If you have been following us, you know that we called this spot on. What happens next? My take is that this virus gave us just the cover we needed to avoid a long and deep recession that would have arrived anyways just because of earnings and the business/interest rate cycles.
But now we have a virus that we do not yet know how it will turn out. If it dissipates by Summer, which I expect it will, then we will have a strong recovery due to the fact that the narrative can now read “business slowly improving” instead of “business being crushed even more”. I would normally look for a bounce, but it seems like Wall Street made this crash happen even faster than times before because too many people were wise to the game.
So, if we get policy responses from the Federal Government then we could still have a good bounce and then possibly head lower or maybe get back to the narrative of “business slowly improving”.
The FED has already cut rates and is printing money like crazy which will lead to huge inflation in order to keep everyone working for stuff. They might cut rates again in the March 17 meeting, but it seems that their actions no longer influence the stock market in a positive way. They are no longer relevant in the sense that they can do anything to improve market conditions. We need policy response that affects REAL PEOPLE’S LIVES and stop eroding their work in the form of their hard-earned money a.k.a people’s very lives. If they don’t get this by now, then we truly are headed for even worse times.