page banner image

Markets can deal with bad news but not with uncertainty. As we get a clearer picture, we’ll see how much has already been discounted by the market.

By Quincy Krosby, Chief Market Strategist, Prudential

April 01, 2020

Highlights

  • The Fed is all in on keeping the economy solvent and markets functioning
  • The fiscal relief package will help cushion the economy during the shutdown
  • Markets remain vulnerable to headlines

Coming into the second quarter, the economic data releases are beginning to show how quickly and forcefully we have transitioned from “a good place” in terms of the economy and monetary policy, as characterized by Chairman of the Federal Reserve Jerome Powell, into the surreal world of a global economic shutdown. This is a world now characterized by daily counts of novel coronavirus COVID-19 cases and deaths, both here in the United States and around the world. This is a world in which the data are sliding quickly, erasing the remnants of what was a strong housing market, manufacturing that was finally beginning to expand, the lowest levels of unemployment in decades, and consumer optimism that suggested a healthy backdrop for the second quarter.

This is a world with huge daily swings in the stock market, which had—despite debates regarding valuation—recently reflected optimism, reaching new highs even as the virus began its migration out of China.

The closing down of the economy, as governments on the federal and state levels attempt to contain the spread of COVID-19, has led to broad and intense discussion of whether the measures are too draconian, and whether restrictions should be lifted sooner rather than later for the sake of the health of the overall economy. The issue of individual rights has also become an integral part of the national discussion as state after state invokes containment policies. To be sure, as the data unfold, particularly with unemployment rising to levels we haven’t seen since the 2008-2009 financial crisis, the debate will intensify.

Read Quincy’s full Q2 April 2020 market commentary, “Whatever it takes.”

The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This document has been prepared solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

The Prudential Insurance Company of America, Newark, NJ and its affiliates. Prudential and its distributors and representatives do not provide tax, accounting, or legal advice. Please consult your own attorney or accountant.

In providing these materials, the issuing companies and distributor listed above are not acting as your fiduciary as defined by any applicable laws and regulations.

© 2020 Prudential Financial, Inc. and its related entities. Prudential Annuities, Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

1033222-00002-00