Brian Acker, president, CEO and chief market strategist at Acker Finley
Focus: North American large caps

MARKET OUTLOOK

Because of the speed and the size of the response from both the Federal Reserve and U.S. government to the pandemic, the deflation shock we felt back in late March and early April is over. We are now in the middle of first quarter earnings and we get a peek into how individual companies faired with COVID-19.The big question is: “What is next?”

First, we are going to get some really ugly numbers on the state of the economy and employment. This data will be backward looking and will be revised endlessly for years, but make no mistake: this data will be bad and will be compared to the 1930s.

Second, with monopoly compounding earnings and with a substantial drop in interest rates, valuations for tech securities will increase substantially. As of this morning, the Nasdaq is positive year-to-date in terms of rates of return.

Third, it’s obvious the U.S. will open up in a number of weeks no matter what the COVID-19 numbers are. Again, if these get really bad and the federal government has to shut down the U.S. economy again, there will be very bad news. We have to wait and see.

Fourth, at the same time as the world deals with this global pandemic, we are also witnessing a nasty divorce between the two largest economic powers: The U.S. and China. The rest of the world will have to wait and see what happens.

Fifth, with Pax Americana over after Trump's election, COVID-19 only accelerates the process of the U.S. defining what countries are in their interests to have a “going forward” relationship with.  Thank goodness Canada is one. This is both in terms of trade and effective supply lines for raw material inputs and manufactured goods. Look for international companies in places like Germany to move manufacturing in the U.S. orbit or sphere of influence.

Sixth, demographics will be the key going forward for the new world order. The only countries that look anywhere near promising in terms of future demographic growth in the next 15 to 20 years are the U.S., Mexico and African countries. For any young person looking for a future, Texas is looking ideal in my opinion.

TOP PICKS

ORACLE CORP (ORCL NYSE)

MERCK & CO (MRK NYSE)

BANK OF AMERICA (BAC NYSE)

PAST PICKS: JUNE 14, 2019

INTEL CORPORATION (INTC NASD)

• Then: $46.19
• Now: $59.25
• Return: 28%
• Total return: 31%

ALPHABET (GOOGL NASD)

• Then: $1,086.30
• Now: $1,384.80
• Return: 27%
• Total return: 27%

APPLE (AAPL NASD)

• Then: $192.74
• Now: $305.55
• Return: 59%
• Total return: 60%

Total return average: 46%

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