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Civil unrest won't be a big deal for the markets: Expert

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The Wealth Consulting Group CEO Jimmy Lee joins Kristin Meyers to assess the long-term outlook on markets as protests spread nationwide over George Floyd's death.

Video Transcript

KRISTIN MYERS: I want to continue this conversation on the markets. We have Wealth Consulting CEO Jimmy Lee joining us now. So Jimmy, to kind of piggy back off of what Sibile was saying, I mean, are you expecting that the markets are going to be reacting negatively as a result of these protests after-- especially after being hard hit from the coronavirus pandemic?

JIMMY LEE: I believe certainly that the protests can affect the stock market in the short term. But I think as we go out, you know, a little bit in time, I think it's going to be something that's not going to be that big of a deal. Certainly for the short term, people will be focused on whether or not we could get a second wave or maybe, you know, that the protests and not social distancing could-- could cause a tick up in the infection rates. But hopefully that doesn't happen.

And so while I think it could set the stock market back a little bit and create some volatility, I think in the longer run as we go out a few months, I think it will not be a big deal.

KRISTIN MYERS: I mean, markets right now are in the green. So there's clearly some disconnect there. And I was reading a note a little bit earlier that said there was similarly a disconnect in the markets after the riots in '68. What do you think is driving that?

JIMMY LEE: Well, I think investors are looking past what's going on with the riots and looking to optimism about the economy reopening. So I sit here in Las Vegas today. And the casinos are opening up this week. And so that's big news for this town as well, as you know, for the entire country for the economy reopening.

So I think investors are looking past what's going on. Obviously, it's extremely concerning for all of us and the safety of everyone and all the communities that have been infected so far. And hopefully this will end soon. But the investor, I think, sentiment is that-- more optimistic about the economy reopening and hopefully that will get past this virus and look towards more good news of-- of an economic, you know, recovery.

KRISTIN MYERS: So you know, to that point about looking ahead, we have jobs report numbers coming up. We have an FOMC meeting coming up. I mean, some people were saying just earlier today that the case might be getting stronger and stronger for negative rates. Do you at all see that?

JIMMY LEE: I don't think that that will happen. I mean, I've heard from Chairman Powell, saying that it's not likely. And I believe him. And I don't think we'll get negative rates. Actually, when we get past the economy reopening and when we get past the virus in a couple of years, we're fearful that with all this new debt that we could get a little bit of inflation. So not only could we get a little bit of inflation from supply shock from demand hopefully coming back, but hopefully we won't get inflation that's, you know, out of control like we had in the late '70s and early '80s but as-- as an investor, I think need to be prepared for that potential consequence and develop a portfolio that can do well in that environment as well.

KRISTIN MYERS: So I want to talk to you about something that-- it feels like a lifetime ago that we were chatting about US-China trade deals. That was dominating our news cycle. So I want to ask you about that because we've seen the tensions between the US and China ratcheting up, China deciding to pull back on some of their purchases of soybean and pork. So do you at all see, with the president downgrading relations with China, that this trade deal might be in jeopardy going forward?

JIMMY LEE: I certainly hope it's not. But I do believe investors are actually paying more attention to that than what's going on with the riots. And it is a big deal what happens with the trade deal with China that doesn't go backwards. And right now with what's been going on with China and Hong Kong, that's up in the air.

So hopefully things will work out and the trade deal will continue on. I know investors are really looking at that closely. But so far with today, the stock market being up, I think investors are optimistic about-- about that as well.

KRISTIN MYERS: All right, well, let's just play devil's advocate that it stalls and, you know, tensions continue to increase. What are you seeing there as the future impact on equities?

JIMMY LEE: I think equities are set up for a pullback regardless of what happens with China. But certainly, if we get negative news on the China trade front, it'll be another reason to take some profits for people that have been invested short term and have made some good returns on this market recovery. So I would expect either way that volatility should kick up from the protests as well as what's going on with the China-US trade deal. And so investors should be prepared for that and maybe look at it also as an opportunity to get some money invested that you didn't get invested possibly during the downturn that we had.

KRISTIN MYERS: All right, Jimmy Lee, Wealth Consulting CEO. Thanks so much for joining us today.

JIMMY LEE: Thank you very much.