Investors may be wondering, “What is the market pricing in with respect to how we are going to recover as a society from this pandemic?” The consensus is pessimistic, with an expectation for a long recovery. While equity markets have rallied of late, largely fueled by stimulus, earnings expectations are dropping.
- We believe the market is pricing in a relatively slow recovery from the pandemic, with society’s return to normal approximately a year away.
- Equity markets have rallied recently, driven by liquidity from global stimulus; however, earnings expectations for companies are dropping rapidly.
- The flight to perceived safety continues as established growth stocks outperform instead of value and small-cap stocks–which typically rally in a recovery.
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