June Commentary

Wade A. McFee Comments

We have been in meeting with business owners this past week as they explained how they ‘sat in chairs in front of their business in Minneapolis to protect them during the riots.’ Will life in Minneapolis, or any other large city in the US, return to a safe and growing conditions any time soon? I have been wondering what might spark an exodus form the Cities to the Suburbs. It is looking like COVID-19 and increasing crime rates might just do it. Home builders in the Suburbs should benefit. Downtown office/retail/apartments should find operating difficult for the foreseeable future.

I believe with the NASDAQ Stock Market hitting new all-time highs, perhaps the most optimistic assumptions are being priced into the market already.

I was on a Zoom Call with Barron Magazine interviewing the Chief Investment Officer of BlackRock Investments on Friday June 19th. His opinion is the same as mine. ‘This is pretty much it for the big rally in stocks and bonds.’  ‘Now, expect the dividend or interest payments you are receiving from your portfolio to be what you make for the next couple years. And expect increased volatility.”

I probably don’t need to remind you of the ‘spoilers’ for the market over the near term:

  1. Potential second wave (or solid continuation of the first wave) of COVID-19 infections.
  2. Continued US Civil unrest disrupting Central Business District of major cities.
  3. Expiration of temporary US government money like the extra $600/week for unemployment benefits.
  4. Federal Reserve ending money printing
  5. US/China Trade War ramping back up
  6. A US National Election that leads to higher corporate taxes
  7. A hard Brexit (United Kingdom leaving the European Union.)
  8. China border conflict with India expanding with dozens of solders already dead.
  9. US Companies earnings falling 16% so far this year according to the WSJ June 20, 2020 pB12.

If income is where it’s at for the next year or so, I still like Preferred Stock, Master Limited Partnerships in oil and gas, Municipal Bonds, and US Government Bonds. Additionally, if we get a substantial decline in stock prices, it most likely will signal a long-term buying opportunity.

Stay safe and enjoy your summer!

Disclosure: The information and opinions presented here are those of Wade McFee and are for general information only and are not intended to provide specific advice or recommendations for any individual. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors. You should contact your investment representative, attorney, accountant or tax advisor with regard to your individual situation.