The ongoing market recovery provides the theme for our Exclusives today. First up, top strategist John Tierney extracts what the S&P500 is pricing for the shape of the US recovery using a dividend discount model. He then runs through where S&P would trade in different scenarios.
Second, the normally bullish macro strategist Dominique Dwor-Frecaut gets more cautious on markets in the near-term. She digs into how much of Fed policy will transmit to the real economy. We also feature top commodities expert John Butler on whether bitcoin is a safe-haven asset and whether it can benefit from ultra-easy monetary policy. Finally, I compare and contrast the world before COVID and after COVID.
We also update our US election tracker showing a continued drop back in Trump’s popularity, and our daily COVID tracker.
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The ongoing market recovery provides the theme for our Exclusives today. First up, top strategist John Tierney extracts what the S&P500 is pricing for the shape of the US recovery using a dividend discount model. He then runs through where S&P would trade in different scenarios.
Second, the normally bullish macro strategist Dominique Dwor-Frecaut gets more cautious on markets in the near-term. She digs into how much of Fed policy will transmit to the real economy. We also feature top commodities expert John Butler on whether bitcoin is a safe-haven asset and whether it can benefit from ultra-easy monetary policy. Finally, I compare and contrast the world before COVID and after COVID.
We also update our US election tracker showing a continued drop back in Trump’s popularity, and our daily COVID tracker.
Enjoy!
Bilal
What If Equity Markets Don’t Get That V-Shaped Recovery? (4 min read) US equities’ steady upward march even as economic and company data worsens by the day has left many investment pros scratching their heads. Yes, economies and markets will eventually recover. But how do we divine the path back to something like normal?
More to the point, what is the market thinking? Is there some irrational flush of exuberance on hopes that the coronavirus is fading? Is it our old friends FOMO and TINA – aka Fear of Missing Out or There is No Alternative? Or is there simply blind faith in central banks?…
(John Tierney | 30th April, 2020)
A Pause In Policy Support Could Provide A Buying Opportunity (3 min read) A May pause in new policy initiatives against a backdrop of slow support to the real economy creates downside market risks. Over the longer run, though, continued improvements in COVID news, a robust Fed put, and the US electoral cycle suggest more market upside from current levels.
The SPX has retraced 60% of its February-March decline, but this speedy recovery could face tests over the next few weeks for three reasons…
(Dominique Dwor-Frecaut | 30th April, 2020)
Will The COVID-19 Scare Propel Bitcoin Higher? (6 min read) Bitcoin has drawn speculative attention recently in part because of the much-anticipated ‘halving’ taking place in the coming weeks. Correspondingly, the bitcoin price has recovered modestly from a well-established prior downtrend. But is the correction over?
And should we see the Covid-19 scare as a positive for bitcoin given that most monetary authorities have loosened policies and enacted various unconventional, emergency lending measures in response? I still think bitcoin is an elegant monetary experiment of potentially useful social value, but I believe gold instead is most likely to be the monetary ‘winner’ from these developments…
(John Butler | 30th April, 2020)
World Before COVID, World After COVID (1 min read) We’re in the fog of COVID, and it would be tempting to extrapolate our lockdown lifestyles into the post-COVID world. However, we have to careful not to assume that human nature and habits have fundamentally altered. Indeed, the French phrase – “plus ça change, plus c’est la même chose” (the more things change, the more they stay the same) – is apt. With that in mind, I’ve listed how I think the big themes of the “before COVID” (BC) world will change in the “after COVID’ (AC) world:…
(Bilal Hafeez | 30th April, 2020)
Global COVID-19 Tracker In the DM world, cases continue to increase only at a moderate pace of less than 5%. Yesterday, Finland saw the largest daily increase in cases of 4%, while US, UK, Canada, and Sweden registered 3% increases. On COVID deaths, the UK saw a huge jump of 20%, which was due to including deaths in all settings not just hospitals. Elsewhere, Canada, Japan and Sweden saw deaths increase 5%-6%…
(Bilal Hafeez, Stefan Posea | 30th April, 2020)
US Election Tracker: Trump’s Ratings Drop Once Again President Trump’s approval ratings have continued to drop in the past week with the unprecedented rise in jobless claims and official end to the longest US expansion in history offsetting the positive from the ongoing stock market recovery. His comments on using disinfectant to combat coronavirus probably did not help either. Prediction markets still see Biden beating Trump in November, but a lot could change before then. In particular, Hilary Clinton’s recent endorsement of Biden will give Trump more ammunition to attach him…
(Bilal Hafeez | 30th April, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)