L.I.F.E. Newsletter August 2020

August 2020

Lifestyle

Enjoy a Lovely Evening of Stargazing 
                          
Headed out camping or hiking? Try the SkyView Lite app as your personal stargazing guide that helps you to simply identify celestial objects and provides a lot of additional information about visible planets, stars, and constellations. Now you don’t need to be a scientist or even an astronomy enthusiast to explore the night sky.       
Night Sky       

Investments

So how are the markets doing? Well, it depends on who you ask. If you ask someone at Zoom, Amazon, or Netflix, things are pretty great! Ask the same question to someone at Marriott, Exxon, or Boeing, and you might have a different conversation. 

Since March 23rd the S&P 500 has rallied 48.04% (as of 8/5/2020), erasing loses in the index for 2020, but not all sectors have seen the benefit. Growth sectors like Technology, Communication Services, and Consumer Cyclical have outpaced their value peers in Financial Services, Energy, and Industrials by almost 2x (58.79% vs. 31.26%). In fact, if you go back to the start of 2020 the divergence is even more stark. Growth sectors in the U.S. are positive 20.25% this year versus value sectors which are still negative -15.37%. 

So where do we fall is all this? As we said in our April newsletter, we have been over weighted to growth sectors of our economy since the week of March 16. We continue to maintain this position but are becoming more interested in sectors that stand to benefit from a Post-COVID era. A new all-time high is in sight, and we believe we’ll find it more quickly than many think.

Food

How to Build a Healthy Smoothie
Smoothies are a simple way to pack lots of fruits and veggies into a single meal or snack. Here are three recipes full of nutritional ingredients that will boost your energy and your mood.

Economy

The battle versus COVID-19 continues. The spread in some of the recent hotspots like California and Florida is slowing, while states in the Northeast and Midwest are now experiencing increases in cases. According to the World Health Organization, 27 vaccines are in human trials, and the chances of an approved vaccine by late this year or early next year are quite high. It’s possible to believe we will beat this latest adversary. 

In good news, the S&P 500 Index has moved into positive territory for the year (as of August 5) after being down more than 30% in March, making 2020 one of the largest reversal years ever. Going back to 1950, however, August and September historically have been the two worst months of the year for stocks. In addition, signs of recent weakening in the job market, based on stubbornly high jobless claims, combined with evidence of reduced consumer mobility from several high-frequency data points suggest the stage could be set for stocks to take a well-deserved break. 

At the July 29 Federal Open Market Committee meeting, Federal Reserve (Fed) Chair Jerome Powell made it very clear that the Fed has additional tools to support the recovery, and that low interest rates may be here to stay well beyond this year and next. The economy has improved off the March lows, but it isn’t near the record-breaking levels we saw earlier this year. Powell also noted that further relief from Congress was “essential” to help support the economy.

Meanwhile, Congress is inching closer to a new COVID-19 relief bill, but parties remain at odds over several key elements. Although the two sides appear far apart, a deal likely may be struck at the eleventh hour—consistent with typical Washington theater. At this time, Congress is expected to agree to a stimulus package in the neighborhood of $1.5 trillion, bringing the total US fiscal stimulus to more than $4 trillion. 

Signs that the economic recovery may be leveling off have not prevented corporate America from delivering earnings well above expectations. Leaders like Apple, Amazon, and Facebook reported extremely strong results in the second quarter, helping these influential stocks move significantly higher. FactSet consensus estimates of future earnings have ticked higher as well, suggesting corporate America may be confident in the eventual economic rebound. 

Baseball Hall of Fame catcher Yogi Berra said, “If you torture numbers enough, they will tell you anything,” which fits well with what we’re seeing right now in 2020. Some data appears good, while some data appears troubling. This journey is not over yet, and there may be more twists and turns before society and the economy can fully recover from COVID-19. But like all journeys, this one has an end date, and we will get there.  

 

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of August 5, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.