Why Economic Reopening May Be a ‘Sell-the-News’ Event

(Bloomberg) --

As several states take tentative steps to reopen their economies following lockdowns to slow the spread of Covid-19, the big question for investors is whether a V-shaped recovery is in store. Baird strategist Michael Antonelli joins this week’s “What Goes Up” podcast to discuss why he believes the economic re-openings won’t be greeted with a rally in stocks.  

Some highlights of the conversation are below:  

“I think the reopen is a sell-the-news event. I don’t think it’s the answer that the market is looking for, per se.”

“A lot of the models out there assume that the coronavirus gets worse and then just gets better in a bell-shaped (curve). I think it’s going to get better in a really long tail. Instead of a perfectly symmetrical bell, the right side of the bell is this really long tail. If someone were to say `I’m reopening Wisconsin tomorrow, I’m reopening New York tomorrow, Florida tomorrow,’ how many people are still going to be 50% consumers? How many people are going to say ‘Oh, I’ll go to an outdoor restaurant but not an indoor restaurant.’ So I’m only a partial consumer for at least awhile. So that’s why I think it’s a sell-the-news event.” 

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