The stock market has predicted a faster and more robust economic recovery than many economists and pundits forecasted. It is well off its lows and nearing healthy recovery levels.
Markets are excellent forecasters but not perfect. Economic activity will soon determine its accuracy. The collective wisdom of market participants can lead to exuberance and overshooting the reality on the ground. However, fear and concern seem to be the more popular sentiment; so, a good bet is there is more to go. At some point, many fearing of missing out (FOMO) will crowd in and make an interim top.
The news from areas of the country that are opening back up is very encouraging. It seems many people have had enough of the shutdown and are eager to get back to more normal activity. The young may lead. From new home sales to purchases of new automobiles, the numbers are far more encouraging than one would expect. Next we want to see how general retail sales ramp-up. The sooner the economy gets back on its feet the less long term damage it will incur. The Bull is hopeful and encouraged by the market action.
The stock market recovery started with a narrow and select group of companies that seem to be clear winners of the crisis. Companies providing distributed communication tools for at-home work and education are an example. Since then more and more companies as well as sectors are participating in the rally. Recently, many economically sensitive stocks have come to life, clearly indicating hope for improved business prospects soon. The Bull and his partners are liking what they are seeing and hopeful too; stay steady my friends.
The Lonely Bull