Forty-six days ago, we wrote “This Time is Different”, the same day the US confirmed its 100th Covid-19 case. Since then we’ve seen massive market gyrations, peak Covid-19 growth rates, and the biggest monetary + fiscal packages in history. It seems like it has been many months – but no, just a long 46 days. We’d love to write this update and include some charts like we normally would, but we are in “no man’s land” of economic data. Data from the past is no longer relevant, and data from April/May simply doesn’t matter. It will be immeasurably bad, current productivity is basically how many more times you walked your dog over last week. Remember, markets live in the future and already know the economy is near halted right now, however jarring the near-term data may be. Markets are thinking about the fall/winter; which is why we’ve seen prices come up off the lows of March.
We feel positive on equity markets. Our positivity isn’t because we have any unique insight into whether businesses will begin to open on May 4th or May 20th, nor do we think opining over a few weeks is really that important. Bouts of bad virus or market news flow will come and go throughout the summer, keeping volatility elevated. Our positive outlook comes because we are in the midst of a human crisis, not a financial one – and while the shock is greater, our resolve becomes stronger. And we know better than to bet against humanity.
