Looking at the Silver Linings

March 30, 2020

The economy was unprepared for COVID-19, but we’re starting to see a silver lining. We take a look at positive policy action, the recent stimulus package, our upgraded views on equities, and resilience.

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Stocks soared last week for their best week since 2008. Of course, this came on the heels of one of the most vicious bear markets we’ve seen in years, so it could be just an oversold bounce. Could this be the lows, and is it time to start aggressively adding equities? The LPL strategists discuss this and focus on some positives, amid a sea of worry.

Update to the playbook

LPL Research has been following its Road to Recovery Playbook for a pragmatic way to determine if stocks are forming a low. Although we still aren’t at a peak in the number of COVID-19 cases in the United States, the LPL strategists feel comfortable saying we are in a sharp recession and confidence is coming in, thanks to policy decisions we’ve seen from the Federal Reserve (Fed) and the massive $2 trillion fiscal stimulus plan.


The stimulus plan is here

Although it took some last-minute Washington drama to get over the finish line, the nearly $2 trillion fiscal stimulus plan passed and was signed by President Trump Friday afternoon. Highlights include direct payments to US citizens, loans to small businesses, help to the healthcare system, delaying tax deadlines, and help for industries directly impacted by the COVID-19 pandemic. The LPL strategists discuss why this plan could potentially help the economy in the second half of this year, once the virus has been contained.

Upgrading our view of on equities

LPL Research has been market weight equities since March 2019, but this week we upgraded our view on equities to overweight. As our Road to Recovery Playbook shows, four of the five steps we need to see have happened. As the strategists note, this doesn’t mean investors should blindly start to buy at this time. We’d recommend suitable investors consider rebalancing their portfolios to match one’s risk tolerance, along with potentially adding to equity exposure for longer-term holding periods where appropriate.

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Play, or Spotify.




This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 


For Public Use — Tracking #: 1-958722 (03/21)