Advisors need to tell their clients to be cautious about any upticks they see in the market for the next few months due to the coronavirus, said Victoria Fernandez, chief market strategist at Crossmark Global Investments, a global financial firm based in Houston.
The health of the economy and markets depends almost entirely on Covid-19 and its impact, she stressed.
“The economic data we have been seeing does not take into account the new virus hot spots and major uptick in cases. It was the second half of June, when this started occurring, and that did not get captured in the unemployment numbers completely” when jobs numbers came in better than expected, she said.
“These new hotspots will derail the recent surge in consumer spending, and hurt the overall economic recovery. We’re going to have to see a lot more positive [coronavirus] numbers in new states that are opening up to counteract the decline that we’re seeing elsewhere,” Fernandez said.
The economy is not going to have permanent shot in the arm until there is better news on the vaccine front, she said. “Then we will see some consumer demand and confidence returning.
‘‘Clients should not get caught up in the headlines,” Fernandez added. “They need to take a step back and look at investments long-term, not as a quick trade.”
At Crossmark, portfolio managers are looking favorably at cloud-based infrastructure and at banks, she said. “That doesn’t mean buy everything in that sector. Look at the balance sheet of the business and look for a low level of debt. Advisors need their clients to have a hedge against a downturn even if it means losing some of the up surge,” she said.
Fernandez noted that the current recession is not typical.
“This time the recession has nothing to do with finances and everything to do with health. So once we get past the health crisis, the economy should bounce back more quickly than it did in past recessions,” she said.