A Bloomberg article over the weekend stated, “if you take a gander at the chart of the S&P 500 (SPX) it sure looks like traders expect the coronavirus crisis to end quickly and the economy to roar back.” In our opinion, there is a misperception about what the S&P 500 (SPX) is messaging. In our view, it hasn’t spiked on the anticipation of a strong economic rebound, but has ramped based on the coronavirus impact and a probable abnormal economic recovery. We would characterize the extraordinary move in the market since the 03/23 low and 04/09 Fed announcement as “economically defensive” and driven by those mega-cap growth stocks that benefit from a longer stay and work-from-home (WFH) economy, or the health care sector involved with the COVID-19 response.
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