Taking Time to Smell the Flowers

In the words of Alexander Pope, “Hope springs eternal.”

Since the depth of this winter’s market decline a month ago, hope is returning to the market and our economy. We know hope is not a strategy, but after being confined to working from home for the last five weeks, we should all welcome the arrival of Spring.

As usual, the market did what it does best: humble all participants. Just as the call for the market to retest its March low became the consensus, the market rallied to ~2,800, still well below its all-time high. Investors, business operators, and officials are starting to look beyond the peak of new COVID-19 cases.

Debating about when the economy should reopen and how, would take many more words and time, but I think we can all agree that it will not be a “normal” re-opening. We cannot lose sight of the fact that only a vaccine will provide a true solution to this pandemic.

A staged, regional opening of the economy probably makes sense. Unfortunately, some businesses will not recover, and the ones that do may need more help, including our own local friends and family. As we reopen, the necessary information and data investors crave may not be complete, and we may very well experience an “ebb and flow” of good and disappointing news.  And that’s okay.

Stocks, bonds, oil, countries, and even real estate may not recover at the same speed and magnitude. Investors will take their cues from all these asset classes and even from personal insights. Earnings season is upon us and we expect a wide dispersion in what companies will say about past expectations and the reality of the last few months, never mind giving any guidance for the rest of the year. We have built an earnings framework through 2022 to help navigate the next few months and look for investment opportunities on your behalf.

Finally, we should celebrate our resiliency and achievements, no matter how big or small they are. After all, it’s time to go outside and smell the flowers, of course, while practicing the prescribed social distancing.

Best Regards,

Amaury de Barros Conti