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Economic Commentary 2020Q3

Summer is here: Making lemonade out of lemons

The great poet Ralph Waldo Emerson famously wrote, “Do what we can, summer will have its flies.” As we head into the summer months, this mood may best describe nervous investors who recently experienced large bouts of market volatility due to the spread of the coronavirus. The S&P 500 Index fell 34% from its all-time high reached on February 19 to its low on March 23. While it has recovered since then, we are seeing global economic activity reflects the implementation of mandatory “shelter-in-place” policies.

Simultaneously, extreme moves in the oil market — with West Texas Intermediate (WTI) oil futures prices at one point trading in negative territory due to fears of oversupply — caused additional distress in markets.

Globally, central banks and governments stepped up to provide unprecedented levels of stimulus measures on both the monetary policy and fiscal fronts. We see three investment implications from this stimulus. First, we would like to maintain core benchmark holdings and rebalance selectively into risk assets such as credits. Second, we see coupon income as critical in a low-yield world and prefer allocations to corporate credit and even select equity industries. Finally, we would maintain resilient portfolios by focusing on U.S. equities and diversifying perceived safe havens, such as U.S. Treasuries.

Investor risk sentiment began to improve in line with reduced market volatility as a result of policy actions. We see evidence in the high level of dispersion at the industry and country levels as investors refocus on the idiosyncratic stories of each area. Interestingly, megatrends also remain in focus, with infrastructure being one area that is arising frequently in client discussions as a contender for further stimulus measures, especially given its high fiscal multiplier effect and the broad bipartisan support it enjoys.

Meanwhile, our view on momentum has decidedly improved this quarter while we remain cautiously optimistic on the economy. Although recent headlines have warned of a looming global recession, our regime indicator remains in slowdown and we’d need to see growth closer toward zero in order to move to a more negative sentiment.

Blackrock Investment Directions Summer 2020

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Economic Commentary 2020Q3

By Lineweaver Financial Group
July 16, 2020 Category: Economic Commentary, 2020Q3

Summer is here: Making lemonade out of lemons The great poet Ralph Waldo Emerson famously wrote, Do what we can, summer will have its flies. As we head into the summer months, this mood may best describe nervous investors who recently experienced large bouts of market volatility due to the spread of the coronavirus. The SP 500 Index fell 34% from its all-time high reached on February 19 to its low on March 23. While it has recovered since then, we are seeing global economic activity reflects the implementation of mandatory shelter-in-place policies. Simultaneously, extreme moves in the oil market with West Texas Intermediate (WTI) oil futures prices at one point trading in negative territory due to fears of oversupply caused additional distress in markets. Globally, central banks and governments stepped up to provide unprecedented levels of stimulus measures on both the monetary policy and fiscal fronts. We see three investment implications from this stimulus. First, we would like

Economic Outlook

By Lineweaver Financial Group
July 16, 2020 Category: Economic Outlook, Q3, 2020

The second quarter of 2020 was one for the history books. COVID-19 caused a global pandemic that led to deaths in more Americans than the wars of Vietnam, Korea, and the Gulf Wars combined, and led to stay-at-home mandates that caused a sharp, deep recession in Q2 when nearly 20% of Americans were unemployed.1 In May and early June, after many thought the curve of new coronavirus cases had been successfully flattened, economic reopening occurred across the country. Within weeks the virus spread, however, and the US entered the July 4th weekend reporting record numbers of new cases of over 50k/day.1 This is double the rate seen in mid-May with total cases now totaling 2.8m, up from 200k cases at the end of Q1.1 Reopening plans have been rolled back in many states. Generally, the level of uncertainty regarding the virus is growing, not falling. Despite this environment, risk assets enjoyed strong rallies throughout the quarter, leading to discussions of the disconnect between Main Street

HealthWatch: Probiotics

By Lineweaver Financial Group
July 16, 2020 Category: HealthWatch, Probiotics

Are you currently taking probiotics to improve your gut health? New research from the American Gastronenterological Association is showing that it might not be as helpful as we are led to believe. Since researchers started to learn more about our gut bacteria, or microbiome, probiotics have become more popular. Yogurt and dietary supplements contain certain bacteria and yeast, which are organisms found in probiotics. Depending on your location, you can find probiotics sold over the counter or by prescription. Since probiotics are not considered drugs in the United States, they arent regulated in the same way as other pharmaceutical products. This can lead to an increase in misleading information and has acted as a barrier to scientific research when it comes to how helpful probiotics actually are. For example, research has found there isnt enough evidence that suggests the use of probiotics to treat Crohns disease, ulcerative colitis, or IBS. The American Gastronenterological Association

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