James Mayer:

Hello, this is James Mayer with the Huffman Mayer Paolo Wealth Management Group of Wells Fargo Advisors. I'd like to welcome you to our July market recap. Thanks for joining us.

As the pandemic continues to control our lives, and with no immediate relief in sight, we were forced to follow suit of so many others and cancel all of our community events planned for this year. This has been a very disappointing and challenging year, to say the least, but we are hopeful we'll be able to resume hosting our client and social events in 2021.

Our office remains closed for now, and our staff is limited, but we are still available to talk with you via a phone appointment or a Zoom meeting. If you have concerns, or you just want to review your portfolio and allocation, please feel free to call the office to set up a time for us to talk.

Here are some market comments I wanted to share with you, as well. With the second quarter earnings season now underway, we are starting to get a much clearer picture of the economic damage created by COVID-19. Among the small percentage of companies [inaudible 00:01:37] reported so far, results have been better than expectations, which are downright dismal. According to FactSet, the consensus among analysts is for second quarter 2020 earnings to decline 44% versus the same quarter last year. If that estimate proves to be accurate, it will be the worst year-over-year change in earnings since the fourth quarter of 2008. In our opinion, forward-looking guidance will have much more of an influence over the market moves than backward-looking second quarter results, especially given the difficulty in making economic projections in this environment. Against this earnings backdrop, stocks have been remarkably resilient. Buoyed by the Federal Reserve banks' timely actions in March, and a predominant sense among investors that this is likely to be a shorter recession.

The past two months have seen a stubborn rebound in COVID cases, both home and abroad, although, in financial markets, this has been more than offset by a steady drip of positive news around potential treatments and vaccines. In the world of finance, prices are all relative to each other, and much depends on the price and income generated by the safest assets. By cutting rates, the Fed pushed money back into stocks, real estate, and riskier parts of the bond market. However, the rebound in prices of these assets over the past four months clearly reflects more than just low rates. Markets are pricing in an economic recovery. While we agree that the economy will bounce back, we think there are some shorter-term risks, including the relationship between the U.S. and China, the pace of progress in preventing and treating COVID-19, and the policy uncertainty that always comes with a presidential election.

Thank you for the trust you have placed in us. Please stay healthy, please stay safe, and hopefully we will see you soon.