By William Watts
The rebound by the U.S. stock market off its March 23 coronavirus low is impressive, but it might be predicated on the wrong question, according to one analyst.
“Most of the analysts are asking — ‘When will the economies return back to work?’ — which we believe is the wrong question,” said Boris Schlossberg, managing director of BK Asset Management, in a Tuesday note. “The much more relevant question is — ‘When will aggregate demand recover to pre-virus levels?’ That is a much more difficult dilemma to assess given the massive damage done to consumer balance sheets.”
Signs the COVID-19 pandemic is peaking in Europe and the U.S. have fanned buying interest for equities and lifted investor appetite for risky assets. Some European countries have started to lift restrictions on movement and activity, while U.S. politicians are scrapping over the timing of a reopening and who has authority to decide.