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6 New Predictions For A Post-COVID Economy

Fundamental Diagnosis profile picture
Fundamental Diagnosis


  • I am updating my macroeconomic predictions, looking ahead to a post-COVID economy.
  • For the virus, I am predicting a second wave in the fall, but the economy will muddle-through without as much disruption.
  • I am adding predictions that inflation will remain subdued and 10-year yield will remain low through the end of 2020.
  • I predict the forward multiple on the S&P 500 will remain high and the index will regain its highs by mid-2021.

With economies around the world re-opening, it’s time to start thinking about what the post-COVID world will look like.

My investment philosophy for navigating macro events is to create a narrative guided by specific, verifiable predictions.

Focusing on verifiable information rather than emotion-driven opinion helps remove bias from the investment process. My initial macro article on 3/10 helped readers understand why S&P 500 earnings in 2020 would likely fall to $140, which would drive the index to 2,400 or below. This was controversial as 2020 estimates were $175 at the time, but estimates have now fallen to $134. My 4/1 article then helped readers understand why aggressive policy action and a near-zero risk free rate meant that the 3/23 lows on the S&P 500 were likely the bottom – a prediction that has held up so far.

For this particular crisis, I have created a narrative for the virus itself, for the economy, and for the market. Today, I update these narratives to include predictions for the post-COVID economy.

Regarding the virus itself

I expect April to be the height of the crisis in the northern hemisphere but then worsen in the southern hemisphere in May-August and re-emerge in the northern hemisphere in the fall. The world will have to endure partial or periodic forms of social distancing until an effective treatment, vaccine, or widespread testing becomes available. By Q4 2020, life in the Western Hemisphere will begin to have recognizable daily rhythms, though certain social changes will persist and have economic ramifications. We will, in essence, muddle through a second wave of the virus with far less disruption.

I am adding a prediction that there will be a second wave of deaths in the U.S. between October and December of this year. However, I am also predicting that the number of states

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Fundamental Diagnosis profile picture

Analyst’s Disclosure: I am/we are long SPY, VTI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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