Article

Recover: Framing the Current Potential Opportunity

• by CAIS

Blog
Part 1 of 3

The long march back to normalcy from the depths of the pandemic is showing signs of solid progress. Here in the U.S., almost 250 million doses of the vaccine have been administered[1], mask guidelines have been relaxed by the CDC and broader reopening plans have been delivered by elected officials across the country. Things certainly appear to be looking up.

As we enter this new, and hopefully final stage of the pandemic, we are increasingly hearing from investors and advisors wanting to know what the opportunity set looks like going forward. They want to know how the pandemic has changed the world around us. To frame the current outlook, we’ve identified three distinct but related phases that may present different investment opportunities – Recover, Rebuild and Renew – the 3 R’s.

In the first of a three-part blog series, I will discuss the opportunities arising from the Recover phase. 

Public markets have continued to recover from the depth of the pandemic induced market sell-off. The S&P 500, which reach a record high on 19 February 2020, took 33 days to bottom out on 23 March 2020, erasing almost 34% of its value. Through to the end April 2021, the index gained almost 87% from its low. This market recovery has occurred while the global economy is still playing catching up.

As it does, it is anticipated that we will experience periods of dislocation and uncertainty due to macro factors, geopolitical tensions and complications arising from vaccinating the global populations. For evidence of these pressures, we need to look no further than the market unease around the conflicting outlook for interest rates as messaged by Treasury Secretary Janet Yellen who stated recently that rates may rise to prevent ‘overheating’[2] versus the U.S. Federal Reserve’s Federal Open Market Committee March benchmark interest rate projections that show the central banks expects to stay near zero through 2023[3]. Or the recent U.S. sanctions on Russia for cyber and other hostile attacks[4]. Or the unprecedented surge in coronavirus cases in India that is overwhelming the nation’s health care system[5].

These periods of disruptions may provide opportunistic entry points into long-term strategic investments, as well as potentially allowing investors to gain from tactically shifting to markets, regions and sectors that experience differing paces of recovery. 

Against this backdrop, we are seeing advisors seek to protect the gains they have made for clients through the recovery so far, while continuing to participate in the ongoing economic recovery.


1. Bloomberg, “COVID-19 Tracker”, https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution, accessed 5/4/2021

2. The Financial Times, “Yellen says rates may have to rise to prevent ‘overheating”, https://www.ft.com/content/049f4a79-abff-4a6c-a7c1-13409e8f63ae, accessed 5/5/2021

3. CNBC, “Here’s where the Federal Reserve sees interest rates, the economy and inflation going”, https://www.cnbc.com/2021/03/17/heres-where-the-federal-reserve-sees-interest-rates-the-economy-and-inflation-going-in-the-future.html, accessed 5/5/2021

4. BBC, “US imposes sanctions on Russia over cyber-attacks”, https://www.bbc.com/news/technology-56755484, accessed 5/5/2021

5. The Wall Street Journal, “What We Know About India’s Covid-19 Surge”, https://www.wsj.com/articles/india-covid-surge-11620222512?mod=searchresults_pos4&page=1, accessed 5/5/2021