Insights

Top News:

5/17: Fed Chair Powell sees economic recovery in 2H of 2020, despite temporary depression-like unemployment.

 

5/18: Encouraging preliminary statement by Moderna on its Phase 1 coronavirus vaccine trial lifts investor confidence, even as such optimism is questioned.

 

5/19: More than 2/3 of institutional investors remain unconvinced of current market rally.

 

5/20: The Fed’s April meeting minutes show deep concern for not just the current state of US economy but what lies ahead as well.

 

5/21: As of May 9^th, 25.1 million Americans filed continued unemployment claims, 2.5 million more than the week prior.

 

5/22: US-China tension escalates beyond trade and geopolitics as Congress seeks to limit Chinese companies’ access to US capital markets by threat of delisting them on exchanges.

 

Heard on the Street:

“We don’t love the risk-reward right now in the stock market… Only 15% in the S&P 500 is trading above its 200-day moving average. So, you’ve had a lot of investors crowd into a specific perceived area of safety in the market — large cap growth stocks.  Look at cyclicals. Look at small caps, banks, transports. All the areas that might indicate a more durable recovery in the economy. They’re all stuck below 2018 lows.”

–Bryn Mawr Trust’s Jeffrey Mills in a 5/15/2020 CNBC Interview

 

The Longer Game:

Ruptures within the US-China symbiotic relationship are feared to have lasting impact beyond the current election cycle and COVID pandemic.

 

 For Your Consideration:

It is understandable that investors should feel paralyzed as debate rages on about the market’s direction.  Without committing to any camp, one can consider two investment management techniques in the interim as part of the ongoing portfolio review. 

 

First, tax-loss harvesting in taxable accounts can help to use losses from stock sales to potentially offset gains and to even get a modest income tax deduction. 

 

Second, looking beyond the immediate horizon towards retirement, a Roth IRA conversion can make sense, especially if you are anticipating lower income this year and/or you expect income tax rates to be higher in retirement (e.g. as a result of the widening federal deficit stemming from stimulus spending). As these portfolio adjustments are fraught with tax consequences, a CPA or qualified advisor should be consulted.

 

Bonus:

Data kept by Kronos, which makes digital time-clocks that workers use to check in and out of work at some 30,000 companies across the U.S., suggest the pace of job recovery may be slower than hoped.