Negative news, including jobless claims and renewed tensions between the United States and China, dominated the news last week. The market reacted in turn and dropped the first three trading days before staging a partial recovery at the end of the week.
Many states have begun reopening their economies and with this comes questions on the course that COVID-19 will take. Uncertainty abounds, both surrounding the economic recovery as well as the progress on developing treatments and a vaccine. Continued near-term volatility is likely.
We spend a great deal of time talking with our industry partners regarding their projections for a market recovery. Discussions lately have focused on the “alphabet soup” of recovery trajectories. That is, if you picture a graph of market returns, what letter will that graph resemble? For example, will we see a “V” recovery, where markets have already bottomed out and now are on the rise to previous highs? How about a “W” recovery, where markets drop again to test previous bottoms and then rise? A “U” recovery would mean more time trading in our current narrow range before a prolonged upturn. The latest prognostications even include a Nike ‘swoosh.’
It will likely be several months before we know which prediction was correct. Each of our partners offers a different opinion on which letter the recovery will take. However, they are all united in the belief that a recovery WILL take place. Sometimes we get caught up in the weeds and lose focus on the big picture: that this pandemic will end and the economy will recover.
As always, if you have any questions or would like additional information, please don’t hesitate to reach out.