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What has changed vs expectations since March equity bottom?
A lot
1/
A lot
1/
-Infections and hospitalizations dropped faster than expected
-Reopenings showing lower than expected R0
-IFR/CFR likely much lower than feared
-Therapeutics emerging
-Narrative shift to ‘natural disaster’ meaning one-time (not one infection wave) event to look through
2/
-Reopenings showing lower than expected R0
-IFR/CFR likely much lower than feared
-Therapeutics emerging
-Narrative shift to ‘natural disaster’ meaning one-time (not one infection wave) event to look through
2/
-‘Unlimited’ bipartisan and global fiscal stimulus (unexpected size, speed, etc)
-‘Unlimited’ global monetary stimulus (unexpected size, speed)
-V shaped recovery in early cycle fundamentals
-L-shaped recovery already off the table
-Weaker than expected dollar
3/
-‘Unlimited’ global monetary stimulus (unexpected size, speed)
-V shaped recovery in early cycle fundamentals
-L-shaped recovery already off the table
-Weaker than expected dollar
3/
-Rates remain historically low
-Aggressive corporate cost cutting (high incrementals when that fundamental recovery shows through in revenue)
-Market recovery led by secular growth rather than cyclicals
4/
-Aggressive corporate cost cutting (high incrementals when that fundamental recovery shows through in revenue)
-Market recovery led by secular growth rather than cyclicals
4/
Also still a massive amount of cash on the sidelines, sentiment remains horrible (market likes to climb wall of worry), Fed just responded like clockwork on a dip (showing active support), higher market is reflexive for fundamentals
5/
5/
And policymakers want inflation which may pop the bond bubble and lead to massive equity inflows...
6/6
6/6