The roiling civil unrest in the U.S. has affected businesses, but it may not impact financial markets until the fall, Ed Harrison told Real Vision during today’s Daily Briefing.
Harrison said that on a one-day level the current events have had no significance, but in the long-term it may be a signpost for the economy going forward. He is looking at the market impact of similar events for insight into the current moment, including the Great Depression on the economic front, the 1918 influenza pandemic on the virus front, and the riots of 1968 and 1992 on the social front.
One parallel he is paying particular attention to is what the country saw in 1968. Harrison said the social unrest was a marker of the top of the market in terms of the economy; the year ended up but it was the beginning of a devastating secular bear market. Harrison questioned whether this is also what is happening today.
All of it adds up to additional risk coming onto the table due to the uncertainty of our current situation, and Harrison said that uncertainty is causing the market to narrow its focus to a very limited time frame. If the data beats consensus it is positive; if it doesn’t, negative, and for this period of uncertainty that has to be good enough. However, he cautioned that there will be a reckoning later, most likely in the fall.
Harrison said that the psychological impact on consumers extends beyond COVID-19 at this point. He expects consumption to continue to be suppressed due to the riots, and combined with things like Apple store closures and Amazon delivery delays, and the elevated risk of a second wave of the virus following the protests, he’s apprehensive about the risks.
We won’t know until fall what the big reaction will be – that’s when we’ll get the big hits, he said.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors(collectively,”Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise(whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance.Well that was pretty intense! We hope you got all of that – now stop reading the small print and go and enjoy Real Vision.