As the month of May comes to a conclusion, many economist are optimistic that the worst of the recession may be over. Bob Doll, senior portfolio manager and chief equity strategist at Nuveen, wrote a few sentiments today that we think sums up observations looking forward:
- Economic activity remains depressed, but should start to pick up.Investors seem to be largely looking past the dismal (and expected) data from April. Instead, they are focusing on possible improvement from economic reopening, pent-up consumer demand and massive monetary and fiscal stimulus.
- May could mark the end of the shortest but deepest recession in a century.As the global economy slowly and unevenly unlocks, June data could show a reacceleration. Optimism over such prospects has allowed stocks to retrace so much of their March losses.
- We anticipate another $1 trillion stimulus package to come in late June.Details need to be worked out, but we expect additional tax cuts, aid to state and local governments, unemployment benefit extensions and possibly some corporate liability protections.
- The Fed has been unequivocal about its ongoing support for the economy and credit markets. Stimulus measures and subsequent announcements by the Fed that it would support credit markets and promote liquidity have helped reduce corporate credit spreads since the equity-market low on March 23. This remains a positive for equity markets.