Market Update September 2020

Market Update Summary (Sept 2020):

• COVID-19 continues to impact the economy, though number of deaths continues to come down.
• Our biggest concern for the economy related to COVID-19 is the small business sector. Data continues to show that small business has not fully bounced back yet and will likely take a while to come back online. Small business revenue is holding around 10-20% down. 
• Regarding employment, we’re seeing about 48% recovery of job losses. Part-time job recovery continues to be stronger than full-time job recovery.
• Our proprietary index for giving us a pulse on consumer health (which makes up 70% of the market) shows the consumer has not yet recovered to pre-COVID levels, although Fed intervention has prevented consumer health from dipping as low as it did in the Great Recession (2007-2009). The Fed has currently purchased about 1/3 of all mortgages to keep that sector propped up.
• The US Dollar continues to weaken, as we’ve been following and predicting for many years. Gold has reached a new multi-year high as investors flee for security.
• We believe the current conditions are signaling potential stagflation – higher prices, weaker economy, potential recession.
• Inflation expectations continue to be built into the markets.You might be personally seeing this in retail price increases as well as increases in education, health care, fees, taxes, etc.
• The news of market rally and all-time highs has to be seen through the lens of market breath, where it’s clear that the majority of companies are not hitting highs. Our technical analysis of the market has us watching out for a bull trap and we predict we are approaching a slow topping of the market.
• Our proprietary market dashboard is flashing concerns in the areas of earnings and revenue across many sectors (except healthcare and technology).
• We continue to invest strategically in strong sectors (technology, healthcare, communication) and along our themes, which include the stay-at-home economy (technology, healthcare, communication), the weakening US dollar & ongoing price increases (pointing to utilities, consumer staples) and market alternatives like gold, cryptocurrency and land-focused real estate.

As we head towards autumn in these unprecedented times, we thank you for your continued trust and confidence. We diligently track market conditions and future economic outlooks so we can position our clients as strategically as possible, and we always strive to offer helpful, friendly and competent service customized to your needs.  To set up a meeting to discuss your portfolio, please click here or give us a call.

Best regards,
The Willow Team
+1 413 236 2980