A couple of weeks ago, my younger son and I were supposed to attend his first Boy Scout Summer Camp since crossing over as a Cub Scout in February.
Unfortunately, Camp Perry was cancelled like many other activities this summer. Our Troop started having virtual online meetings in May and the boys were able to work on their merit badges and rank advancements. Two weeks ago, the Troop and adults successfully carried out their first virtual campout and we camped in our backyard. We regularly checked in thru Zoom after setting up our tent, cooking our meals, completing a two-mile nature hike and working on several assigned requirements.
I am sharing this story as a great example of how young men, and women, have adapted and are adopting new technology with good-old fashioned skills to have a great campout. In a way, investors are having to adopt the same approach to navigate the markets going forward.
Over the last few months, we highlighted some of the charts we are looking at to evaluate the shape and velocity of the economic recovery. This data confirmed our expectations, given the history of the stock market and previous market corrections. We also incorporated charting new data series such as TSA checkpoint traveler and OpenTable network seated diner numbers. Having a little grey hair has suddenly become a reassuring look.
The good news is the overall data these last few weeks is validating the economic recovery. Some of this is already priced in the stock market; however, the question is where do we go from here?
As the U.S. economy reopens, Americans have changed their behavior and spending habits, potentially permanently. Consumer confidence, which translates into consumer spending, can be easily be swayed by surges in Covid-19 cases and new restrictions. Aggressive monetary and fiscal policies have comforted the stock market, but even these policies have a limited effect on the average American and their ability to ward off this virus. And while we have seen bright spots, the job market remains precarious and uneven for many.
The bottom line is the global economic recovery process is expected to be choppy, jagged, and most likely to last well into 2021. As such, global stocks are poised for a period of consolidation as investors assess that the anticipated rapid earnings recovery is gaining sustained traction in the second half of this year.
And to my fellow scout leaders, ask me about sleeping in 110 degree heat at Bear Creek two years ago!
If you have any questions or want to have a conversation about the market or your portfolio, please contact Liz, Ed, Fred, Scott, Tyler, or myself. Your Sendero team is ready to help.
Amaury de Barros Conti
Vice President, Research & Strategy