-recessionary bear markets, all others correspond with recessions.

11/28/80 - 8/12/82 3/24/00 - 10/9/02

As of 04/01/20.Source: Recessionary dates used by NBER (National Bureau of Economic Research). # of trading days calculated 4 assuming 252 trading days per year. Bloomberg.

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Markets Rebound Before the Economy

Recession Start Market Low

July 1953 August 1957

April 1960 December 1969 November 1973

January 1980 July 1981 July 1990

March 2001 December 2007

September 1953 October 1957 October 1960 May 1970 October 1974 March 1980 August 1982 October 1990 October 2002 March 2009

Recession End

May 1954 April 1958 February 1961 November 1970 March 1975 July 1980 November 1982 March 1991 November 2001 June 2009 Average

Market Bottom

8 months prior 6 months prior 4 months prior 6 months prior 5 months prior 4 months prior 3 months prior 5 months prior 11 months after 3 months prior 4 months prior

S&P Performance from Low to Recession End

25.8% 11.4% 21.3% 25.8% 33.8% 23.9% 35.3% 27.0%

35.9% 24.9%

5 Source: Strategas

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Interaction Between The Economy And Stock Market

SELL

Rising interest rates (tight $)

Rising inflation

Capital expenditures

increasing

Profits accelerating

Low unemployment

PROTECT

Falling commodity prices Inventories high Profits decreasing

Capital expenditures decreasing

Declining inventories

Rising commodity prices

Falling inflation

Falling interest rates (loose $)

High unemployment

CHEAPER CAPITAL: BORROW TO BUY OR BUILD

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CARES Act ? Relief Available to Business Owners

Jere Doyle S e n i o r Ta x a n d E s t a t e P l a n n i n g S t r a t e g i s t

The CARES Act: Main Provisions

Financial Assistance to Individuals Americans will receive a check in the amount of:

? $1,200 for individuals ? up to $2,400 for couples ? $3,000 for a family of four The payments will be phased out based on income levels.

Extended Unemployment Insurance Program ? Adds $600 per week to normal state benefits for up to four months and provides an extra 13 weeks of benefits. It expands eligibility to freelancers and gig economy workers as well.

Payroll Taxes ? The measure allows for employers and self-employed individuals to defer payroll tax, requiring half to be paid by the end of 2021 and the other half by 2022.

Small Business Loans ? $350 billion in loans for small businesses impacted by the virus. Companies with 500 or fewer employees could tap up to $10 million each in forgivable small business loans to keep paychecks flowing.

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