by David Picton and Team, Picton Mahoney Asset Management
The coronavirus forced a global recession. Massive monetary and fiscal stimulus was then applied around the world, most notably in the U.S., where the U.S. Federal Reserve (the Fed) succeeded in pushing real bond yields to record lows while driving investment flows into risk assets, especially growth stocks. While some segments of the economy remain quite depressed, a new economic cycle is now generally underway. While stock markets seem priced for a better future, one crucial ingredient remains before declaring an outright victory over the recession: a clear plan to open the U.S. economy that safely deals with the COVID-19 threat. We think COVID-related issues will be sorted out as 2021 progresses, leading to the new emergence of more cyclical leadership in stock market indices.
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