Brian Acker's Top Picks: Bank of America, Johnson & Johnson and Crescent Point
I think it’s important to note that the decline in equity markets that we have seen to date is not pricing in the financial impact of COVID-19 in my opinion. Only about 20 per cent of this decline can be traced back to the virus. The balance of the decline (say 75 to 80 per cent) is a deflationary shock that has hit the Western world, especially currencies and assets denominated in U.S. dollars and euros.
The U.S. Federal Reserve is trying everything in its power and using every tool in its tool box to alleviate this deflation. The U.S. government is using both fiscal and monetary authority in an unprecedented and historic fashion to transition the country’s economy from a full stop, self-isolated position to a full growth recovery and life after quarantine.
I believe once the U.S. government and Fed recover from this deflation shock, the U.S. equity markets will realize and patiently await a restarted economic recovery sometime in mid-summer or early fall.