Sector strategist Denise Chisholm looks closely at the how the unique effects brought on by the pandemic have affected different sectors in the short term and potentially set them up for accelerated growth in the long run as economies reopen. Denise Chisholm thinks we may be nearing the end of this recession. She calls it atypical, noting that most recessions feel like a roller coaster, while this one feels more like an elevator that got stuck midway up, forcing us to take the stairs. If it’s over in the next two to three months, it may be the shortest recession since 1930. Denise believes that based on market history, the odds of an equity market advance in the six months after a recession is declared over are 100%. In most recessions, the market begins to outpace the economy. Denise notes that we should be looking at what the market has discounted, and specifically the valuation spreads. Despite rallying 40% from the bottom, we are still seeing large valuation spreads.
Recorded on July 22, 2020.