Having sat through a number of recessions and crises in a professional capacity over the nearly 30 years I have done this sort of thing, I’ve taken on board a number of life lessons. One of them is the resilience of equity markets. The psychology of most equity investors is intrinsically optimistic. Each new bout of bad fundamental news can herald a further life-giving dollop of liquidity from the central bank. And it really takes the realization that one is standing on the edge of the abyss, with no remaining safety nets, for real and protracted selling to set in. Indeed, as each new crisis and recession is met with ever more willing and often able central banks to pick up the slack, that tendency to keep looking through any bad news has tended to grow over time.

Regular readers (if there are any of you?) will know that I have been quite disparaging about the recovery of (in particular) US equities since their March 23 trough. I have smacked my head in exasperation as it rallied in the face of more than 20 million payrolls losses this month, or on every ill-conceived and non-credible rumour of an effective treatment for the Covid-19 virus. Re-opening of economies was another factor to cause optimism-led buying. Second wave risks were just something to brush aside. V-shaped recovery is implied by the relatively small earnings declines suggested by equity pundits. You can’t blame the dismal scientists for this as for once, we are virtually united in our view that this recovery will be any other shaped than V.

But like so much else in life, in the end, it doesn’t matter what we (and especially I) think. Just as it doesn’t really matter what the facts are in this post-truth world. What really matters is whether or not the equity investor community still has that inherent optimism, and is willing to look through every knock to their view as a temporary setback that will get nursed back to health by more policy band-aids.

So in this respect, it is worth asking, have the recent comments by Fed speakers downplaying the likelihood of negative rates in the US shut the last door for further discount rate cuts? Maybe. And is the prospect of any further fiscal stimulus also dimming? Probably. Are there also genuine concerns about the impact of premature reopening of the states? There should be. And further afield, similar concerns could be levied at the prospects for ongoing ECB stimulus given the recent unhelpful intervention by the German Constitutional Court. Though the recovery in European stocks has been far less striking.

The bigger question is, is all this enough to result in more than a one or two day dip in stocks…? And from what I’ve picked up along the way, I honestly wouldn’t bet on it, no matter how supportable a proposition that would seem to be.