As we sit here today there is a lot of talk about “looking across the valley” to the world we will inhabit after the lockdowns and the worst of the virus is behind us. What needs to be considered though is the following;
1. The floor on the other side of the valley will be lower than where we stepped off.
2. The valley is deep but the damage that has been caused to the economy as a result of flicking the “off” switch is not yet fully understood.
3. How wide is the valley? I think this is something we initially under-estimated and the recovery is now likely to be “U” shaped rather than “V” shaped.
This month there has seen what looks like a V-shaped recovery in the stock market but what has happened in the economy? This is where the disconnect lies. A 27 per cent jump in the US S&P 500 is technically a bull market.
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