Facts:
- Unemployment reads 11.1%, compared to last month’s 13.3%.
- PMI (Purchasing Managers Index) expanded to 52.6. Compared to last month’s 43.1
- The S&P 500 (C Fund) increased 1.99% during the month of June.
- Q1 GDP read -5% according to the 3rd estimate.
- The Fed Funds interest rate remains between 0% – 0.25%
Assessment:
The above facts show a path to recovery. As I mentioned last month, spikes in Covid-19 cases will not drive the market down. Only if the state-, federal-, and world governments halt openings, or worse, impose new shutdowns, will the market will drop, again. If that happens, buy more!
Presidential Election:
Of course, we cannot ignore the elections. Seems every presidential election is a high-drama, “do or die” mentality for Americans. Understandably so.
But the stock market doesn’t seems to be so dramatic come election time. Here’s a collection of market responses to elections dating back to 1980:
- The Red Lines Represent the market performance YTD prior to the 100-day pre-election performance.
- The Blue Lines represent the market performance during the 100-days pre-election.
For those who want to see what happens the day of, and the day after elections, here is a graph:
source
Notice how most of the movement the day of is corrected the day after.
Bottom Line:
The election prediction game is probably going to lose you money, not make you money. The real question is whether the economy is sound. The above indicators suggest so, and so long as governments don’t interfere, the markets should recover and blossom.
I’ll keep track of new market-impacting policy. If there is a new president, that won’t necessarily make-or-break things. But, if/when a new president passes economically devastating policy (such as a Green New Deal or a variation of Socialism), then the markets will respond. But we will have to wait to see if such proposals come.
Below are my recommended portfolios for this month.
If you would like to discuss this or any other matters relating to your finances please get in touch here – Email me stephen@stephenzelcer.com . Or fill in the form at the bottom of the page to arrange a meeting. Thank you
Stephen
