Following the Easter break, last week brought continued relief for long-term investors, building on the recovery from previous weeks.
That said, the continued strength of markets hasn't been welcomed by everyone.
Perhaps it was telling that the most vocal criticism of recent coronavirus support efforts from global policymakers came from the hedge fund community.
Many hedge fund managers chose to describe these efforts as either unjustified market interventions, or the first steps towards state ownership and socialism.
Might these managers be frustrated at being wrong-footed twice, having missed the March crash, and are subsequently doubling down by betting on new market lows?
Two scenarios remain rational and entirely possible. These are that:
a) new lows may lie ahead, and
b) the worst is behind us, because investors now consider holding equities to be the preferable long-term position compared with holding cash or low risk assets. This decision is reached by weighing short-term downside risks against the medium-term certainty that there will be a post-coronavirus recovery.
The latter scenario has come increasingly into focus recently, as the balance of public opinion shifts from open-ended constraints on activity to a gradual re-opening of public life and the economy across differing age groups and demographics.
This will have been prompted by a combination of falling new hospital admissions, reports that healthcare systems are largely coping and increasing economic hardship pressures.
But there has been another encouraging development which has proved to be the most market moving.
This is the news that, while somewhat anecdotal, there is evidence of effective treatments emerging from some of the frontrunners among the anti-viral drugs undergoing frontline testing in hospitals around the world.
Risks and results
It's still very early days to assume the peak of the global Covid-19 pandemic has passed earlier than modelled.
Yet it is increasingly reasonable and rational to believe the key reasons for full lockdowns are beginning to dissipate.
The statistical evidence confirms the infection is most dangerous for the elderly and the vulnerable, who are at elevated risk of infection when the virus spreads uncontrolled through communities.
In most regions, fatalities among the over 60s account for 95 per cent of all loss of life due to coronavirus.
Once this group has been shielded from wider community contact – as has been the case in the UK after communal contact peaked last month on Mother’s Day – hospital admissions and fatalities reduce.
But dangers persist.
The broader, younger population evidently suffers severe illness to a lesser extent, but can still fall victim to the virus without it being entirely clear what factors beyond pre-existing heart and lung conditions are determining this.
The understandable fear of this risk could prevent a wider return to pre-virus public life for the working age population unless a vaccine or effective treatment becomes readily available.
Despite some positive reports, a widely distributed vaccine looks unlikely to appear before 2021. So it's understandable why so much (market) hope and excitement is attached to any positive news from the anti-viral drugs tests.
Hope is powerful, but it can lead to over-optimism.
We can't be sure whether the latest developments are reason enough to follow China’s example and end the blanket restrictions across society.
The experience of those countries across continental Europe who are now daring to ease their national lockdowns will be instructive for those who are a few weeks behind in the pandemic.
Should this bold experiment prove successful, it is reasonable to expect a gradual return to public life starting from May.
Should the scientific results of anti-viral drugs tests confirm the anecdotal evidence, then it could even make the ‘herd immunity’ approach a viable public health strategy again.
On the other hand, should re-opening society lead to renewed spikes in hospital admissions, or the tests on anti-viral drugs return inconclusive results, it may mean further lockdowns are necessary.
We think markets are currently choosing to focus on the former rather than the latter. Being awash with central bank liquidity, and gargantuan economic stimulus, markets could keep propelling upwards.
We will see over the coming weeks whether this proves to be justified or wishful thinking.
However, positioning your investment strategy decisively towards one outcome or the other seems high-risk at this point – just ask those hedge fund managers.