MacNicol’s Monthly Commentary – June 2020

Don’t look now but the S&P500 is back over 3,000 points. Yes, I let out an incredulous gasp myself. The absolute level of the S&P500 was thing but I was much more surprised by the speed the index “tore” away from a well defined trading channel during most of late April and early May. Recall that just 60 days ago the 3,000 point level was viewed as  insurmountable by a decent number of analysts and strategists. A jumbo dose of monetary stimulus along with emergency fiscal measures helped, but I think the real reason why the S&P500 is up now 45% from its March 23rd low is because investors are beginning to price in expectations of an economic resurrection. The ‘emergency” measures from regulators were timely and did much to stabilize matters. But the reality is these measures are temporary, fraught with unintended consequences and not to mention unbelievably expensive.


 

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