Page 3 - ISQ October 2020

INVESTMENT STRATEGY QUARTERLY

Other, more traditional value sectors such as Energy, have a ocrats being best for the economy (not always), the Energy
cloudier outlook. Oil market fundamentals remain rather sector performing best under Republicans (not recently), and
pedestrian, as the rebound in economic growth has not boosted tax hikes causing negative equity performance (not in the post-
demand for transportation fuels back to pre-pandemic levels. World War II era).
Numerous countries and US states are still engaged in modified This year has taught us a number of lessons, and expecting the
lockdowns, and the oil market needs to avoid a second-wave unexpected is certainly one of them. While we are aware of
induced detour during the upcoming winter season as it would where the potential aforementioned potholes may be, inves-
surely lead to intensified restrictions. OPEC discipline and a tors must take safety precautions as they advance toward their
decline in US production have offset a large portion of the financial goals. Disciplined strategy and asset allocation param-
reduction in demand, thus allowing oil dynamics to reach equi- eters should serve as rumble strips, keeping a portfolio from
librium.
drastically going off-course. In addition, an uncomfortable level
Accordingly, our price target for West Texas Intermediate (WTI) of portfolio risk may be an opportune time to pull over and
at year end is $40 per barrel (bbl) with potential to rise above reassess the route ahead. Having your adviser serve as a
$50/bbl over the next 12 months, contingent on stronger fuel co-pilot to help with directions is beneficial, but it is especially
demand globally. While there are COVID-19 related risks to the prudent when navigating the uncharted territory we find our-
market (vaccine setbacks, potential second wave), the outcome selves in today.
of the presidential race is at the forefront of investors’ minds. This upcoming quarter will move quickly—from the hopeful
The polarized political environment was exacerbated by the further reopening of the economy to the US Presidential elec-
COVID-19 outbreak, and with the election quickly approaching, tion and the holiday season that follows. Above all, we wish you
voters are truly at a crossroads. For incumbent President and your family health and prosperity in the final months of
Trump, a unique, virus-induced recession as well as high levels 2020.
of unemployment have threatened his re-election efforts. How-
ever, a strong third quarter GDP report released just five days
ahead of the election may provide him with the boost he needs.
Former Vice President Biden currently has the edge, but this
election cycle is likely to be unprecedented—from the debates
to the final counting of results. Lawrence V. Adam, III, CFA, CIMA®, CFP®
Chief Investment Officer, Private Client Group
Regardless of the outcome, we encourage investors to view the
winner of the White House as only one factor in determining
your asset allocation and sector positioning. The economy,
earnings growth, Fed policy, and underlying secular trends
combined create a more robust outlook. In fact, many generally
accepted doctrines have proven to be inaccurate, such as Dem-

All expressions of opinion reflect the judgment of the Chief Investment Office and are subject to change. Investing involves risk including the possible loss of principal. Past
performance may not be indicative of future results.

Investment Strategy Committee Members

Lawrence V. Adam, III, CFA, CIMA®, CFP® – Committee President, Nick Goetze Managing Director, Fixed Income Solutions
Chief Investment Officer, Private Client Group
Nicholas Lacy, CFA Chief Portfolio Strategist, Asset Management Services
Chris Bailey European Strategist, Raymond James Investment Services
Ltd.* Joey Madere, CFA Senior Portfolio Analyst, Equity Portfolio & Technical
Strategy
Scott J. Brown, PhD Chief Economist, Raymond James
James C. Camp, CFA Managing Director, Strategic Income, Ed Mills Managing Director, Washington Policy Analyst, Equity Research
Eagle Asset Management* Pavel Molchanov Director, Energy Analyst, Equity Research
Doug Drabik Managing Director, Fixed Income Research
J. Michael Gibbs Managing Director, Equity Portfolio & Technical Strategy Chief Investment Office
Kevin Giddis, Managing Director, Chief Fixed Income Strategist, Anne B. Platt, AWMA®, AIF®, RICP® – Committee Chair, Vice President,
Investment Strategy Investment Strategy & Product Positioning, Investment Strategy
Giampiero Fuentes Investment Strategy Analyst, Investment Strategy
Kailey Bodine Investment Strategy Analyst, Investment Strategy

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*An affiliate of Raymond James & Associates, Inc., and Raymond James Financial Services, Inc.