The end of 2020 and the beginning of 2021 have so far been very strong periods for doing the homework and picking the stocks that are going to benefit most from the easing of Covid restrictions. The general market, often measured by looking at the S&P 500, is definitely not cheap and for the large companies a lot of post Covid optimism is priced in. Those companies are not the place to be anymore for the stock investor. Higher returns can be achieved elsewhere: mostly in picking small and mid cap companies that have not much optimism priced in but are financially stable and overlooked by analysts.
Newsletter portfolio up over 30% in 2021
The Hubens Capital newsletter discusses these small and midcap opportunities and this has worked out very well in 2021. Overall the portfolio (over 35 stocks) is up more than 30% in less than 3 months, while the S&P is up just over 6%. Examples of very profitable stocks this year are:
Entercom (ETM) up 145%
Performant Financial (PFMT) up 117%
Express (EXPR) up 367%
LEE Enterprises (LEE) up 107%
Many other stocks are up around 50-60% with very few stocks in the red.
Today there are still very strong opportunities
The newsletter focuses heavily on these small and mid cap opportunities and today there are still very strong ones in the market that have the potential to bring returns of 50%-200% over the next 6-18 months. Obviously, the markets can also go down and on the short term one might experience losses. But in such case, the newsletter will advise at what moment to get out or increase the position. Assume a stock is priced in the market for $1.00 but should according to analysis be priced around $2.00. A downturn in that stock, without specific company or industry news, is likely to then become a larger opportunity. In that way, we were able to build large positions in the Covid crash in March 2020 that enabled the investor to make large returns in the recovery after the market crash. A stock market crash is bad for the retail investor that doesn’t have guidance, but the informed investor will outperform in the time after the crash.
Cheap way to boost performance
The newsletter service is a low-cost way to get informed about stocks that are undervalued and interesting to own. There are interesting stocks for the offensive investor, but also for the more defensive investor and for the ones who aim to derive income (dividend) from their investments.
With the current low interest rates there is not much upside putting excess cash on the bank account. It is wise to spread your money over different asset classes and to be not scared to put a significant amount in stocks. Stocks do offer the best performance on the long term. People often are scared to lose money and are afraid of market crashes. Crashes will happen from time to time, but the market does always recover in the end. If you for example look at the S&P 500 total return, there has not been a decade where you would have lost money. On the short term, investing in stocks can be tricky. But on the long-term, patience will be rewarded. Even in 2020 stocks are profitable.
Selecting stocks yourself too time consuming
When you are building a stock portfolio, you have to make sure you spread your money wisely and select the ‘right’ stocks. Doing research yourself is often too time consuming and difficult to combine with a full time job. On the other hand, just trying to find trade ideas via Google is also not a good option. There is an overload of analyses and information. A lot of them is not even independent and it takes a lot of time to find valuable analyses.
Newsletter of HUbens Capital
The newsletter of Hubens Capital is there to help you selecting stocks that have strong fundamentals and are undervalued. The newsletter shows also different risk profile portfolios. There is a portfolio for the defensive and/or neutral investor, one for the offensive investor and also a dividend portfolio. For the defensive (and neutral) investor, the focus is mostly on analyzing and selecting stocks that do not have massive price swings but are undervalued and often also pay a significant dividend. For the offensive investor, the focus is more on small caps and inefficiencies in them due to illiquidity. The dividend portfolio is mostly interesting for the ones that do like to invest in stocks but also want to receive monthly income from their portfolio.
What TO expect from the newsletter service?
Biweekly newsletter focusing on significant market opportunities. The newsletter shows you the reasoning behind the opportunities but evenly important how to trade them. What levels to buy (and sell) in different scenarios. The newsletter also gives you the reasoning behind certain market moves and which stocks are on the radar for the upcoming months. Every stock is classified based on the risk profile and there is a recommendation for how much to maximumly have in a portfolio. The newsletter contains also the current recommended portfolio stocks for the different type of investors. Obviously you can make your own choices and do not need to adhere to the portfolio.
Email updates when positions are initiated, increased or reduced. There are also updates when important events in one of the stocks are happening. Like earnings that shock the stock price, insider buying, etc.
If you become a member and the newsletter service does not suit you, you can cancel at any time without cost. The first month is a ‘trial’ for which you only pay 1 euro. After the first month you do pay 19.95 per month. You can reduce this amount by bringing more members in. Every new member that you bring in reduces your monthly subscription with 5 euro. In the worst case you do not like the stock selections and trade ideas and it has cost you only 1 euro!
As Donald Trump has been nicknaming all of his (potential) opponents, Joe Biden got the nickname ‘Sleepy Joe’. According to Trump, Biden is an old man who barely understands what’s happening in the world and is not able to finish long sentences. Trump argues he should be playing granddaddy instead of fighting for the presidency.
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I am sure over the last weeks and months, Joe Biden is actually sleepy in the sense that he is sleeping well and Trump possibly not. In the last four years, Trump has made a lot of impulsive decisions. Most of them he got away with and things went at least not heavily against them. The US China relationship was a tricky topic but in the end there was some kind of a deal and it did not completely get out of hand. Trump thought he could do the same with the corona virus. First deny the dangers and later on state that he is doing all he can to make sure there will not be many deaths. He made some mistakes here. He underestimated the virus and thought he would be safe saying that if the US would not have more than 100.000 corona deaths, he would do a great job. He probably thought there would be only 20.000 or so and be very safe making the statement. Currently there are far over 200k deaths.
Without corona, Trump would have had a very high chance of getting reelected. The economy was strong and he did deliver on quite some of the promises he has made before his predicency. Currently, also due to underestimating the virus, the US economy is struggling heavily and many workers have been laid off. Quite often in industries, like the oil industry, that have a lot of Trump voters. For Americans, there is one thing more important than the political choice and that is employment. When voters start losing jobs, the responsible leader will start losing votes. The inability to effectively dealing with the corona virus has been leading to the current situation where Biden is having much higher odds of winning the presidency than Trump. I would say 70-75% chance that Biden will be the new leader.
Effect of Biden or Trump on the stock market
The opinions are very much divided on what the effect of four more years Trump or four years Biden will be on the stock market. It obviously is important whether the Senate stays Republican or becomes Democratic. See below my opinion on the stock market under Trump and Biden.
Trump as President
If Trump gets reelected, the general idea is that we get four more years of low interest rates, low tax rates for companies and trade wars. If he would copy his previous four years, it would probably be fine for the economy and stock market, assuming he can deal with the corona virus in 2021. But, I personally do think that Trump will become even more impulsive and do even more just what he wants. Why? He does not need to somehow behave well anymore as he cannot get reelected in 2024. Trump does what iss best for Trump, not for the USA or the world. To get reelected he needed a strong stock market. For the next four years he does not need a strong stock market per se. I think he will lose control of himself and make many decisions that will not favor the economy and the US. With Trump, one might have low tax rates, but one also has uncertainty and stability about the future. For example, how can a Chinese company invest in the US as next month Trump might have changed his opinion. If Trump wins the elections I do see the chance of an initial uptick in the stock market, but I do fear that that uptick will vanish quickly.
Biden as President
Biden is left and he is not that obsessed with the stock market. He fights for minorities and is a climate fan. But he is mild. He is not like Bernie Sanders who wants to ban the oil industry on day one. Biden is a reasonable guy who believes in transitions and understands that those take time. He is the guy who wants to have peace and negotiates in such a way that all parties can live with a certain outcome. Maybe not the most competitive way of managing and maybe not the best for Wall Street. But, Biden is boring and brings stability back to the US. Stability that investors will start rewarding soon. Next to that, especially now when the economy is struggling, he will most likely undo at least some tariffs with China and will not start bullying Europe with car tariffs. If Biden wins the presidency, I do see as a possibility that the stock market initially ticks down just because the general consensus is that Biden is bad for the market. I do disagree with that and I think investors will soon after start to be glad with the stability Biden is bringing to the economy.
Which sectors might do well on a Biden victory?
If you look back over the last four years and check which sectors did well, you can see that these are the sectors that actually would be expected to do well under Biden. Clean energy for example might do well and the oil&gas and coal sector might underperform. But I do think that Biden in the end most likely will not even change that much. He is quite ‘nice’ to the oil&gas and coal sector in a way that he doesn’t want jobs to get lost there and likes aiming for a smooth transition on the long term towards clean energy. He is not a hater of the business. I think sectors that trade a lot internationally and especially with China will do well under Biden. Tariffs might disappear and international trade will benefit from it.
See below the sectors that outperformed and underperformed over the last four years.
When do we know the result of the elections?
That is a very tricky question. Especially this year with the corona restrictions and the fact that Trump is going to do whatever it takes to win the elections. He will not easily acknowledge his loss and might fight the outcome heavily. The complete result is never known on election night. But if the difference of the votes counted is large enough, there is a good change Biden or Trump can claim the victory. Let’s assume that chance is around 60-70%.
Delay in results
For this election, there has been a massive increase in mail-in voting, mostly due to corona restructions on the day of the elections. In some states people could vote weeks before the elections, but also in many states people can still vote by mail to the date of the elections. All these votes then have to be counted and that can take a while. That is the main reason that the official result can take days, weeks or even months. As long as the race is very close, it is possible there is a lot of uncertainty in the days after the election who is the winner.
It is also possible that for example Biden wins the elections by a small majority and that Trump does not acknowledge the result and wants a recount of all votes. In the case that it takes too long to count (or recount) all the votes (has to be done before the 8th of December), then the US is facing a possible constitutional crisis where Trump will do all that is possible to remain president. This is a scenario that might spook the markets as the uncertainty around the presidency will remain for a long time.
Stock tips Newsletter
My next newsletter is coming out just days after the elections, where I will assess interesting stock opportunities. After a big event as the US elections there are always opportunities. Stocks that do see panic selling and trade for too low prices. I do expect a lot of opportunities to arise after the US elections and during the ongoing corona pandemic in the upcoming months and year.
The large tech companies have seen their share prices go up rapidly over the last weeks and months. They have a large weigthing in the S&P, which made the Index very strong over the last periods. In Europe we are less heavy in tech and that is one of the reasons the European stock exchanges are underperforming the S&P over the last weeks. Next to that, the EUR/USD has been very strong which is beneficial for US companies as they can export their products against interesting currency exchange rates and they do pay their costs mostly in USD. The USD has weakened considerably over the last weeks. Investors currently do not see the USD as that much of a safe haven. There is US election risk and the corona virus is far from under control.
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Better safe havens?
Are there better safe havens out there? Investors do think so as they are aiming for Gold and the Bitcoin. Gold has seen quite a strong rally over the last weeks. What is the message behind the rally in gold? In the beginning of the Covid-19 crisis, gold was not that popular and was even in a freefall like all assets. Investors were liquiditating higher margin assets to get cash in. Bitcoin was liquiditated and even gold. Currently investors are pricing in higher chances than before for a so called ‘stagflation’. A rare combination of slow growth and rising inflation. This would very negatively impact the value of fixed-income investments. Stagflation could take hold across parts of the world. Central banks keep on printing money and have set interest rates to record low levels. Some investors belief this in time is going to turn into spending and a period of much higher inflation. As gold is one of the best protections against inflation, investors are fleeing to this metal. I think it is speculative to invest large amounts in gold, as I do think that high levels of inflation are unlikely to come back anytime soon. Life-expecatancy of people becomes higher. Older people do have to rely more and more on a smaller amount of retirement funds for a longer period. They need to start saving at a younger age and they need to save more. They will avoid spending which will leave the inflation rates at a lower level. Next to that, globalization will go on. Large companies like Amazon are able to get you products against lower and lower prices. Further technological developments also will help lowering the costs of products. Less people are needed to do the job and products are being made at a lower cost and more efficient. But, at the moment, gold is a trending topic.
The bitcoin has seen a strong rally as well over the last months. Bitcoin lately broke the $10.000 again and that triggered traders to buy and quite some do expect a rally to levels higher than at the end of 2017. Fundamentally it is difficult to explain why the bitcoin is moving up again. There are a lot of speculative traders in this product and also a lot of gamblers. Or people who only watch the graphs and based on those buy into the rally.
Stocks that still need to recover
Some stocks, especially tech stocks, have shown very large recoveries and some are also on the all-time-high. A non-tech stock that has recovered heavily during the last months is PostNL. PostNL reached a low below €1.00 in March and that was a huge overreaction. PostNL would actually benefit from the Covid-19 crisis as it is focused mainly on distributing packages to consumers who order online. Ordering online became even more popular during the crisis as people did rather not leave the house and quite some places were shut down or had restrictions. Next to that, the accelerated transition to online buying will most likely not revert back in the future. PostNL is able to achieve high margins in their parcel business and is doing extremely well at the moment. In the stock newsletter it was advised to buy below €1.00. Currently the price is €2.40. PostNL moved up over 140% in just a couple of months. There was not too much risk in the investment as fundamentally PostNL was doing very well and at some point this would come back in the stock price. There were no liquidity problems and the business & longer term stock price were very safe to take a position in. There are more companies like PostNL. Companies that are actually doing very well but are being underpriced. And companies that do have problems during the crisis, but will get out much stronger. If you want to know more about these opportunities, check it out below!
Last weeks we did see that the markets did go up and up nearly every day. As long as there was not too bad news, the markets did go up. Lots of investors used the dip in March to get extra equity exposure. Economies were slowly reopening and that gave confidence.
As I wrote last week, the market seemed to get too greedy. And when everyone is greedy, you have to be careful. We saw this on Thursday. The stock market made a strong retreat (-6% on a single day!) based on fears for a second wave. It has been clear that a second wave is quite a possibilty. There is quite some uncertainty about how the second wave would look like. Investors might soon start jumping from calling victory over the first wave towards fearing the uncertainty of the second wave.
Signals for second waves
It is good to keep an eye on new outbreaks of the Corona virus to understand how likely large second waves are. Some countries are doing really well at the moment. For example the Netherlands has the virus under control. When the Netherlands loosened on their Corona measures, there was no uptick at all in Corona cases (besides upticks caused by more testing). Shopping centres and the beaches were busy at times, but the virus did not come back yet. In Europe the situation is quite well under control. With that we saw the EuroStoxx move up much more than the S&P in the last weeks.
Infections in some states in the US went up quite a bit. The following link gives you a good overview of where infections are rising quickly in the US:
You can see that in quite some Southern and Western areas/states, the amount of infections is rising quickly. This came after reopening significant parts of the economy.
Another important thing to watch is if the BLM protests in the US will have a strong effect on the outbreak of the virus. So far it seems not be the case, but the protests are still going on and one needs to wait around two weeks to see the impact.
Meanwhile over the weekend new infections appeared in Beijing, China. Parts of Bejing are being put in lockdown again after 45 new infections appeared on Friday. The origin was a food market. Some imported salmon seems to be the cause of the new outbreak. It is a small outbreak and China understands how to handle it. But it shows that the dangers of travel and import/export are very realistic. 55 days went by without any infections in Beijing. It is going to be interesting to see how well the virus will be contained in the upcoming days.
economic damage has limits
When the Corona outbreak started, each country in the end did what it needed to do to stop the virus from spreading. And each country was able to do that. Most economies were doing fine before the crisis and it could hold its breath for a while. But the economy has its limits. A country cannot be too long in a lockdown without damaging the economy severely. A very damaged economy will bring a lot of deaths too. Lots of unemployment leads to poverty and even much more suicides. Poverty leads to bad hygiene and psychological problems. Politicians will take this into account. Hopefully there will soon be a vaccine, otherwise there have to be made very difficult choices. If the economy cannot take it anymore, do you still lock down the country or do you hope for the best and use quite a loose Corona policy? The difference with the first wave is that we are now much more experienced with how to deal with the virus and with a lockdown. We know more about the virus and how it spreads.
After the market crash that we experienced in March, markets did recover in the weeks/months after but the upticks of the last weeks do remind me of greedy investors. Investors that do not want to miss the train. People are getting greedy and that is normally a sign of a (local) high in the markets. The index and some stocks are heavily overbought. The S&P is only trading around 5% from the all time high and that just in the middle or at the end of the Corona outbreak crisis. The S&P is close to break even for the year. It does not make much sense.
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Investors and analysts were at the beginning of the year thinking that the S&P was expensive and that it was time for a healthy correction. The Corona crisis was not a healthy correction but a crash. The outbreak seems under control but that does not mean at all that there is little damage done. Quite some companies have lost reasonable amounts of their revenues and supply chains are often messed up with part of the chains being damaged. There is no vaccine or effective treatment yet and because of that the economy can not run for the full 100% in the upcoming months. The general opinion is that there will be a rapid recovery but most forget to price in the risks that the economy is facing.
No bankruptcies yet
So far there have not been that many bankruptcies, which makes sense. Most companies, in the low interest rate environment, can survive a couple of months with lower revenues and low interest rate expenses. Though, slowly they are burning cash. Weak companies or companies with low margins will start to feel the massive pain after 6-9 months of lower revenues. Then they will get into liquidity problems. When the first major company will start getting into these problems there will be a chain reaction that will send the stock market lower again.
Markets getting mispriced
Make no mistake, I am not saying this is going to happen. But the risk of this has to be priced in in the markets. It might well have a 30% chance of happening. A 30% chance of a downtick of maybe 30% in the Index. That would mean pricing in a 9% lower index level for that scenario. In the most likely case we do see the economy recovering and we do not see major financial problems for most companies. Still, without the crisis, the economy and the job market would have been much stronger. The economy is an ill patient that slowly recovers but cannot run a marathon yet anywhere soon. In my honest opinion, investors are missing this point. Lots of (small) investors do not want to miss out on the rally and see no alternative to make money. Which is the same as the situation during the Bitcoin mania.
Greed is back
Greed is back. Greed is Good. For the ones that go against it. As Warren Buffett always says: “ Be fearful when others are greedy and greedy when others are fearful”
Why did we tick up so much on Friday?
On Friday the US came with their monthly job report which was much better than expected. It put more energy in the upticks and people seem very convinced that the economy will quickly recover.
Massive returns on outperformers
Some companies/sectors did outperform over the last weeks. Those were mainly financials, energy companies, insurers and (commercial) real estate companies. There were some really nice opportunities in the last weeks. Beaten down sticks that barely did recover. This paid off very nicely in the last week. Some stocks increased as much as between 50% and 100%. Currently there are still some hidden gems like this and for the ones that want to read about them: click below and go for a free trial if you have some money to invest.
Markets have been behaving calmly in the last week(s). Countries do slowly reopen and things are going as planned. Meanwhile the rate of infections in most countries is going down. There are some outliers though and looking from a worldwide perspective the Corona virus is far from over and even not yet under control.
Netherlands doing fine
In the Netherlands the situation seems quite in control. Let’s have a look at the daily amount of infections.
Very promising. The Netherlands is reopening most of their economy slowly and step by step. From tomorrow onwards café’s and restaurants open their doors again. Under strict regulations and all according to the 1.5m society. It is going to be interesting to see if we get a small rebound in the amount of cases or not. To be continued. Most countries are currently showing a similar graph as above. But not all. The US is somewhat struggling still:
Problems in non Western countries
Most problems are currently arising in countries that were a bit lagging with the outbreaks like India, Brazil, Egypt, South-Africa, Peru et cetera. Brazil:
So in Western countries the virus seems getting under control, but it is clear that worldwide there are still regions having quickly increasing amount of infections. This will put some pressure on the worldwide economy and will slow down the speed with with international travel can go back to normal. Only a vaccine or effective treatment can bring some quicker help here.
Worldwide the virus is far from over
Worldwide we are still seeing very high number of new daily cases everyday, as you can see below. While we have seen global stock indices recover a fair bit, the danger is not far away. Worlwide daily infections:
Volatility should remain elevated and we can still see hefty reactions in stocks when things would go worse in Western countries again. I think the first time that a Western country has to make a step back towards a lockdown will be a possible trigger for a large sell-off again.
Stock pickers market
Till then, this stock market is a market for stock pickers. Some stocks have done really well while others have done really badly. Some stocks are currently better not to own, while some other stocks that got punished very severely offer very interesting potentials. In April I advised a couple of stocks that were highly undervalued and doubled in value in less than a month. For more insights have a look at the link below:
Volatility in the market has been coming off as countries are looking forward and ahead of the crisis. Reopenings of economies are coming up. Restrictions are becoming more relaxed and the fear of a very strong Covid-19 death spike is slowly going away.
The next challenge
The next challenge are the reopenings themselves. The reopenings are a positive on itself but it is also important to focus on the behavior of the Covid-19 during the reopening. And that is quite a bit of a black box. Is a second wave coming? No-one knows. Can we go one step forward every week/month? Or is it a long fight with one step back now and then as well?
Problems yet to come?
Also, so far not many companies have been getting into severe problems yet. They are still surviving but for how long? Revenue levels are not going to be back at pre-crisis levels soon. Companies with a lot of debt or already in longer term trends of declining revenue streams might be hit hard even if the economy is partly or nearly fully open again.
Shell throwing in the towel
That it is not a quick recovery when economies open is confirmed for example by the fact that Shell decreased the dividend heavily. It was the last thing that Shell ever wanted to do. It means, as they said as well, that they expect the corona crisis to have long-term effects on the oil markets. They do not expect a quick recovery. Most people have bought Shell for the dividend. Shell never lowered the dividends since WOII. What a stock! Never sell Shell is what people thought. In the current oil business it is important for companies to decrease spending, focus on the cash flow and survive the oil crisis. The ones that survive will come out stronger. Oil is still needed for a very long time and is expected to peak somewhere around 2035. Normal demand, without the Covid effect, is expected to increase year over year.
Importance of a stock list
As an investor it is quite important to have a list of stocks on your radar to potentially buy in case of reopenings of the economies and a market recovery. Some stocks are still close to the year lows and are heavily affected by the Covid-19. Though, if things turn, these are also the stocks that do have an immense amount of potential as long as they are not overloaded with debt. To read more about these kind of stocks, you can have a look below.
Markets have stabilizied in the last weeks. The S&P posted two weeks of gains and the focus is going a bit away from the Coronavirus outbreak towards the Corona virus effects on the economy. Economic data in the upcoming weeks will give indications of how severe the crisis is going to be. The Corona virus outbreak is slowing down, and the next question is how do countries partly reopen the economy and when? Do restaurants open soon again and what kind of measures will be taken. Can companies that depend on on-site sales stay alive even if the economy only partly reopens under strict circumstances?
The upcoming week is a very important weak for the market to start getting a feeling for the pain that the Corona virus has brought to companies in Q1. In March most of the pain started so we get some insight. Nearly a fifth of all S&P companies will have their earnings released this week. Next week I will look back and explain what information we have gotten so far. Even more importantly than just releasing the Q1 numbers is the guidance for the rest of the year and which measures do have to be taken. Companies might stop share buybacks, suspend dividends, reduce CAPEX or even do need to attract additional cash. Last week the financial markets have been trusting the words of Donald Trump. He is trying to reopen the economy sooner than most expect according to him. Next to that there have been rumours that companies are getting close to a vaccine or an effective treatment for Corona. Gilead is believed to have found an existing medicine that might work well on patients that suffer from the Corona virus. Maybe it is true, maybe not. Already since February I have read many claims of people that companies had found some kind of effective treatment. So far these were mainly rumours and were more signals of hope than of facts. Even if there is a treatment or a vaccine, it probably still takes many months before large amounts of people do get access to them.
Do people dare?
Even when the economy would reopen rather quickly, would this exactly bring production and earnings quickly back to pre-Corona levels? Probably not. People will stay careful and the government will probably have strict measures that will stay in place for months/years to come. Just looking at Wuhan, China, shows that even when people are free to Dine Out again, they still do not. Restaurants and cafes are open but are quite empty. People rather want to be safe than sorry. People do not go out and prefer cooking at home. In Europe we might be different, but still I do not expect full restaurants anywhere soon. People probably do not want that and the government neither. At least till there is a vaccine available. Nevertheless, some stocks will move up quickly and behave in a very bullish way when more information will come up in the upcoming weeks about partly reopening the economy. Why? They will start having revenues and can avoid getting into financially trouble. Quite some stocks are currently priced for bankruptcy and this can change very quickly. To keep on top of these companies, check below:
In the last week stocks have done well. What is the reason for it? And is this going to be a long rally from here? Or just a bounce?
Reason for the upticks
Say the economy would be a patient. Let’s say the patient would get very ill, for example getting cancer or Alzheimer. Stock markets do not like uncertainty and would panic very hard while the patient (read:economy) is very ill and the future path is very uncertain. Then at some point the patient dies (read: recession is there). This would be the worst-case scenario. But somehow, the market does get the certainty of the state of the patient (economy) and can start looking forward again.
For diseases like Covid-19, the day that the most people get infected is probably close to the low of the markets. Currently, the amount of new infections has been stabilizing worldwide and gives the markets some freedom to start looking again ahead of the disease. This is a bit what is happening now. Markets start focusing again on signals that economies/countries might start partly reopening again in the upcoming weeks/months. For example, in the US they are currently assessing if they can start sport events without public in May or June.
Long rally from here?
That is not per se a likely scenario, it is one of the possible scenarios. It could also easily be a bounce that we are experiencing now. After which the markets decline again. It is all depending on:
How long does it take to get the Covid-19 completely under control?
The trade off that countries make between saving lives and saving the economy?
At what stage do they (partly) re-open the country again?
Do they come with extra stimulus every week? Or do they have to let a lot of companies go bankrupt?
Do some politicians think more about their elections and try to save every single life instead of doing what’s best for the country as a whole?
How severe the recession will be and how well the financial system can cope with that.
The recession still has to come and economical figures in the upcoming months will give indications how severe and long the recession will take. The current situation is very exceptional and no-one or only few people do have a good idea how the economical landscape will look like in a few months and years.
Every crisis brings long-term benefits
People and countries learn from difficult times. It is easy to live in a world when things are going well, but when things are difficult people do need to get creative. A lot of people in a lot of jobs are currently finding out that working remotely from home is not that bad and can actually work very well. I expect that in the future, lots of more people and companies will offer people to work from home more and more compared to the situation before Covid-19. This can have enormous benefits. Less hours do get lost in travel (less traffic jams), people working more efficiently and last but not least the environment benefits as well.