If that takes a year, the question becomes, “How will companies do when they’re running below capacity?” So how will companies do operating at 20%, 30%, 50% capacity for a while. There’s stimulus money out there to help those companies. But in general, there’s a fairly long recovery ahead of us for the economy, for companies, for fundamentals. So if you’re an investor, that’ s not particularly insightful because that’s potentially what’s priced in the market. So how do you reconcile that with the fact that we’ve rallied in the S&P 500, 25, 26% from the bottom. That’s why you hear a lot of macro strategists, for example, say the market is pricing in a quick recovery on the virus, the market is expecting that we’ll turn a light switch and the economy will go back online quickly. I don’t think that’s the case. All of us investors, we’re reading the same research, and we know it’s going to take a long time.

The market has rallied from the bottom, probably primarily on the basis of liquidity and the stimulus. We’ve had $10 trillion and counting in stimulus globally—fiscal and monetary—in about four weeks, and that’s remarkable. And that’s a lot of money flooding the market. Also just stepping back from panic around the virus and the pandemic and around the plumbing in the financial system, which for a while looked like it was going to break. So that has fueled the market rally. We all know earnings expectations are dropping like a stone. And they’re continuing to drop like a stone. And most economists expect -4% in global GDP for 2020.

So it’s been a liquidity fueled rally. In fact, if the main scenario being priced in the market was one where we recover quickly from the virus, you probably would see different stocks outperform than what we’re seeing right now.

 If the scenario was that we’re going to flip a light switch and that’s why the market has rallied, you’d probably see value stocks rally relative to growth. Meanwhile, they’re down about 17% year to date relative to growth. You’d also probably see small caps outperform large caps. And they’re down about 14% year to date relative to large caps.  This rally has been described as a pseudo-bullish rally because we’re not seeing the cyclicals outperform. There’s still a flight to safety, if you will, in the stock market.

Now, bonds, and safety in bonds, is remarkably expensive so that’s contributing to this size and style rotation, if you will. In fact, it’s not a rotation because value was already underperforming growth going into the sell-off. It was already cheap going into the sell-off. And the same thing could be said of small caps.