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Market Vizion: Riots and Recovery

We've got just two things today on Market Vizion. We're going to talk about the rioting and looting in American cities, and we're going to talk about the resilience of the American stock market.

Acknowledging the Deep Pain in Riots

When it comes to the rioting and looting in American cities right now, there's two sides to this.

First of all, none of us should try to sugar coat the emotion and the rage that we're seeing play out in response to George Floyd's death. We should not try to sugarcoat that or cover it up as a society or individually.

Hopefully what we're seeing is the beginning of a national dialogue where we take these systemic issues that we have more seriously and pursue intentionally the more perfect union that our forefathers envisioned for us.

A vision where the experiment of the American melting pot would become a place of equality and us handling one another equitably, properly, and justly. Where justice can be found regardless of skin tones, regardless of ideologies.

If you are a praying person, please keep the Floyd family in your thoughts and prayers as we finish this up. We should not, I certainly will not, sidestep the seriousness of that within this context.

How Will Riots Affect the Economy Going Forward?

Economically however, I want to turn the corner a little bit because we've been talking about what we expect to be a bit of a second half rebound in the United States economy and the global economy, really.

The fact of the matter is these riots and looting may actually help because they function kind of like an act of God. When we see a tornado or a hurricane blow through an area, you see mass destruction, but then you see the community rise.

Just as important, you see checks get written. Many of those are charitable checks, which a number of us are writing these days in support of folks that are affected by COVID and now folks that are affected by these riots.

Insurance Companies Distributing Large Amounts of Cash

More importantly, insurance companies that sit on very large buckets of capital start to write checks from those coffers. Those are funds that otherwise sit very static, very stable, very stodgy, and kind of frozen for very long periods of time. That act that activates that capital that would not otherwise be activated.

We're actually hopeful that as the emotion of this stuff dies down and we (hopefully) get back to some sense of normalcy as those insurance checks comes through, it will actually contribute to the economic rebound in the second half of the year.

Gauging Q3 Stock Market Resilience

Now, stock market resilience. I've said repeatedly, we went from 29,500 to 18,200 too fast. We've gone from 18,200 to back up to 24,000 - now 25,000 - on the Dow Jones too fast. We're probably going to be range bound here, but the reality is the stock market is always a forward-looking indicator. The reason the market dropped off so hard in March and April was that it was looking forward to the second quarter data. Now the market is beginning to look at that third quarter data.

The beautiful thing about the market is it has no memory. It does not remember what last quarter's economic data was. It's always looking forward.

As much as we're seeing and have priced in the drop in second quarter data, the reality is if we get even a fraction of that made up in the third quarter, the third quarter and subsequent fourth quarter data could be the best economic data numbers we've ever seen.

Some are talking about GDP growth numbers between 10 and 20% on an annualized basis. It really is because the fall was so sharp and so sudden that they are anticipating that. I think that's why the market's been very resilient.

Perspective for the Decisions Ahead

We at Visionary Wealth Management are always here with perspective for the decisions ahead. Please contact us anytime you have concerns or questions. We're never going to sidestep your questions or your concerns either.

Have a great day, enjoy the changing seasons, and look forward to a fantastic summer of 2020.