With less than a month to the election, I’m not worried about it, or at least not directly. I’m focused on the Congressional logjam that has prevented passage of the second stimulus bill aka the CARES Act II, or whatever the next stimulus bill is to be called. If I were to handicap it, I’d bet that the Democrats take the White House and maybe tilt the balance more in Congress’s favor. Then Pelosi and Schumer likely will get their trillions in fiscal stimulus rather than settling for less. I’m usually a fiscal conservative, but with GDP having contracted by a third (annualized) in the second quarter, and with that haunting us should America be forced to shutter again, I think that we almost can’t err with too much support. I live in a red state (South Carolina) and work with a Republican-leaning firm (Independent Solutions), but that’s what I forecast and hope for (i.e., fiscal stimulus on par with March’s stimulus bill).
As to the market, I’m still cautious given the uncertainty, but I’m prepared to invest aggressively when the coast is clear, or after stocks have taken another beating to reflect the worst. Over the long term, I’m looking to ride the bull. Equity prices only point in that direction with interest rates likely to be pinned to the floor for years, which I believe will be for a lot longer than the Fed promises (i.e., through 2023). Get ready to party but wait a bit longer!
Check out my other blog; Portfolio Manager Paul Meeks Sees Another 10% Downside in Tech Stocks as well as our recent feature in the Wealth Management Magazine for the 2020 Midyear Outlook for additional details.