CNBC had Gene Goldman on this morning. Mr. Goldman said, “We believe in a U-shaped recovery. First of all, the recovery is in place where you can look at cyclicals rallying, copper is back up to mid-July levels that’s pre-trade war levels. Also survey data looks strong so the recovery is in place and the market is pricing in a V-shape recovery. We’re focused on a U-shape because of four things:

1 – the hit on the economy in terms of the number of people working from home is 310 million people at the height of the pandemic, that’s 95 percent of the U.S. population

2 – if you look at a V-shape, this suggests that we have a pre-pandemic economic growth by the fourth quarter of this year, we just don’t see it. If you look at the last six recessions, on average it takes about 33 months to get to pre-recession growth levels

3 – there’s 11 million people unemployed, it’s terrible, it’s awful, and this is going to weigh on the economy

4 – there’s so much caution around the virus if you look at in terms of spending on goods versus services. Services is really lagging dramatically as people are skittish and scared about the virus

These four things are why we believe in a U-shape recovery versus a V-shape recovery.”

Gene Goldman makes excellent points and we believe he is correct. To the extent that the stock market is pricing in a V-recovery versus a U-recovery, we may have small corrections through the end-of-year when the market gets too far ahead of the economic cycle and the U-shaped recovery.

Gene Goldman, CIO at Cetera, discusses the main investment themes that will be evident the rest of the year: a U-shaped recovery, significant market volatility, and shifting investment landscape or change in market leadership.


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