Markets All the Way Back!
Markets started from the bottom now they’re here…
We haven’t defeated the virus, far from it, but the S&P 500 at least completed its own full recovery last night, setting a new all-time high. The investing world’s historians will look back on the first half of this unforgettable annum and explain it something like this:
The coronavirus started in Wuhan, China. It hitched a ride on globalization to infect most all Far East Asia, and then begun creeping further West. It was airports that closed first, but a ‘contain not control’ approach led to total business shutdown, hysteria, and a stock slide.
After the toilet roll hoarding, The VIX shot up 500% before Central Bank money printers were kicked into action, and stimulus rained down. It was then low-yield bond investments, out, and high-risk picks from the stock stack, in. It’s been smooth-sailing ever since for the vested, as the world adjusts to life right now.
The masses take issue with the gains, however. It doesn’t seem right that investors get so rich while a supposed health crisis looms large over the working class. Yes, but no one talks about the need for businesses to recover before unemployment numbers can recover!
We’re in August now, and we don’t see stimulus stopping. It doesn’t look like a second wave is coming. The markets see a debt pile accrued at the worst of times, now about to get tendered and refinanced ahead of better times.
It’s conceivable that the fundamentals, like consumer spending, catch up with the markets before markets get around to pulling back, so we’re in a good place bar a few bubbles!
The questions on our minds now are where does monetary policy go from here, what corona-era consumer habits will we all stick to, and where in the classic economic cycle of booms and bust do we pick up from? Do the ‘classic’ models even hold up anymore?
We’ll leave all that in your safe hands.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.