Wednesday's Market Minute: New Highs, Same (Sort Of) Story

The U.S. stock market is back at all-time highs. Naturally, there will be cynics and naysayers about the incredible rally off the March low – and indeed, we do live in odd times. The stock market at a record, with unemployment worse than the Great Depression. But, hopefully by now investors understand that the raw economic numbers just don’t bring the same implications that they used to. There is a giant band-aid in the form of a monetary and fiscal stimulus papering over the worst of the real impact on Americans.

That means the biggest questions are not the same ones of crises past; our great uncertainty lies not in this precise moment but in the moments still to come as we understand just what the implications will be of inducing Depression-like symptoms to avoid a real one. While those will be questions around the effects of policy supported by printing vast sums of money, it’s important also to realize that the stock market’s full retracement is also a function of the surprising resilience of the U.S. consumer and the power of technology to enable life to function in such a scenario. Economic data in the U.S. has shocked economists for five months straight.

COVID curves that flared up outside the initial hot-spots are now on their way down. Dozens of companies are working on large-scale vaccine trials with promising indications. There are real, good things happening that have changed from March to justify stocks reversing. Yes, the new record comes on skeletal breadth, low volume, and the deepest concentration of FAANG leaders in history. For some, that's worrisome. For others, it's business as usual; new highs, same story – just in a more extreme form.

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