Obsidian Market Update 4/24/20

Good afternoon,

Another week of the global pandemic has brought some interesting news and updates on the market. Here are the three we think are most worth your attention.

Oil
Many of you have undoubtedly heard that oil prices dropped to -$37 per barrel earlier in the week. This unprecedented event sounds impossible, but here is how it happened:

  • A backdrop of conflict between Russia and Saudi Arabia over oil production
  • The nearly global shut down has effectively halted oil use
  • Oil storage facilities were full

Because oil is sold on a futures market, people buy or sell contracts for future delivery at a locked-in price. Many investors in oil can’t take delivery, but they purchase the contracts and hold them to sell just before delivery day. This week, for the first time in history, nobody wanted the oil, so the contracts were useless, and investors had to dump them at any cost. This was a moment for the history books.

The Stock Market
Markets continue to fluctuate, but they are generally up from the bottom because investors are feeling less uncertainty.

A few weeks ago, we bought into some of the broad market indexes. We don’t know enough yet about earnings or what is going to happen to put much additional money into the stock market. At some future point, we plan to sell more bonds and buy into stocks. 

Real Estate
Many of you are involved in real estate as a source of income, and recent news about mortgages and evictions may be of interest.

Many states have barred landlords from evicting tenants while workplaces are closed. What this means for tenants after the shutdown ends is unclear, but there could be a big wave of evictions. We will advise you further when we know more.

Along these same lines, forbearance programs are lifting the obligation to make mortgage payments. Some servicers will add any missed payments during the pandemic to the end of a mortgage, while others will require the property owners to repay the missed months immediately. Check with your mortgage servicer about their policy if you are considering this option.

We will continue to update you weekly, and in the meantime, we are here for you when you need us.

Past performance is no guarantee of future results.  Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.