We just reached the biggest 50-day rally in the history of the S&P 500. Rally? Yes. Bulls vs Bears. Bulls win. Markets love image.
Non specialist find this “weird”: ongoing sanitary crisis, worst recession in ages, geopolitical storm, social unrest, martial law discussed in the US, curfew in NYC the world's financial center, tensions in Hong Kong ...if this a “rally” it is a sporty one.
Specialists as always are pretty good at explaining what is going on. Less convincing about the future. They underline the role of central banks, the influence of tech stocks, some green shoots of a promising recovery or TINA (There Is No Alternative to equity when rates are at zero). Some think the market sees things that we are not seeing: the beginning of a new business cycle? These might be good reasons.
In few years we’ll have the detailed reading and might be surprised by what we will learn.
But shorter term the growing gap between specialists and laymen might raise suspicions. The rally might well end up as a head to tail. Main Street might consider Wall Street first with surprise then with anger. Ironically however and for the time being with the curfew and lockdown Main Street rallies are under control.
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