Hardest thing in investing is doing nothing


After a month of trading sideways, markets were showing signs of breaking to the upside yesterday. The Nasdaq index was at an all-time high, until California’s Governor Gavin Newsom announced specific lockdown measures. In California, indoor businesses such as restaurants and bars are now closed through August. In addition, most counties will close fitness centres, personal care services and malls. US equities subsequently went down; the Nasdaq, after being up 2% intraday, ended down around 2%, with the S&P500 down 1%.


If California were a country, it would be the world’s fifth largest economy. California’s measures mean that 1) the growth recovery will be slower 2) the job-heavy leisure industry has to write off the summer season almost entirely. It is likely that further stimulus measures will be required to support the leisure industry and other parts of the services sector. We keep a close eye on the strategies employed by states and countries facing a resurgent virus. With no vaccine, and given the recent virus developments, risks remain to the downside. We still think the bar is high for full-scale lockdowns and as long as lockdown measures remain targeted, and paired with stimulus, there is a medium to long-term path for markets to follow.


We are being asked by clients whether markets have got ahead of themselves, and whether a pullback is imminent. Very few people can pretend to have specific market-timing skills, hence we think being on the right side of structural trends is much more important than trying to pick the short-term tops and bottoms. The best strategy is to stay invested, stay the course set with your adviser and see market volatility as part of that journey, almost like a friend, rather than fear it. The biggest risk for clients is often that of being out of the market, i.e. of not carrying sufficient risk in portfolios. Indeed, the hardest thing in investing is doing nothing.


EUROPE- European equity markets rose on Monday. Chemicals led the market, while Real Estate was the main laggard.

There was not much on the macro front. The German economy ministry said that country’s economy has passed its lowest point and the recovery process is starting. Indeed, a rise in industrial orders indicates that production will pick up in the coming months, but risks still exist, particularly in very slack demand from the noneurozone.

On the corporate front, as we enter the initial stages of the latest earnings season, related share price responses, including Akzo Nobel and G4S, were overwhelmingly positive.

USA - US equities finished lower yesterday. Treasuries were slightly stronger and the US dollar was better than the yen but lagged versus the euro. Gold finished up 0.7%, while WTI crude oil finished down 1.1%.

On the coronavirus aspect, markets reversed earlier gains in the afternoon on some downbeat updates out of California, where Los Angeles and San Diego schools have decided to go all virtual in the fall and Governor Newsom ordered closure of some indoor activities including restaurants and bars. However, the Federal Drugs Administration granted fast-track designation for two potential coronavirus vaccines developed by Pfizer.

On the political front, the latest poll showed Biden ahead of Trump in Florida and tied in Texas and Arizona. In addition, there were more concerns about a looming fiscal cliff, with a wide gap over the size and scope of a fifth coronavirus relief package.

ASIA - Asian equities are weaker today. Nevertheless, China trade data showed an unexpected rise in exports and imports for June and revealed that the economy is turning the corner. Recent consensus surveys point to a return to Gross Domestic Product growth in the second quarter, after the first-quarter downturn.

This document has been prepared by Quintet Private Bank (Europe) S.A. The statements and views expressed in this document – based upon information from sources believed to be reliable – are those of Quintet Private Bank (Europe) S.A. as of July 06, 2020, and are subject to change. This document is of a general nature and does not constitute legal, accounting, tax or investment advice. All investors should keep in mind that past performance is no indication of future performance, and that the value of investments may go up or down. Changes in exchange rates may also cause the value of underlying investments to go up or down. Copyright © Quintet Private Bank (Europe) S.A. 2020. All rights reserved.