Early last week, we wrote about the market pullback due to the spread of Covid-19. Yesterday, we saw another wave of selling after OPEC announced it will allow oil production to increase. This drove the price of oil below $40 per barrel and the 10 year treasury yield to ~0.5%. Lower oil prices and interest rates are typical reactions to stress in the market, but also act as a natural counterweight to negative economic news by lowering the costs of borrowing and transportation to consumers and businesses. While the market correction has been sharp and painful, we believe markets have been relatively efficient in pricing risks -- with the most cyclical stocks, and those with the highest exposure to China, seeing the largest pullback.
In the midst of so much uncertainty, we would like to share with you the steps we are taking to address the market risks.