Skeptics assert that the ability of the S&P 500 to register a series of record highs in recent weeks despite the ongoing coronavirus outbreak is proof that a mix of investor complacency, programmatic trading, passive investing, and permissive central bank liquidity is preventing rational price discovery in equity markets. Although we do not dismiss this viewpoint, there is an alternate explanation rooted in fundamentals – assuming reasonably timely success of containment efforts, lost output will be paid back with interest in a ü-shaped rather than not V-shaped recovery, Beijing will be engaged in vigorous stimulus efforts, and global central banks will have eased policy to an even more accommodative level then before the epidemic…Sign up for Markets Policy Pro to read the full piece.
Looking ahead to next week, the calendar features some key US economic data.
- US Economic Data
- US Housing Data
- EU Economic Data