The markets today, June 17, several hours before the opening, look set to open positive with most major North American and European indicators in the green. This follows yesterday’s huge morning surge, trimmed later in the day but not enough to prevent a solid closing. Today, markets continue digesting Federal Reserve Chairman Jerome Powell’s cautionary notes in his testimony yesterday. Powell warned that the U.S. economy faces a deep downturn with “significant uncertainty” and that may explain part of the afternoon trimming.
Meanwhile let’s take some alerts into account as we consider investments. For the current recovery, we don’t even know how much uncertainty to expect until we see how many more spikes occur in several states. Nor do we know how fast and how many workers will get their jobs back.
Let’s also consider whether consumers will return to their normal spending habits (unlikely for at least the remainder of 2020) and whether corporations will fully revive capex plans, (aslso unlikely for the remainder of 2020).. Let’s also consider for how long the Fed can continue propping up the market. If we don’t find a strong balance – as the guy in the security commercial says – “It can only end badly.”