Page 3 - ISQ UK July 2020

JULY 2020

Much of Europe participated in coordinated fiscal stimulus No president has won reelection when a recession coincided
action, but US economic growth will be more resilient and the with the election year, and with the possibility of a Democratic
rebound should be much more robust. In addition, the sector sweep on the rise, the market’s concern for a rollback of the
composition of the S&P 500 is more apt to weather a potential corporate tax cuts may become elevated. In addition, escalating
second wave in COVID-19 cases while simultaneously being tensions between the US and China have renewed fears
better positioned to thrive should the economy accelerate as surrounding a derailment of the trade truce, and any potential
expected. We still favour more cyclical or growth-oriented setback in the development of a vaccine could curtail investor
sectors such as Technology, Communication Services, and confidence as we seek to emerge from this ongoing health
Health Care. For long-term investors wanting international crisis.
exposure, we would consider select Asian emerging market The original Star-Spangled Banner is on display at the
equities as they may benefit from our expectations of a global Smithsonian’s National Museum of American History as it
recovery, a modestly weakening US dollar, and attractive encompasses the values on which the American nation was
valuations.
founded: freedom, justice, and equality. Throughout history
Oil prices remain at the liberty of global demand, which will these values have been tested, and they have always endured.
normalise as economies across the globe reopen. The demand From an investment strategy perspective, this is not the first year
fallout from COVID-19 peaked at ~20+ million barrels per day investors have faced challenges and it will surely not be the last.
(bpd) earlier this year, but should ease to 5 and 1.25 million bpd However, it is times such as these that prove the principles of
in 2021 and 2022, respectively. Prices will also benefit from asset allocation and selectivity are indeed a perfect union that
production cut agreements between OPEC and Russia as they can help your portfolio stand the test of time. The stars of the
attempt to reduce global oil supply by ~10%, and from the flag are located in the ‘northwest quadrant’ when properly flown
decline in US production due to a reduction in capital or hung, and portfolios should strive to move toward this
expenditures and new wells. With both the demand and supply quadrant too – a place that maximises return for a given amount
side of the equation improving, oil prices should end the year of risk.
around $38 per barrel.
Have a safe, healthy and enjoyable summer.
The panic-driven market movements caused by COVID-19 have
been subdued, but pullbacks remain possible and should be
viewed as a natural, healthy occurrence. We are monitoring the
potential risks o’er the ramparts, especially since equity
valuations are the highest since 2001 and due to the tremendous
amount of optimism priced into the market. The upcoming
election is poised to be a perilous fight as the virus-induced Lawrence V. Adam, III, CFA, CIMA®, CFP®
recession has altered President Trump’s reelection prospects. Chief Investment Officer, Private Client Group

Investment Strategy Committee Members

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

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