From the middle of March to the beginning of April, there was extreme volatility in the stock market. With uncertainties due to the Coronavirus and a “second wave”, will we see a replay of the selloff? Join Barry McCall and Steve Alverson as they share what we have been advising out clients during this unusual time.
Read the full transcript below.
“We can say yes, there’ll be another market sell off. We just don’t know when it will happen. ”
Transcript
Barry McCall: Another question I know that we have received is, obviously from the middle of March to the first week or two of April, there was tremendous volatility to market. A huge sell off. Are we going to get another one of those? And what we've been sharing with clients is, and not trying to be flippant about it, but those things are going to occur. They're gonna occur. We can say yes, there'll be another market sell off. We just don't know when it will happen.
We do know that consumer spending drives about 70% of our gross domestic product, and consumer spending was off almost 14% in April. That's one of the largest decreases in history. That's going to influence the market. At some point, that's going to influence our gross domestic product and the size of our economy.
Steve Alverson: GDP, the first quarter, it shrank 5%. It's with pretty good certainty we can say that the second quarter is going to be much worse. So, you know, that would officially, depending on how you look at the definition, put us in a recession. There's going to be some implications of that. Is it going to affect the market? Are we going to realize that immediately?
Barry; A great question. I wish we knew the answer to that. I wouldn't be surprised if it has some impact, but again, I think the market, we're hearing so much of this information right now. So to some degree, it's almost as if we're becoming a little bit dull to it and numb to it. I think the market's kind of the same way. It's becoming a little bit numb. So it's almost anticipating. If the second quarter GDP shrinks by 25%, I think the market will go, okay, well, that's kind of what we were anticipating. It's going to be okay. We'll keep moving forward. I think outside, barring any strange surprises, I think we'll continue to see things march ahead, perhaps a bit of a slow pace, but I think we'll march ahead, as long as there aren't any surprises. Do we have a second wave of really serious infections that require intensive hospitalization stays. If that happens, those types of things that cause movement.
Steve: A huge geopolitical event. The stuff that's going on right in China, that kind of thing that could surprise us.
Barry: Wall Street does not like surprises. I think that, again, barring those things, what we have seen the market's anticipating is that there is going to be a good recovery and it will continue to move along.