Watch the CPK Market Action Report: June 2020
Stocks are quickly approaching their pre-Covid highs. Is this just a façade or will a further reopening of local economies prove to be the fuel needed for domestic markets to reach new all-time highs?
Watch the full 3-minute Market Action Report now:
June 2020
Stocks rallied in May, sparked by a supportive Federal Reserve, stories of reopening, and progress on finding a COVID-19 vaccine.
The Dow Industrials rose 4.3 percent, while the S&P 500 gained 4.5 percent. The NASDAQ led, picking up nearly 7 percent.
During the month, investors chose to focus on future economic hopes rather than current woes.
Stocks rallied on news that the Federal Reserve is committed to doing whatever it takes to support the recovery.
Stocks weakened late in the month in response to tensions between the U.S. and China, but comments by President Trump on the last day of trading eased concerns.
In some sense, a sustained and complete economic recovery may rest on developing a vaccine for COVID-19.
There are over a hundred vaccine candidates, with 10 currently in clinical trials.
Over the next couple of months, results from several of these trials are expected to be released.
If positive, the vaccine trials could provide the markets with a sense of optimism. If they prove disappointing, investors may dread the prospect of a prolonged economic recovery. Either way, expect investors to be attentive to developments.
For the month of June, my equity models are still 100% cash. While there have been obvious pockets of great strength, technical indicators are still showing signs of weakness. Readings like this can be frustrating at times such as these. However, investing is very similar to flying a plane. You have instruments that tell you everything you need to know to fly and land the plane safely. If you ever let your opinions, personal feelings or emotions overtake your ability to follow those instruments, that’s when you get into major trouble.
At current levels, S&P earnings are equivalent to what they were in 2019 when we had nearly full employment, a booming economy, and improving trade conditions with China. With the number of unemployed in the U.S. approximately 30 million and an economy struggling to get back to normal conditions after a global pandemic, it is hard to imagine a sustainable market at these levels. However, history has told us that you never try to stand in the way of the Federal Reserve. If conditions continue to improve as they are and the Federal Reserve maintains its “no holds barred” approach, I am confident we will see the indicators take a more bullish look in the very near future.
As a reminder, my current allocation is not a recommendation. I still expect heavy volatility to continue for some time. Successful navigation through this environment will definitely require a fluid plan with all hands-on deck.
Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.
If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.
I’m Chad Kunc and that puts a wrap on the May 2020 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.
And that action starts, NOW!