What do we see?  A “V”!  Yes, we had a recession. Governments around the world shut down economic activity to stem the spread of the Covid-19 virus, prompting the sharpest, deepest recession on record.  Starting in February and ending in early May, the peak-to-trough drop in annualized GDP approached 10%, versus 6% in the Great Recession of 2007-2009.  Investors’ spirits dropped accordingly.

But now the economy is expanding! Global Central Banks and Washington policymakers reacted to the crisis with unprecedented speed and vigor.  The former contributed over $13 trillion (about 15% of global GDP) and the latter added over $2.9 trillion, with more to come.  This response, plus the global reopening of economic activity (1/3 so far?), has limited the recession’s duration.  The “V”-shaped rebound in stock markets around the world surprised (should you say delighted?) many investors and confirmed our belief that an expansion is underway. Still, economic and stock market recoveries are never without interruption, so expect some bumps.