At the start of the 3rd Quarter, Oakworth’s Investment Committee made several predictions for the quarter. Here are a few of them:
- After a better than expected 2nd Quarter, investors will be anxious to see how the economy responds when various relief packages start to expire towards the end of the summer.
- The 2nd Quarter earnings season should be interesting given the lack of forward guidance corporate America has been giving. As long as it isn’t a ‘worst case scenario’ and forward guidance isn’t a disaster, investors could move past it more quickly than you would imagine.
- As the quarter progresses, investors will increasingly turn their attention to the November elections. If the Republicans can hold the Senate, the economy is ensured another 2 years of gridlock, no matter what happens with the Presidency.
- The recipe for growth is in place: low energy prices, low interest rates, and expansionary monetary and fiscal policies. However, another mandated lockdown of the economy will render that irrelevant. Our elected officials have to be extremely careful
- Two things are certain about 3Q: (a) stock market returns won’t be as strong as 2Q’s historic ones, and;(b) we will have a better sense of the economy’s true health by the end of the quarter than we have at the start.
These were mostly directionally correct. Things continued to get better during the quarter. Even so, here at the start of the 4th Quarter, it is still difficult to completely ascertain the economy’s true strength.