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Market Commentary – May 2020

June 9, 2020

Even as the American economy is reopening tentatively and gradually, the markets have come back with a fast and furious rush. From its low in March, the S&P 500 Index has rallied over 40%, bringing it to within less than 6% of its all-time high. The technology heavy NASDAQ 100 Index hit an all-time high on June 4. High yield bonds are down just 4.7% for the year. All other risky assets rallied for the month, paring their losses for the year substantially. This impressive rebound has occurred during one of the most widespread global pandemics in 100 years, the worst economic collapse since the Great Depression, and a rising wave of social unrest, leaving investors to question the rally’s sustainability. But there is even more to this disconnect than meets the eye. We are in the midst of one of the most heated bull versus bear debates in our lifetimes. In this commentary we delve into the two sides of the debate in order to understand the sources of hope as well as the reasons for doubt.