July 24, 2020
Narrative: The bullish equity narrative includes: 1) much faster than expected economic recovery to date; 2) increased fiscal support; 3) ongoing monetary policy support; 4) light equity positioning/elevated bearish sentiment; 5) relative valuation to bonds and; 6) an eventual acceleration of buybacks. The bearish narrative clearly has some incremental near-term traction based on: 1) a deteriorating economic environment; 2) insufficient/delayed fiscal support; 3) corporate uncertainty and; 4) likelihood of more regional rebounds in coronavirus case counts. But the bullish narrative could quickly reassert next itself next week if it looks like the final fiscal package will be >$1.5T and can be accomplished within ~2 weeks. And the bearish narrative would mostly evaporate on improving COVID trends in current hotspots.