Those who think it’s possible to predict the future of economies and markets with any sort of accuracy would have a hard time explaining 2020—a year dominated by a black swan event that descended u
The multiple expansion in growth stocks appears to reflect two recent developments. First, near-zero interest rates have pulled down the discount rate, making future cash flows appear more attractive relative to current ones. Second, the pandemic-driven shift online provided a significant boost to companies with a strong online presence
After the very substantial decline of US equities in the first quarter of 2020, stocks rebounded in the second quarter—a pattern consistent with earlier recessionary periods. The strength of the equity market recovery in the face of increasing daily cases of Covid-19 surprised many commentators.
In the second quarter of 2020, the high yield market recouped much of the steep loss it had suffered in the first quarter of the year. The turning point for the market appeared to be the Federal Reserve’s March announcement that it would take aggressive measures to counteract the economic effects of the Covid-19 pandemic.
The price of gold was pulled by many crosscurrents in the third quarter. The key factors included the advance and retreat of the coronavirus, positive and negative news about progress on a vaccine, the uncertain fiscal outlook, political tensions surrounding the US elections and the changing values of the dollar and the euro.