i-Wire: Market Update 27th April Market Update: Searching for the new normal Equity markets have recovered strongly and are now trading with far less volatility. We are concerned that this recovery may be too optimistic and markets could retrace some of these gains as they are now pricing in a lot of good news. They are taking the visibility of a peak in virus infections and the size of the economic stimulus packages and assuming that the recovery in growth and earnings will be V-shaped. Equity markets are trading at more expensive P/E valuations than they were before the outbreak of the pandemic. The one day ‘negative’ oil price was a technical event resulting from the way oil futures trade but the oil price has fallen from US$60/bl to US$20/bl and looks set to remain at these low levels for many months. Government Bond Yields offer negligible yield and minimal value but we see opportunity in corporate bonds, especially investment grade where spreads have widened significantly but default risk should still be low. In this note we will look at: How markets have performed during the crisis. The outlook for the global economy, and why you should handle forecasts with [...]