This Week's Message: We've A Long Ways To Go

Considering even the best case GDP projections going forward, the notion that stocks have already priced in the economic reality to come is, in my opinion, the definition of faulty. If the market doesn’t leg down to, at a minimum, the recent lows over the next few days/weeks, I suspect we’ll see it when the data that will truly reflect current conditions begin to hit late-April, early-May.

In the meantime, we can hope -- for much more than market reasons -- that the COVID data improve markedly and that we, thus, can begin formulating a somewhat more optimistic near-term thesis…

Longer-term, however, I remain fully cognizant of the fact that our macro assessment pre-virus had us already hedging portfolios and moving to a generally more defensive core asset allocation. The nature of the downturn has indeed provoked a government stimulus response of record proportion, nevertheless, those numbers, as huge as they are, at this point merely serve to lessen the initial liquidity blow while, at best, staving off some of the next wave of stressors that have already begun to hit the economy. 

The severity of this particular downturn will no doubt inspire further measures, on both the monetary and the fiscal side, which may (maybe) mitigate some of the fallout (I'm talking markets). However, I’m reasonably certain that the downturn will ultimately run its course and, in the process, let’s hope, clear the market of the worst of the excesses that have built up over the past 11 years -- those found in corporate credit in particular…

Speaking of further stimulus measures, per the below, heart-breakingly, individuals and the small businesses they work for will be needing additional assistance going forward:

Click to enlarge...

Thanks for reading,

Marty