| President Trump is eager to lift restrictions and get Americans back to work. Official projections for the final death toll in the US have been lowered to ‘around 60,000’. The president’s initial, gut instinct on Covid 19 (‘this is a seasonal virus’) is drawing support from more and more US political commentators.
Rightly or wrongly, the stock market is responding with reports of a possible peak in hospital admissions in the US and UK spurring a shift in sentiment.
Italy and Spain have already turned a corner.
Sceptics warn that a proper bear market is not complete without ‘bear market rally’. The S&P 500 has recouped 48.1% of the losses sustained between February 19th (3386.2) and March 23rd (2237.4). Waves of money ‘gushing into asset markets’ as a result of central bank panic, are pushing market prices and stock indices higher critics claim.
It should be remembered: central banks can ‘do whatever it takes’ because core inflation was trending substantially below 2% before the crisis, and has now fallen even further.
This week will be critical. if hospital admissions definitively slow in New York, the rally will extend.
It is telling, perhaps, that real estate led the recovery in the stock market last week, rising by 21.2%. The S&P 500 was up 12.1% last week. The fall in mortgage rates of recent weeks, embedded by QE, will provide a huge boost to the housing market, once the curbs or restrictions are pared back.
Summary
• Central bank support helps
• But lockdowns will end
• Underlying health problems require focus on tech
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