Toroso Market Commentary for 1st Quarter, 2020

A Market in Suspension & an Economy in Despair

A frothy market with questionable growth prospects has been required to take a time out. How, and when, our economy will reopen remains unknown. The best-case scenario at the moment appears to be reaching herd immunity by Q2 of 2021, most likely with a vaccine. We wouldn’t set a schedule to that, as it seems like a too-good-to-be-true timeline with a high possibility of delay. What the reopening of the economy will look like in the next 3 quarters remains unknown. What is known is step 1: removal of the ‘stay home’ order. The next comment may sound uncanny given the current environment, but all things considered, markets have priced in a pretty flawless execution of the next 9 months consisting of seamless coordination between states, countries, nations, central banks, corporations, and scientists needed to get there. Intentions and execution don’t always line up. Additionally, consumers need to receive stimulus checks before they get evicted, especially if we expect consumers to feel comfortable spending big during the traditional high spending back to school/Black Friday/holiday seasons.

The COVID-19 Fiscal and Monetary policy was put together in just a few weeks; in the 2008 recession, it took upwards of 9 months. What is the biggest difference between 2020 and 2008? 2008 was a top down liquidity crisis that filtered down to affect all members of the economy. This recession, thus far, has only significantly affected low income workers, creative workers and gig economy workers, leaving most others unscathed. The market in suspension has only affected Main Street – Wall Street is eagerly waiting for the merry-go-round to turn back on. The ominous federal reserve “put” has been shown in full force.

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