Podcast: Episode 8

Midyear outlook: Navigating the reopening

Hear from Brian Nick, chief investment strategist at Nuveen, on what reopening means for job growth, the financial markets, and your planning in the months ahead.

Podcast: Where are we on the road to economic recovery?

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TIAA Perspectives Podcast Episode 8: Where are we on the road to economic recovery? Hosted by Jim Daniello, CFP®, wealth management director for TIAA. Joined by Brian Nick, Chief Investment Strategist at Nuveen. - [Jim] Hi everyone. I'm Jim Daniello, a wealth management director for TIAA. Thank you for joining me for another installment of TIAA's Perspectives Podcast where we'll talk about financial planning strategies, money management tips and steps you can take now to remain on track towards your goals. Today, we're talking about the road to recovery as the US and global economies continue to grapple with the COVID-19 pandemic and the uncertainty that accompanies it. I'm fortunate to have Brian Nick, Chief Investment Strategist at Nuveen joining me today. Brian holds the Chartered Alternative Investment Analyst designation and has more than a decade of experience analyzing economic, equity and fixed income data and developing investment strategies to optimize client portfolios. Welcome Brian. - [Brian] Thanks Jim. It's a pleasure to be here. - [Jim] Brian, as our listeners are well aware, we've experienced unprecedented levels of change over the past few months. I'm interested in hearing your perspective on how countries across the globe are adapting to life with the virus and what this means for job growth, the financial markets, and people's personal planning in the months ahead. I know there's a lot to cover, so let's start with how we got to where we are today. - [Brian] Sure Jim. If we rewind to seven months ago, we began the year riding high on a 10 year bull market and the longest economic expansion in modern history. What we didn't know then was that both of these would soon come to an end, as the world was hit by the Coronavirus and the related economic recession. That shock hit financial markets pretty hard, resulting in a clear risk off pattern across asset classes, including both stocks and bonds. So when US government bonds are the best performing thing in your portfolio, that's usually not a great sign for how everything else has performed. What we've seen is that relatively safe asset classes like treasuries and certain corporate bonds have delivered positive returns as they're meant to in times of stress, while the most volatile parts of the global stock market have been the most challenged. One thing I will say is that the markets look a lot better today than they did several months ago. You'll remember that the S&P 500 fell 34% from its peak in February to its trough in March. But the good news is that it's up over 40% since then. Other markets have done a little less well, but the pattern is generally the same. They've been staging a steady and sometimes rapid recovery ever since. - [Jim] Brian, I know the stock market's performance in recent months has been perplexing to a lot of people. Can you help our listeners understand why stocks have rallied in the midst of an economic recession? - [Brian] Well the stock market often leaves the economy into recession, but it also often leaves on the way out. And so we've seen certain parts of that over the last quarter for sure. Keep in mind, economic policy has a lot to do with restoring investor confidence. I'll talk about what central banks have been up to in just a minute but there's no doubt that markets have latched on to what seems to be a relatively strong economic recovery in the world's largest economies as a sign that investors may be willing to take on more risk. - [Brian] Well thanks Brian. We also continue to see news and data about the steep rise in the number of COVID-19 cases and hospitalizations reported across the country in recent weeks. How is this influencing your forecast? - [Brian] Well this is really the key question Jim as the headlines over the past few weeks suggest, cases are on the rise in a majority of states while the virus seems to have been largely contained in other parts of the developed world like Europe and Japan. The virus itself doesn't affect consumer behavior in any significant way, but fears of the virus certainly can. On a day to day basis, we can see markets gyrating based on the latest news out of places like Florida, Texas and California, but in general, investors continue to adopt an optimistic posture towards solving the healthcare crisis. Think of the myriad reports we've been reading about encouraging progress on vaccine trials or treatments. Those types of headlines grab the market's attention just as much as the headlines about hospital capacity in Houston or Miami. Tragically we know that fatalities from COVID-19 are a lagging indicator. While we started to see a decline in fatalities in the spring, they're back on the rise in the US resulting in a steep deviation from what we're seeing in Europe for example. It remains to be seen if this trend will persist or worsen, and if that will lead to a serious pullback in US economic progress. - [Jim] So what does this mean for the shape of the recovery here in the US? Previously we talked about the potential for a W-shaped recovery, where we might see states and their economies reopen only to close again temporarily should COVID-19 cases or hospitalizations rise. Is that what you're still thinking? - [Brian] A W-shaped recovery still certainly remains a risk if we see another set of economic shutdowns either by government mandate or consumer choice. But that's not our base case. We're actually anticipating more of a swoosh shaped recovery similar to the Nike logo many people may be familiar with. Keep in mind that the recession is already over and probably has been since May when the economic data started showing a new expansion beginning. But the pace of the recovery is what remains so uncertain. And yes the possibility for a double dip is real if the virus really does wreak havoc on the world again, and specifically in the US in the second half of the year. - [Jim] So Brian, how does a swoosh differ from a V-shaped recovery? - [Brian] The reason I refer to it as a swoosh is because it has a very specific bottom to it. This indicates that the downturn was caused by external factors and the economy could effectively reopen or at least partially reopen when the coast was clear from the virus. So we knew we were always going to see a few very good months of data when the lock downs ended. What sort of growth we can generate beyond that will very much depend on how quickly we can get people back to work, and how well economic policy can sustain demand in the meantime. I know that's hard to visualize, but compared to previous downturns, we're expecting a much deeper recession than normal, but a somewhat shorter one than we experienced during the Great Recession that followed the financial crisis of 2007 and 2008. - [Jim] You know Brian, we're also seeing a number of the lessons learned during the last recession paying off for people now such as the importance of building cash reserves and emergency savings. We've been talking to a number of clients who were quite frankly, scared when the market dropped in March, and were fighting the emotional urge to move to cash. However, the large majority who had a financial plan in place were actually in a good position to weather the storm since they had adequate cash reserves. So for many, it was just a matter of pointing out that they're planning has already taken these events into consideration including, how they could avoid cementing losses by using emergency savings to provide for their short term income needs. - [Brian] That's exactly right Jim. Savings rates were much higher coming into this crisis and the average US household has been able to preserve significantly more wealth than in 2007. Fewer families are overleveraged, more of them have saved more in the past several years, and the quick recovery in financial markets as compared to 2008 has probably prevented them from feeling they have to be more conservative in their spending habits. So, US consumers have both the means and the desire to spend more money if given the chance, which was not the case coming out of the last recession. Fear may also have contributed to the severe dip in spending we saw in early spring. However that only lasted a month or two, compared to the financial crisis for spending declined for years before fully recovering. A big part of this was also due to online sales. The shift to e-commerce has been an ongoing trend in the global economy, but it's been put on overdrive by the Coronavirus and the economic lockdowns. My in-laws never ordered a thing from Amazon before all of this but now they're hooked. So while online retail still makes up a relatively small share of overall commerce, that share is growing, making consumer demand more durable even through challenges like this pandemic. - [Jim] Brian, I've experienced that in my own household. Here's a quick tip for anyone thinking about retiring one day. Don't share your Prime password with your kids. Trust me, I learned this the hard way. Brian, what role has government stimulus played in driving consumer confidence? - [Brian] The combination of the individual checks that went out in March and the ongoing emergency supplements on unemployment insurance have actually caused incomes to rise compared to their February levels. - [Jim] So, how is the labor market responding to the reopening process? Are we seeing jobs coming back as quickly as we anticipated? - [Brian] The evidence is mixed on the labor market so far. Keep in mind that the US labor market which tends to experience wider fluctuations in the number of jobs compared to other economies like Europe, where fewer people tend to be hired and fired because of the labor laws they have in place. There's no question that the impact of the pandemic on the US labor market resulted in the worst shock in living memory. We continue to see well over 1 million people file for unemployment insurance on a weekly basis, and close to 20 million remain on that insurance to this day, despite the impressive job gains we saw in May and June. - [Jim] You know Brian, the timeframe is an important distinction here as well. I remember that it took two years for unemployment to peak during the Great Recession. What does this mean for this recovery? - [Brian] Well the June jobs numbers were actually better than expected. So we are further along in the healing process than we would have thought at this stage. But things are still grim. The unemployment rate of 11.1% is higher than at any time during the Great Recession, and tens of millions of people who had jobs in February, don't have them today. That effectively puts a parking brake on the US economic recovery. For now we're doing a good job of taking care of the folks who are out of work through federal stimulus programs, but we may need to sustain those even longer, as the next few months are likely to show a slowing pace of job growth. You need the economy to run hot, with help from the government and the central bank to bring people back quickly. - [Jim] I know that something that concerns many of our listeners, especially those in education, healthcare and the nonprofit sectors, all of which have been impacted in different ways by the pandemic. Many have faced job losses, furloughs, even reduced hours. Others are simply uncertain about what the future holds. Now, Brian, are we able to measure the impact of the stimulus spending in the US? And how does our spending compared to those of other countries around the world? - [Brian] Well Europe and Japan are spending as much or more as a percentage of their GDP on stimulus programs this year, and will likely have to continue spending in 2021 as the world heals. So far, most of the stimulus has really been more like an antidepressant. The mission is to ensure households and communities don't suffer because of widespread job loss. So cutting checks to individuals and paying them more than they normally get in unemployment insurance is a good idea. A lot of money is also going to small businesses with strings attached that encourage them to use it to keep workers on their payrolls. And that seems to have worked pretty well too. But I don't wanna overhype the impact that it's having. Stimulus spending is not going to get the economy moving on its own. Only a full defeat of the virus can do that. It's merely helping to cushion the blow of high unemployment and prevent businesses from failing while they're closed. = [Jim] And Brian, as you already know, parts of the CARES Act that were signed into law back in March are up for renewal in July. Is there a risk in allowing some of these stimulus measures to lapse? - [Brian] I think so Jim. If some of these programs are allowed to lapse, this may cause the economy to take a few steps back or at least keep it from taking more steps forward. So more will be needed very soon and likely well into next year. - [Jim] So essentially, the various stimulus measures enacted by governments in the US and abroad have helped to prop up economies until the virus is eradicated or more likely, until we're able to suppress it through a combination of vaccines and other measures. To a certain extent, it sounds like we're between a rock and a hard place. While stimulus measures such as the Payroll Protection Program and the CARES act have really helped ease some of the short term pain, Brian, it's sounds like they may be creating additional problems down the road where economic growth and inflation are concerned. - [Brian] That's right Jim. When you see numbers like 20, or 25% of US GDP spent by Congress in a single year, it could certainly set off alarm bells for anyone worried about inflation. Right now though, the US economy is in a deep hole, and it's very hard to generate any significant inflation while you're digging your way out. Run the economy too hot for too long like they have at various times in places like Venezuela or Turkey, and sure, inflation can show up very quickly. But recall that we had a big fiscal stimulus, so not this big after 2008, along with years of aggressive federal government programs to increase the money supply, and we still never got to core inflation at a 2% level on a sustained basis. So inflation to me would be what they call a hype class problem if it showed up. It would be a sign that the recovery had been achieved in a robust way, and the playbook for licking inflation is well established. You raise interest rates, and cool the economy off. I just don't see us as being anywhere near that point right now with unemployment still in the double digits, and the virus still whipping around the country. - [Jim] Those are great points Brian. Can you explain though for those listening, what steps the Federal Reserve has taken in recent months to help keep the economy open and moving forward? - [Brian] Central banks have been well central to the economic recovery, and in particular, the markets collective ability to heal. You name it, and they've done it. Cutting rates to zero, pledging to keep them there indefinitely and expanding the size of their balance sheet. They've also introduced some new features that weren't present after the financial crisis of 2008, such as lending money to issuers of municipal bonds, and buying corporate bonds in the open market. Both of which have definitely helped bond markets to recover. There's still a lot they can do, mainly around providing guidance as to when and how they might start to reverse some of the things they've done, but the impact is clear. The Fed acted quickly to ease financial conditions, which helped to ensure the financial markets are functioning and the economy and markets remain liquid. - [Jim] Brian, liquidity or should I say lack of it was a significant problem for both companies and individuals especially during the start of the last recession. What are companies seeing now? - [Brian] Companies have found it easier to borrow over the past few months. And as the US dollar has retreated a bit as stock prices have risen, we can generally say that financial conditions have eased. But it's the speed with which they've done so that's so striking. Compare this period to the 2008, 2009 one, in which things were badly impaired for a long period of time. That held back the recovery in those years, and fortunately, we're not repeating that in 2020. - [Jim] And Brian, I think the timeline is really important for people to understand. Often our perception of an economic downturn or a recession is based on what we personally experienced in the past. For instance, the Great Recession from 2008 to 2009, maybe the only reference point that many have for a downturn of this magnitude. Now as a result, people may assume that the current recession will take on similar characteristics to the last one in terms of how deep it goes, or how long it lasts. So it's important to understand how periods of economic turmoil compare and contrast. For example, leading up to the housing crisis in 2008, we didn't have the strong economic underpinnings in place that we do today. When the housing bubble burst, it revealed a fragile foundation and structural problems that took years to repair. This time, we had a robust economy prior to the forced closings in March. So it makes sense that we're in a stronger position to make our way out now. Brian, what does all of this mean for the stock market going forward? - [Brian] Well so far we've seen a V-shaped recovery from the equities market, but there's been quite a bit of variation by geography and sector as to what's done well. The US has led the way primarily through technology companies, which tend to be more shielded from the effects of the Coronavirus and generally have high secular earnings growth. This puts them in greater demand during periods in which growth is expected to be low. As I mentioned earlier, the stock market is generally a leading indicator for the economy. Investors can express their beliefs or concerns about the future by buying stocks today. And compared to cash or most types of bonds, stocks still offer a very attractive risk return profile. However, most investors need far better returns than what fixed income alone can provide at the moment. Nonetheless, we continue to see individual investors pulling money out of the market. This is what we call an unloved rally in which smaller investors are wary about taking on too much risk and end up not fully participating just at the point when the upward trajectory is sharpest. The last thing I'd say is that a lot of the increase in the stock market has come not as a result of investors thinking profits are going to be really strong anytime soon, but because they're willing to pay higher and higher prices for those profits in the form of richer valuations. And those can be susceptible to pull backs when bad news pops up. But it seems like for every bad headline about rising new COVID-19 cases, we see a good one about the economic recovery or the promise of a vaccine sometime in the next few quarters. So that hope is keeping stocks afloat for sure. - [Jim] Brian, let's stop there for a moment because I think this is another really important point for our listeners. We talked earlier about how market activity can elicit an emotional response from investors. As you point out, we still see a lot of people who are feeling jittery about the markets and what might happen next. As a result, many are making poor decisions, pulling money out at the wrong time and realizing losses or re-entering the markets as prices are rising. This is why it's so important for people to be anchored in a plan. When you work with an advisor to create a plan that is aligned with your goals and risk tolerance, you have a personal investment policy in place that governs your investment decisions to help you keep you on track as the markets fluctuate over time. When you combine that with professional money management, which includes dynamic portfolio rebalancing over time, you essentially create an anchor to help weather storms along the path and accomplish your goals. - [Brian] I agree Jim. And if you had gone to cash in March following the 34% drop in the S&P 500, you would not only have realized significant losses, but you would have missed the 50 day rally that followed that drop off. That could have significant consequences when it comes to pursuing your long term goals. Also, keep in mind that stocks aren't alone in staging a strong recovery. Most asset classes that sold off sharply in March are close or back to where they were in terms of attractiveness. That actually presents a problem for investors, particularly those who may not have fully participated in the rally over the past few months. - [Jim] And Brian, there's been a lot of talk lately about price run ups and stocks being overvalued in the late stage of an extended bull market. Should investors be concerned? - [Brian] One thing we talked about coming into this year was how investors should be braced for a more difficult decade in the 2020s compared to the 2010s, because prices had run up considerably and the economic road wouldn't be as smooth. I don't think we pictured anything as jarring as what 2020 has brought so far, but it's striking how little has changed on net about the valuation story because of the whiplash we've seen in asset prices. It's still going to be a hard road ahead for long term investors, regardless of what the second half of 2020 brings. - [Jim] And Brian, the fixed income markets are another concern for many of our listeners, especially retirees taking income from their portfolios. Earlier this year, you said you expected interest rates and inflation to remain low for an extended period of time. Has anything taken place that would change your outlook there? - [Brian] No. And since April, the Fed has made it very clear that this is its expectation as well. In the global bond markets, even longer term rates have fallen to the lowest levels we've ever seen. And this clearly has implications namely that building an income producing portfolio out of government bonds, to the extent anyone was trying to do that before, has now become nearly impossible. So the next alternative is municipal or corporate bonds, which definitely pay higher yields, but are also tied to some extent to treasuries, so their rates are low by historical standards as well. The next step could be abandoning bonds entirely, which means you're looking to equity markets, or perhaps real estate to generate income. And while those asset classes should certainly be a part of your income strategy, shutting bonds altogether, will tend to raise the volatility of your portfolio considerably because of diversification that you're losing. - [Jim] So Brian, is there a middle ground? - [Brian] A middle ground could be to allocate more to higher risk parts of the bond market like emerging market debt or high yield corporate debt, which have more of a correlation to stocks than treasuries most of the time, but also pay a higher yield. There's no silver bullet here, just a lot of ideas for you to discuss with your financial advisor and figure out what the right strategy is for you. - [Jim] Low bond market yields have definitely made it challenging for those seeking income from their fixed income portfolios to do so without taking on additional risk. This was a challenge for many people before the pandemic occurred. That's one reason why it's so important for investors, especially those in or nearing retirement, to think about creating a buffer to help manage different risk factors, whether that's volatility in the equities market, or low bond market yields. One way to achieve that is by creating an income floor. By combining different lifetime income sources, such as social security benefits, a pension if you have one, and other guaranteed income sources like fixed annuities, you're able to create a foundational income to cover your essential expenses in retirement. That can take a lot of pressure off during times of uncertainty like we're experiencing today. And as you pointed out Brian, this is one of many areas and strategies your wealth advisor can discuss with you and help you implement. While the consensus for now is that bond yields and interest rates will remain low for some time, what are some of the things you're seeing that you do expect to change along the road of this recovery? - [Brian] We think a lot about future state and post pandemic state when we're building portfolios today, including when we're trying to identify individual companies and sectors that could thrive as opposed to those who are at risk. One of the first things that we think about as real estate investors is offices and retail. As I mentioned earlier, we know that the pandemic has sped up the transition from brick and mortar to online shopping, which puts retail property values under greater stress. Offices are a little different. More people may work from home when this is all over, but those who still go into the office will probably need more space to operate. The decades long trend toward packing workers into less and less space like sardines is probably about to reverse given the heightened concern about worker safety. Of course working from home and other semi-permanent changes after the pandemic could end up cutting business costs and making companies more efficient. Business travel is likely to stay down significantly from its 2019 level, even if people feel fully safe from the virus, because it's expensive and relatively easy to eliminate. We're not saying every change people have made during the shutdown will be permitted but some will. And as society adapts, there will be investment opportunities on both the buy and sell side to add value to portfolios. We're watching these trends closely so our investors don't have to. - [Jim] Brian, you raise some interesting and very relevant points. A lot of our clients hold real estate investment trusts or REITs in their portfolios, which typically invest in commercial real estate, which may include office, industrial and retail space. So on the one hand, these investments could suffer if workers don't return to office buildings. However, this sector could also benefit if companies require more square footage to accommodate returning workers, right? - [Brian] That's exactly right Jim. - [Jim] I also wanna comment on your statement about the need to watch these trends closely. This stuff can get very complicated very quickly. And most individual investors simply don't have the time, the resources, or access to company information to perform the level of research analysis, and due diligence required to make these buy and sell decisions on their own. That's another good reason to take advantage of professional portfolio management. As Brian so succinctly put it so you don't have to do it yourself. Now Brian, we've talked a lot today about how the markets, the economy, and consumers are responding along the road to recovery. One thing we also need to address though, is that this is an election year. I know that markets typically don't take much notice of the upcoming election until we get to the conventions. However, as we've all learned, 2020 is anything but a typical year. What impact do you expect the election to have on the markets? - [Brian] Well, we've certainly seen a strong shift in the polls since around May, and the indication is that former Vice President Biden currently has a moderately large lead over President Trump in the National Popular Vote. This is driving the odds that Biden will win to rise in the online betting markets that we track for this purpose. What that means for the markets, or what it could mean is harder to say, because it's clear that the virus is the primary driver of market returns at the moment. It's actually also probably one of the primary drivers of the election as well although things can change quickly. As we found out this year, the world can look like an entirely different place in only a few months, so making large bets through your investments on one outcome or another, is probably both difficult and ill advised. - [Jim] And Brian, what would a Biden presidency mean from a policy perspective? - [Brian] I think we have to be careful about trying to predict what the policy outcomes may be like in 2021 under a Biden presidency. Well, prediction markets also believe the democrats could take over the Senate while retaining the house. The main task at hand for any administration and Congress next year will be to continue to help the economy heal from the shock it experienced this year. So it's probably not valid to cut and paste the candidate's preferred policy positions off of a campaign website designed in October 2019, and assume all of those policies will be enacted by a friendly Congress. Specifically, taxes are less likely to rise significantly next year, while spending could grow by more. Fiscal policy in other words is going to stay loose. And that's probably true regardless of who is in control of things. There are some areas like regulation of banks and energy companies in which Biden could be less quote unquote, market friendly than Trump has been, but there are other policy areas like trade and immigration, in which a more moderate approach could be better for the economy. Markets like certainty, and the more diplomatic route when it comes to trade policy and international alliances, has been good for markets over the long run. - [Jim] I think One of the takeaways as we move closer to November is anything or everything could change between now and then. So we'll continue to monitor this closely in the months ahead. And Brian, I wanna spend a few minutes on what you see as likely scenarios for the markets and the economy for the remainder of 2020. - [Brian] Sure Jim. Let's start with the base case or most likely scenario. In this scenario we see the global economy recovering steadily, but not especially rapidly over the balance of the year. This is where that V-shaped beginning to the recovery turns into more of a swoosh or a check mark. We also think headwinds are going to be here for the time being from business closures, bankruptcies, and that is gonna push unemployment rates or at least keep unemployment rates high for the foreseeable future. And speaking of businesses, we expect large company profits to fall by about 25% this year, which is about average for a moderately severe recession, but we also think there's gonna be a strong recovery in those profits in 2021. Last but not least, as we mentioned we think interest rates and inflation are likely to remain low across the world for at least the next several years, as the global economy starts to pick itself back up. - [Jim] The base case scenario is certainly in line with themes you talked about earlier Brian, however, what if something changes drastically for the better, such as viable treatments or a vaccine coming to the market earlier than planned? What would a best case scenario look like? - [Brian] Jim I really think you hit the nail on the head with what would need to happen in order for this scenario to come to fruition. We're really looking at a rapid solution on the healthcare front. A resolution of the healthcare crisis that will likely involve some combination of a vaccine or really effective treatment for COVID-19. And in this best case scenario, the V-shaped recovery could sustain and become more widespread. So you could even see, currently distress industries like airlines and hotels that are really linked to current consumer concerns about the virus, they could recover much more quickly than we're currently anticipating. We'd also expect to see a rapid drop in the US unemployment rate. We think that by the end of this year, the US unemployment rate will be around 10%. In this scenario, I could easily see it getting down as low as 8%, which would be quite a rapid drop from where we are right now. Also in this scenario, overall the global economy is returning to its prior peak much sooner, sometime in the first half of next year, as opposed to the end of next year, because the recovery is that much more rapid. And every cloud has a silver lining, and every silver lining has a cloud. In this case, in a good scenario, inflation probably becomes a quote unquote, problem for central banks. A high class problem to be sure, but if the economy is recovering more quickly, interest rates may need to rise to confront rising inflation much more quickly than central bank has currently anticipated. - [Jim] And finally Brian, what should investors be prepared for if we see a less optimistic scenario than your base case? How would you define a worst case scenario? - [Brian] I'd start off by defining a worst case scenario very humbly because there's no way that six months ago, I would have defined the worst case scenario for the global economy as anywhere near as bad as it's actually gotten. So we know there's always these tail risks out there, and one of them hit us in a big way this year. That said, knowing what we know, the downside scenario, the worst case scenario would involve a dual policy failure. A healthcare policy failure and an economic policy failure. On the healthcare front it would mean uncontrolled spread of the virus, not just in the US, but in other large economies that lead to consumer fears, and yes tragically, an increasing mortality rate. On the economic side, it would be really failure to provide a safety net or support for the ongoing economic crisis, especially if the healthcare crisis continues to dominate in the fall and in the winter months. So if these fiscal policy efforts that we're currently seeing going through Congress fail, that could mean that policymakers have become more complacent or too complacent and there could be a big drop in incomes on August 1st as a lot of people who are currently receiving unemployment insurance won't be receiving unemployment insurance when the month turns over. If we get the Coronavirus returning to its former lethality, that is really where you start talking about the double dip recession because you have state governments, local governments locking things down again, people staying in their homes, and what consumers have adapted in some measure to the new normal, that wouldn't sustain strong growth rates in the third and fourth quarter of this year. So you could get that W-shape recession in this scenario. Last but not least, in somewhat tertiary to all this but still very much in the headlines, the US-China relationship has continued to deteriorate for understandable reasons. Remember this was the dominant concern for markets in 2019, specifically around trade, a deterioration or scrapping altogether of the phase one trade deal between the US and China could lead to economic difficulties related to higher tariffs. That's a problem that the global economy doesn't need at the moment, but it's one that's still very much lurking in the background. - [Jim] Well thank you Brian. As usual, this information is extremely helpful for those seeking ways to protect their portfolios, and optimize their planning in the months ahead. - [Brian] My pleasure Jim. [MUSIC] - [Jim] As we wrap up, I wanna leave our listeners with a few key takeaways from our discussion. As Brian pointed out, we're living in a period marked by rapid change. As a result, staying the course during uncertain times requires more than simply toeing the line. Anchoring yourself in a plan helps to ensure that the decisions you make are aligned with your goals, timeline and risk tolerance. A plan also heads off reactive or emotional decision making that can easily derail your strategy. If you don't have a plan, consider scheduling time to meet with a TIAA advisor to put one in place. If you already have a plan, make sure you're communicating with your advisor frequently and reviewing your plan on a regular basis, especially during unusually challenging times. If you have questions about any of the information we've covered today, be sure to contact TIAA to schedule time to talk about your needs. Your TIAA advisor is here and ready to answer any questions you have, work through any concerns and help you make the decisions that are right for you and your family. Thank you for listening in and for spending a few minutes of your time with us today. Have a great day everyone. [END] Any guarantees are backed by the claims-paying ability of the issuing company. Jim Daniello is a Registered Representative of TIAA-CREF Individual & Institutional Services, LLC. This material is prepared by and represents the views of Brian Nick, and does not necessarily represent the views of Nuveen, its affiliates, or other Nuveen staff. These views are presented for informational purposes only and may change in response to changing economic and market conditions. This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with his or her advisors. Certain products and services may not be available to all entities or persons. Past performance is not indicative of future results. Economic and market forecasts are subject to uncertainty and may change based on varying market conditions, political and economic developments. This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA), New York, NY. Each is solely responsible for its own financial condition and contractual obligations. Advisory services are provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser. 1244937

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