Always pursuing 'a more perfect Union'
As we celebrate the 244th anniversary of our nation’s independence, there is no better time to pause for a moment and take stock of all that we have been through in 2020.
It’s hard to believe that just 132 days ago, the S&P 500 was sitting at an all-time high of 3,386, unemployment was at a half-century low of 3.5% and the longest economic expansion in U.S. history was in its 131st month, with prospects hopeful for continued growth as the U.S. and China had just completed a Phase 1 trade deal after months of difficult negotiations.
Since then, we’ve seen unemployment soar to nearly 15%, a post-World War II record, as a staggering 47 million Americans have been forced to file for unemployment insurance. Oil prices turned unthinkably negative, driven lower by a senseless price war between the Russians and Saudi Arabians. And most sad of all, more than 500,000 people around the globe, including over 125,000 Americans, have tragically lost their lives to Covid-19.
In the wake of the pandemic, much of the world was forced indoors in an economic and societal shutdown with no parallel in history. As businesses shuttered and our busiest gathering places were deserted, liquidity markets froze and the S&P experienced its fastest 35% decline in history, as investors contemplated the potential for an economic depression.
Amid all of this stress, some of our oldest wounds were reopened, as frustrations over the nation’s original sin of racial inequity boiled over, leading to widespread social unrest.
And yet, much like the flag that flew over Fort McHenry on Sept. 14, 1814, here we are—still standing. Forced to adapt to conditions unlike any we’ve ever seen, we have collectively persevered. Through the power of our own innovations, our living rooms have become our workplaces, our webcams have kept us connected to our loved ones and our happy hours have become virtual. We’ve coined new terms like “flattening the curve,” “social distancing,” “allyship” and “contactless delivery.” As a society, we have made difficult choices to help the most vulnerable. Our government and central bank have borrowed, lent and spent trillions of dollars in an effort to save as many lives and livelihoods as possible. And we wear facemasks now, not to protect ourselves, but to protect those that we love.
The markets have reflected our resilience. Much to the consternation of the perma-bears, who seem to unceasingly root for Armageddon, our collective and swift response to the crisis has all but taken the worst-case scenarios off of the table, sparking the fastest 45% stock-market recovery in history, as we collectively picked ourselves up and began the difficult journey of getting on with our lives.
In our uniquely optimistic American spirit, we may have pushed too far too fast in our efforts to return to normal and to each other. Across the southern and western regions of the country, the virus continues to rage, threatening our progress and forcing us to contend with the likely reality that we will need to bring the same resolve to the second half of the year that carried us through the first half.
As we enter this holiday weekend, it is important that we look back and remember those who we’ve lost in the first half of the year as well as those who have made the ultimate sacrifice on our behalf for nearly 244 years. We must also contend with the plight of those who have not shared fully in our founding principles of equality and the unalienable rights of life, liberty and the pursuit of happiness. It is just as important, however, that we look forward. We look forward to the continued reopening of our country—more safely and carefully to be sure—but reopening nonetheless. We look forward to our collective healing: economic, social and emotional. We look forward to the return of the sports that we love, the restaurants that we miss, and eventually, handshakes and hugs. And as a nation, we look forward to continuing our pursuit of a “more perfect union.”
We press on
From an economic perspective, we remain constructive, as we have throughout the crisis. While the fundamental rationale for our call has been and will be detailed in notes to come, our basic underlying optimism is formed from the undefeated historical record of the human spirit to persevere, innovate, adapt and overcome. As the old market adage goes, this time is no different.