Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
Chief Investment Strategist
Summary: Yesterday's close in S&P 500 marked a 17.6% gain in three trading session something we haven't observed since the 1930s in a testimony to how volatile markets have become during this COVID-19 outbreak. We have looked at previous big moves and what S&P 500 did subsequently. History suggest declines on average in the next two trading sessions after such a big move but then over subsequent six weeks equities offer cumulative returns of up to 6% on average. Over a three-month horizon the outcome range is massive so investors should be careful about taking bold positions. In other words this is a trading environment where active management of positions is crucial.
Yesterday’s close in the S&P 500 Index marked a 17.6% gain in three trading session turning it into the 6th biggest such move since early 1928. With aggressive policy moves and a period of optimism it’s worth pondering where equities will go from here.
Today has so far only offered risk-off for investors with equities down 5% in Europe as the EU Council meeting last night was a total disappointment for Europe as especially Germany and the Netherlands against eurobonds and the leaders could not find common ground on a coordinated fiscal response. This has left the market wondering whether Europe’s recession will be deeper and with the weekend upcoming many traders might be realizing their gains this week.
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
China Outlook: The choice between retaliation or de-escalation
Commodity Outlook: A bumpy road ahead calls for diversification