Don't Stop Believing | SPX YE 3,600
US equities have staged an impressive comeback from the March lows as they climbed their way out of bear market territory. The shift to decelerating Covid-19 cases has been the primary catalyst behind the recovery. However, the transition from rising to peak case counts did not come without economic pain, as the market recalibrated expectations to what we consider a worst-case scenario. Washington has reacted relatively quickly with unprecedented stimulus and a "Do whatever it takes" Federal Reserve policy response. The historic degree of stimulus, along with record-low interest rates, should provide valuation support as the market navigates around a turbulent Q1 earnings season. Based on this backdrop, we believe the pain trade has now flipped from down to up, as investors look ahead with optimism for reopening the US economy.