Within a week of hitting all-times highs in mid-February, the US stock market began an unravelling stunning in its speed and devastation, as the sudden shutdown of the US economy to fight COVID-19 temporarily erased three years of stock market gains.

While the S&P 500 was down more than 35% by mid-March, by early June, it was back close to its all-time high on February 19, with the Nasdaq index making record highs.

Economic activity has indeed picked up as states began phased re-openings in May, with well-publicized and ongoing difficulties in managing that process. Significant support for the economy and the stock market came from early and turbo-charged action by both the Federal Reserve and Congress, who doled out several trillion dollars in direct payments to individuals and businesses, with more likely coming in August. With over 70% of the economy dependent on consumer spending, this support has been a critical lifeline.

However, with over 17 million Americans on unemployment (11.1% in June) and new claims each week still over 1 million (now 18 weeks in a row), the risk of permanent job less increases with each day we fail to contain the virus. Unemployment, while improving, could stay stubbornly high, slowing the ongoing economic recovery.

The market has been consolidating since June, after bouncing 45%+ from its March 25 low. The Fed’s pledge to keep interest rates at 0 for several years has and will support higher stock valuations. The promise of a vaccine coming by year-end – some 161 are in various stages of development – periodically lifts the markets as magical thinking takes over.

As I pointed out in my last newsletter (attached), out of chaos and uncertainty comes opportunity, and there has been plenty of it. We selectively and fruitfully bought stocks through the downturn, and mostly held on to those we owned, seeing little long-term, negative impact on their fundamentals. But what now?

Here in the US, investors worry about the failure to contain the virus and its impact on business and employment as people rightly worry about their health and safety; will our fiscal and monetary support, though heroic in size, be enough as key sectors struggle to regain their footing? What happens to the travel, hospitality, leisure, and traditional retail sectors as COVID-19 continues untamed?

The election is also of increasing investor focus: what are the implications for various sectors, stocks and the economy for various outcomes in the upcoming Presidential and Congressional elections? It seems not unlikely that whoever occupies the Oval office will find their plans severely constrained by big deficit and debt realities, with radical change in tax and spending

priorities not a given. But almost certainly, worries about a Democratic win and fiscal implications will add to market volatility. Here at BD8 Capital Partners, we continue to look for and invest in companies with long runways of growth, sustainable competitive advantages, strong balance sheets and seasoned
management teams. We have used the many shocks of the last months to buy premier names at prices well below where they are now. For now, however, we expect the current trading range to continue given recent market strength.

If you would like to discuss your financial planning needs, the health of your portfolios and whether you are well positioned for what lies ahead, please feel free to contact us here at BD8 Capital Partners.

Please stay safe and healthy.

Warmest regards,
Barb
Barbara Doran
CEO
bdoran@bd8cap.com___________
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BD8 Capital Partners LLC
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The content of this article is for informational purposes only and should not be considered a recommendation of any particular security, strategy, investment product or investing advice of any kind. There are risks associated with investing, including the entire loss of principal invested. Past performance does not guarantee future results. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management, LLC, Spire Securities, LLC or its affiliates.

Spire Wealth Management, LLC is a Federally Registered Investment Advisory Firm. Securities offered through an affiliated company, Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC.

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