While there is little chance the second half of the year will be as messy and economically unproductive as the first, there are plenty of reasons to expect the volatility and uncertainty to persist. Here are four factors that may move the market in the second half of the year:
1 – Timing on a Vaccine – As we write this, there are a handful of hopeful vaccine candidates now in Phase III trials, and many have promising early results. At this stage, a vaccine is the only path forward in the U.S. to eliminate or perhaps even contain Covid-19. Many economic and earnings forecasts are relying on a vaccine being approved perhaps by the end of the year, and the market appears to be pricing-in a return to economic normalcy in the next six to twelve months. But what if a vaccine is not approved by the end of the year, or the rollout is messy and chaotic? In our view, the timing and efficacy of the vaccine is poised for a negative surprise, as the positive outcomes from a vaccine breakthrough are already baked into stock prices.
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While the first half of the year was nothing if not messy, what is in store for the remainder of 2020? We look at this answer in our just-released market strategy report.
In this report, we’ll take a look at who the leaders of the rally were (and are), take a walk down memory lane to look for lessons from old investing legends, and give readers seven reasons to stay bullish in the uncertain year ahead.
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Download Our Just-Released August Market Strategy Report1
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2 – Election Uncertainty – Many investors may assume that a Biden or a Trump victory in November may move the markets in one way or another. But in our view, the markets care less about the actual winner and more about how smoothly and peacefully the election goes. By now, we think the market has largely priced-in both Trump and Biden’s plans for four years in the White House, with the bottom line usually being that a politician may announce big plans but follow through only partially – if at all. What we believe will impact markets more is whether the election is carried out smoothly, and whether the results are accepted by the winning and losing party without major conflict. With Covid-19 and the current state of political affairs, a seamless election in November is far from assured.
3 – Further Escalation Between the U.S. and China – Things are not going well between the world’s two largest economies. A couple of weeks ago, the U.S. shut down the Chinese consulate in Houston, Texas after accusing Chinese diplomats there of espionage and intellectual property theft. In response, China expelled all U.S. diplomats from an embassy in Chengdu, and both sides are accusing the other of acting out of line. These spats only add the long list of tensions between the two nations, which now includes trade, accusations of espionage, the novel coronavirus, China’s strong-arming of Hong Kong, intellectual property theft, and more. With tensions rising and China well behind on their end of the trade deal, there is a distinct possibility that economic relations could worsen in the coming months, with a cold war brewing.
4 – A Google Antitrust Lawsuit – The U.S. Justice Department may be positioned to bring an antitrust lawsuit against Google in the coming weeks or months, which could rival the biggest antitrust lawsuit in U.S. history – the U.S. vs. Microsoft in 2001. The government has been investigating a potential antitrust case against Google since 2019, as an increasing number of competitors have been complaining about stifled competition in areas of search, advertising technology, and news publishing. If the Justice Department successfully brings a case against Google, it could have downstream effects for other major tech companies and have investment implications for the sector-at-large.
If there is one thing we know about the second half of 2020, it is that uncertainty is likely to persist and volatility may be a norm. We think investors should watch the above four factors closely for big market impact.
What is in store for the remainder of 2020? We look at this answer in our just-released market strategy report.2 In this report, we’ll take a look at who the leaders of the rally were (and are), take a walk down memory lane to look for lessons from old investing legends, and give readers seven reasons to stay bullish in the uncertain year ahead.
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Disclosure