Without fiscal stimulus, personal income will stagnate, job gains will slow, consumers will pull back, and more small and medium-sized businesses will fail. The possibility of a stimulus package getting passed before the election is remote, despite Federal Reserve (Fed) Chair Powell’s extraordinarily direct call for more fiscal stimulus to avert economic disaster. The market’s performance and the economy’s recovery is calm compared to the volatility of March and April, but several issues concern me as the eyewall approaches. The relative calm we feel right now isn’t the end of the storm, it is just the eye. Scott Minerd discussed his outlook for markets and the economy with CNBC’s Brian Sullivan during the Milken Institute 2020 Global Conference.ĭo not be mistaken. We have seen some extremely strong economic numbers, although these reflect more a retracement from a historically swift and steep drop rather than intrinsic growth. Credit spreads have tightened but are still cheap on a historical basis, stocks recovered but have recently fallen from fresh all-time highs. Market volatility is down, and the economy has begun to recover, faster than almost anyone expected at the outset of the pandemic and the economic shutdown. As the storm progresses and the wall on the other side of the eye hits, it doesn’t build from the edge but slams immediately at full force.Īfter suffering through a brutal economic and market storm since March, we are experiencing what seems like a break in the weather. When you are in the eye of the storm, you could walk outside and feel completely safe. The wind and rain at the edge of a storm is slower and gains in intensity towards the middle, but right in the eye it seems like there is no storm at all. Everybody is familiar with the phenomenon of the eye of the storm, that small zone of calm in the dead center of a hurricane’s swirling fury.
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