Stock Market: Happy Easter 2020

(Drivebycuriosity) - It`s Easter again. It is a very different Easter, the world has changed extremely in the recent weeks. Instead of seeking for Easter eggs we are hiding from the virus. We are told to stay at home, to avoid any contact. Many industries are shut down,  supply chains are interrupted and many businesses are on life support. COVID-19 and the measures against it killed the 11 years old bull market and caused a wave of panic selling on the stock market. There was talk that in the US 50 percent will be infected and everything will be shut down for many months. Temporarily the S&P 500, the gauge of the US stock market, crashed more than 30% from the all-time-high from February 19.

In the recent days the S&P 500 rallyd again and regained about half of the losses. The recovery rally is driven by encouraging news from the COVID-19 front which overrides the grim economic date. In the US and many other countries the curves are flattening (new cases, hospitalized persons, deaths) - thanks to lockdowns, self-quarantines, social distancing, hand-washing etc. Governments are already talking about gradually lifting the restrictions. We are getting reports about the emergence of very effective therapeutic drugs (e.g., hydroxycloroquine, Azithromycin, zinc), many firms & university institutes are working on multiple vaccines and the traditional flu season is ending - thanks to better weather. The rally is also fueled by the $2 plus trillion stimulus packages from the government. And the Federal Reserve started to add about $4 trillion by giving loans & purchasing bonds.

With some luck an economic recovery could start in May. The second half of the year could show an economic boom starting in the third quarter. There is a huge backlog demand. People are tired from sitting quarantined at home, they will be happy to go back to work and to visit shops, bars, restaurants. The recovery will be still be fueled by the $6 trillion plus stimulus tsunami which works as financial steroids. There also will be strong tailwinds from record low interest rates  and oil prices are still much lower than at the start of the year.

Happy Easter!