Russia is challenging world order, inflation is at a 40-year high, and a stock market correction has been underway. The relentless progress of the United States is being tested once again. Here’s an important perspective on this moment in financial history.
On March 23, 2020, the stock market bottomed. The Covid bear market had erased -33.9% of the value of the Standard & Poor’s 500.
In that moment, which preceded the advent of vaccines, no one knew the bear market was over. No one knew the stock market would appreciate by 71% in the next 21 months. In the throes of the Covid crisis, no one expected the U.S. government would embark on the largest transfer payments programs since The New Deal.
In that fraught time, no one predicted that the American consumer’s balance sheet, two years hence, would be stronger than ever in modern American history. Nor did anyone foresee that the Covid-19 would be managed much the flu.
The Standard & Poor’s 500 stock index closed Friday at 4,463.12, up +1.17% for the day, and a breathtaking +5.97% from last week. The index gained +66.43% in value from the March 23, 2020, bear market low, as of Friday, March 18’s close.
Compared to the January 3, all-time closing high, stocks dropped by as much as -12.5% on March 8 before rebounding sharply.
The U.S. Index of Leading Economic Indicators (LEI), released this morning, provided fresh evidence that 2022 economic growth will exceed the 2.2% 10-year growth rate expected by the nonpartisan Congressional Budget Office. By a substantial amount. The Conference Board, which collects the data for the 10-subcomponents of the LEI lowered its forecast for U.S. economic growth in 2022 to 3% from 3.5%. The Ukraine situation prompted Ed Yardeni and J.P Morgan to lower their forecasts for U.S. gross domestic product growth.
Point is, every moment seems fraught with risk. Seeing beyond a seemingly bleak moment is hard most of the time. Who knew two years ago we’d be trying to slow economic growth to tame inflation while a Russian despot faced an existential economic war?