Ann: S&P DJI Announces June 2020 Quarterly Rebalance, page-12

Hey mate, yeah it's very tricky to tell. I think what worries me most is:
- Market has solidly priced in a 'V' shaped recovery in the US - it's not going to be 'V' shaped.
- The US did not adequately suppress the virus before reopening - several states are now recording all-time highs. Why this worries me is that it effectively means is that, unlike in places like Aus, NZ etc, their first lock-downs may have slowed the spread, but didn't snuff it out. Recording numbers at all-time highs means in many ways their first lock-downs have only solved part of the problem. If those states were still in lock-down, or the flare ups were only in isolated pockets, I wouldn't be so concerned. But now you have what is becoming uncontrolled transmission in states that account for approx 100 million Americans, which, at the rates reported over the last 14 days, will be a calamity.
- Complete lack of political cohesion and unity - unlike in Aus, tragically the US states all have different measures in place, at different levels at different times. With porous borders, it means the virus can easily spread throughout and worryingly back to locations like NYC and other places.
- Markets at all-time highs - this is pure insanity. Markets are forward-looking, but many economies won't be back to their pre-COVID levels for years, but the indexes have them back there within a few months. I think when this reality hits it will be jarring.
- High retail, low institutional investor exposure - this differs depending on the source, but the general view is that institutions are sitting this one out, while the retail FOMO crowd gets involved. Tricky to know, but that worries me.

I think the next 4 weeks will likely tell us all we need to know - our only current defense against the virus is separation and distance, which is exactly what the Americans aren't doing, while simultaneously removing restrictions, which I think will be a recipe for disaster. I've been selling into strength and building cash, as I believe when the US indexes turn, anything that had momentum/FOMO/high beta will be crushed, regardless of their fundamentals, potentially presenting a cracking entry/top-up point.