The Economy And Markets In 2020

The stock market and economy remind us of the Great Depression era 

After the worst decline since the Great Depression, we expect the US economy to recover in the third and fourth quarters.  The stock market crashed viciously into a bear market and unemployment spiked to levels not seen in nearly a hundred years.  Covid-19 has wreaked havoc worldwide – our lives will not be the same again.  But equally swift has been the response from Congress and the Federal Reserve to support the economy and markets. Work on vaccines and antibodies has been accelerated with the utmost speed.

The US consumer is strong and if spending and income growth return as we expect in the latter part of the year,  the economy will rebound, and growth will return.  Keep in mind the consumer accounts for roughly 70% of the US economy.  The US remains the strongest anchor economy of the world in spite of challenges seen elsewhere including the coronavirus, protests in Hong Kong,  and geopolitical risks from Iran and North Korea, to name a few.   

History tells us, that election years tend to be good for the market and the stock market does especially well if the incumbent party wins (regardless of political affiliation). The damage to corporate earnings from Covid-19 require careful selection in sectors and companies that have solid balance sheets, robust and resilient earnings, and good corporate governance and management.  Overall, we expect to put the worst pandemic of our lifetime behind us, shrug off its damaging impact, and move on to a new day in both the economy and the market.  All investment strategies must re-calibrate, re-adjust and rebalance to take advantage of the new opportunities emerging.