There's Plenty of Room for Bulls and Bears
The optimists in the stock market are focusing on the direction of economic activity, and the pessimists are stuck on the level of activity.
The stock market is looking up.
Photographer: Spencer Platt/Getty Images
There’s a growing consensus that the economy is in the process of bottoming. For market participants, that means navigating a barrage of conflicting commentary and analysis. Some would advise investors to focus on the level activity while others on the direction of activity. Be wary of taking sides in this debate, because both might be correct.
Economists at Goldman Sachs Group Inc. and Morgan Stanley see evidence that the economy will trough this quarter and then resume growth in the second half of the year. The underlying logic is straightforward. Activity across the globe was brought to a standstill to slow the spread of Covid-19. Now we are slowly opening the economy, and a trickle of activity is evident. The trickle will grow into a steadier flow as we keep opening more parts of the economy.