June 12, 2020
Wall Street Solutions with Main Street Values!
Volatility Reemerges After “Too Far, Too Fast” Stock Gains
Dear Great Lakes Wealth Clients & Friends,
We hope you and your loved ones are safe and well, coping as best you can with the changes brought about by the coronavirus pandemic. As policymakers discuss the appropriate course for reopening the economy and mitigating both health and economic risks, it can be just as challenging to make personal decisions about how to proceed. Understanding recent volatility in the financial markets may be adding to your sense of uncertainty, so we would like to share with you our latest market views:
- The S&P 500 index has experienced declines this week. Yesterday, the DOW 30 dropped -1862 points (-6.9%). Volatility can be attributed to a variety of factors:
-concerns from national health advisors over a possible resurgence in the spread of the virus as a result of reopening the country too soon
-comments by the Federal Reserve chairman emphasizing downside risks to the economy
-elevated jobless claims
-partisan differences on additional fiscal stimulus legislation
-renewed tensions between the United States and China
- The S&P 500 has rallied over 39% since March 23rd while the DOW 30 has rebounded over 41%. In the short term, however, we feel we have come too far, too fast, and would not be chasing the markets here. We expect a pullback and would use it as an opportunity to continue to accumulate equities for the longer term. We continue to believe this is the opportunity of a generation to invest, but patience and a sound strategy are essential for success.
- We are watching two developments that may affect markets in the coming months: fiscal stimulus negotiations and the U.S.-China relationship. We view a fiscal stimulus proposal from the U.S. House of Representatives, where Democrats hold the majority, as a starting point for negotiations that could push the next phase of legislative relief response into late June or July. And signs of escalating tensions in the U.S.-China relationship pose a potentially significant risk for the market in the second half of this year, with the Phase One agreement reached prior to the pandemic possibly in jeopardy.
As we all look to stay abreast of the latest developments, we will continue to keep you updated with relevant, and hopefully, useful information. You can always find the latest information from Great Lakes Wealth and market volatility on our website: www.greatlakeswealth.us.
If you’re not yet a client and are interested in becoming one, please give us a call at 248.378.1200 or send me an email at deweysteffen@greatlakeswealth.us.
Thank you for your continued trust in us.
Sincerely,
Dewey D. Steffen
CEO/Chief Investment Officer
