Recessions are a normal part of the business cycle. However, the COVID-19-induced recession was not normal as it simultaneously impacted both the supply and demand parts of the economy. Social distancing has worked to reduce both the number of cases and deaths caused by the virus, but these same efforts have unfortunately led to mounting economic costs. As states begin to reopen, optimistic investors have been looking beyond today’s awful data and focusing on economic recovery. With this as a backdrop, we have three primary predictions for the balance of this year—a U-shaped economic recovery, elevated market volatility (though a retest of new 2020 lows is unlikely), and a possible rotation in companies and sectors that lead markets forward. These expectations represent our base-case scenario, but are subject to change if unanticipated events occur, such as a renewed U.S.-China trade war, the emergence of a second wave of virus in the fall, or a vaccine is developed.
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Commentaries are published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.
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