By no means are we out of the woods yet with the Coronavirus pandemic, but things are certainly trending in the right direction.  The incredible social distancing efforts that Americans have endured has “flattened the curve” and our politicians are working to restore our society to some form of normalcy. 

A return to normalcy is also underway for equity markets.  Equity markets were faced with unprecedented uncertainty in the early stages of the virus and immediately priced in a worst-case scenario.  As we have cooperated with social distancing guidelines and more complete data on the virus has been studied, equity markets have experienced a gain of roughly 34% off the March 23rd low.   Volatility has declined dramatically, and some areas of the market are poised to take out their pre-virus highs set earlier in the year.  Investors who have stayed the course have been rewarded for their patience. 

The Fed has done a lot to backstop the economy.  They have reduced the Fed Funds rate to 0%, implemented the $600 billion Paycheck Protection Program, increased unemployment benefits, sent direct stimulus checks and much more.  While not perfect, these programs have gone a long way to keep the economy afloat and spark a recovery in the stock market.  

As mentioned, we are not out of the woods yet.  The Fed can only do so much and the next move in the stock market largely depends on how and when our political leaders re-open the economy.  A smart and swift re-open will go a long way to reducing unemployment and getting us back to economic normalcy while providing a massive boost to investor confidence. 

At Contravisory, we are pleased to report that our remote operations are winding down and our Contravisory family is back together again at our office.  We hope there will be no need to implement these procedures again anytime soon but take comfort in knowing that our contingency plan for remote operations has been executed successfully and that most importantly, our team and their families have stayed safe.