Even the stock market’s capacity to shrug off the financial devastation and gloomy coronavirus headlines has been improve emboldened bulls and baffle some of the savviest Wall Street specialists.
A major dose of reality, however, looms large, if Andrew Lapthorne, the worldwide head of quantitative research at Societe Generale, has it right with his latest prognosis.
“With questions on the effectiveness and wide availability of vaccines remaining, as well as the potential impacts of the pandemic’s damage to the economy, there may be more downside risk from markets overshooting,” Lapthorne wrote in a note to customers cited by Company Insider Sunday.
He pointed to historic data that shows exactly how extraordinary the rally from the lows before this season was. Moving back to 1929, the S&P 500
has recovered by 27%, normally, in just a year of this 15 drawdowns of at least 30% on document.
Strong, undoubtedly, but nothing similar to the 45% in four weeks that we’ve just seen.
Read:His fund’s upward 60% later he predicted the bottom — today , he sees a ‘severe collapse’
And if investors are hoping a vaccine keeps the fire under this market litwell, Lapthorne has plenty of doubts as to whether that will be that a catalyst in the short term — or long term, for that matter.
There are 200 vaccines under development, and none is guaranteed to be effective on a global scale. HIV, for instance, still no vaccine. Even when there is one, he said, anti-vaxxers and others who decline the vaccine is going to slow down the necessary steps toward herd immunity.
Lastly, the U.S. economy, he added, could take a while to get back to business as usual. Even if a vaccine is available, the public, having adapted to a new normal, will likely remain hesitant to gather in large groups and ride public transportation, which will pose a headwind to growth.
“Long-term deleterious economic after-effects of pandemics could span multiple decades,” he stated.
Stocks look into Begin the week on a positive note, together with futures on the Dow
, S&P 500
all pointing to a green spacious.