The 'primary endpoint' - for the 'Crash of 2020' was of course March, as a crowd of leveraged money managers had no choice but to liquidate (I'll be generous and say often against their better judgement perhaps), with a concern for their basic capital. We saw that, identified it as a 'capitulation', and without any assurances (after all Covid-19 was a biological not financial crisis at the outset), proclaiming it might be known as 'The Inger Bottom', at least around here.  

Now, in that case 'hope indeed was a strategy' at that time. Hope that the Fed's interventions would matter, hope that hedge funds and others with a leverage capacity would throw it at the stock market, knowing that if not they risked becoming 'toast' anyway, if they 'failed' to buy that collapse, so had no chance if they instead joined the chicken-little crowd by selling into the hole. It worked, and the process has taken us to where we are now.   

Tea Time 

So for sure you don't trade on hope normally, but that's why any investor or trader leaning-against-the-wind had to do it in mid-late March. So, now it's more than hope, and while the 'primary endpoint' for the S&P decline was March, it is now approaching the 'end of the beginning' in medical science's fight for a stopgap drug (at-least) method to 'take death off the table' in the Covid-19 fight. I'm a bit underwhelmed by what we know of the Gilead Sceinces (GILD) Remdesivir trial, as first blush suggested what I've called it.... weak tea, which is better than no tea at all.    

So sure, now the market is discounting 'more' than the good news actually unveiled, which 'just happens' to coincide with more of the nation opening, whether or not local Covid-19 case levels are truly improved or not (generally most do not conform to guidelines, even if governors often say otherwise, at least in some states, not all, and within states it varies widely).  

While part of the market lift is a compression factor relative to algo traders, and of course the reliance on the 'super-cap' stocks within the S&P. But for sure I'm increasingly concerned that the market is setting-up a correction, at the same time too many have believed in the exhaustion prospects after I first mentioned that unfolding, so I thought just based on that we'd work to a slightly higher S&P level. Perhaps we must pass month-end first of all.  

Certainly some of that is 'FOMO' (Fear of Missing Out) of the upside, and I see all the horrible as well as optimistic guidance estimates, none of which are particularly reliable, with all the known-unknowns regarding profitability or earnings levels in 2021. Treasury Secretary Mnuchin has indicated they have contingencies, should things 'not' recover as they desire, and that's of course a bit of a 'comfort cushion' in-event it should be needed later.  

The Secretary is also arguing against new bailouts for airlines, although it's a bit odd to hear that, since (for-instance) Delta expects 5.4 Billion from the Government stimulus program, and 4.6 Billion for the 2nd tranche. I noted yesterday they had no problem funding a bond offering with gates at LHR (London Heathrow) and JFK (New York) as collateral but in actuality that's backed by another program, in this case from the Federal Reserve.  

Note not just Delta (DAL), but others such as Carnival (CCL), Airbnb, and Ford (F), raised billions from debt markets after the Federal Reserve made very easy credit available. In fact, Delta formerly touted their investment grade rating in the past and now, despite S&P Global downgrading their debt near junk, has little problem generating funds. The Fed is actually now buying corporate bonds of 'formerly' investment grade companies. When the Fed does so, they free up private capital to lend elsewhere, typically at rates lower than companies would have to pay without this government program.  

My overall take is that there are lots of issues still 'on the table'. It's increasingly clear that we're seemingly at the end of the beginning for starting to emerge from this global nightmare (if you believe Remdesivir is more than a nearly-palliative 'weak tea'), and by the way it's not only US markets now recovering.      

This crisis, which began with my late January warnings of 'WuFlu', a name I gave the coronavirus prior to the Covid-19 designation, and aside our catching the decline and a very important bottom in March, there are so many aspects of this catastrophe.

The impact has been almost of biblical proportions for huge industries like airlines or of course anything involving travel, tourism, related segments or so on. And I don't presume GDP improvements will be rapid or broad, but of course welcome the stability which leaves the future very risky regarding monetary policy and so on, as the Fed Chairman fairly addressed Wednesday.  

As to the lending by Government, doesn't this pandemic merit government trying to provide some assistance? Isn't that what government is for? Of course, more so than a lot of other things they've spent on over the years. Heck, the Government is almost certainly going to get repaid and will probably make good money on equity interests they're getting for free from loans. In fact I hope they do, which means companies will be recovering over time.   

Bottom-line: we are starting to emerge from the shadows of cocooning, at the same time initial moves are timid, as they should be. Look at the initial experiences in Germany from limited openings, a quick increase in cases, so it looks like they have plenty of volunteers for the Pfizer (PFE) vaccine trial as is getting underway next week. As I said, no shortage of candidates. The President can name it anything he wants, the rush to get this done already is underway and has been for awhile.  

The Fed is doing what they think is good for the whole economy, and won't define how long they'll stay at the lower bounds, and won't change guidance in any rush. They won't of course be in any hurry to move rates up, intending to stay put for now with rates and policy, with a pretty 'grim' medium term concern (emphasis was on uncertainty but clearly concerned), while 'doing what it takes'.