Dividend futures suggest a lot of bad news is discounted in stocks

We have argued that a sustained recovery in equity prices is unlikely until clear evidence emerges that coronavirus is being brought under control around the world. That still seems some way off, so we wouldn’t be surprised if this week’s strong gains in stock markets, which partly reflect hopes that the peak in pandemic may be close, unwound a bit in the near term. What’s more, big increases in equity prices are quite common after major corrections and don’t necessarily mean that bear markets are over. For example, the rise in the Euro Stoxx 50 since mid-March is reminiscent of what happened to that index a similar amount of time after the collapse of Lehman Brothers during the Global Financial Crisis (GFC). It subsequently fell back to a fresh low.