The S&P 500 ended January with an uneventful loss of 1%. However, it was anything but an uneventful month.

Why have markets been so strong in the face of crises, medical, economic, and political?

We said in the first quarter that we would get through this crisis and that things would improve and recover. Financial markets recovered first, quicker than they ever have from such a deep economic hole and quicker than anyone could have hoped. Economies have made great progress too but are not back to their pre-COVID-19 levels yet and may not be for another year or two.

Many of our clients, and investors broadly, are asking this important question: How do we reconcile the recent equity market gains, particularly in the United States, with the poor state of the current economy and the weak outlook?