Good evening, everyone, and happy Friday. We need a breather.

In April, stocks posted their worst month since March 2020. The NASDAQ and S&P 500 clocked their fourth consecutive losing week, which doubled as the NASDAQ’s worst month since 2008. The U.S. economy shrank in the first quarter at a 1.4% annual rate, a sharp reversal from a 6.9% annual growth rate in the fourth quarter. It was the weakest quarter since spring 2020, when the pandemic and related shutdowns drove the U.S. economy into a brief recession. All of this comes amid a recent uptick in COVID-19 cases in China, where stringent lockdowns are giving rise to growth concerns, the ongoing war in Ukraine, and persistently high global inflation.

Where do we go from here? This kind of fraught environment was the focus of our FSInsight weekly “huddle” meeting on Friday morning in New York, where our research heads discussed this challenging time for markets. Here are some key takeaways from the meeting:

How much bad news is priced into the market?

This is the question that Brian Rauscher, our head of global strategy, led off our meeting with. There’s no clear answer. As earnings season hits full swing, absolute results have been largely positive, while guidance has been tepid to bearish. One FAANG ...

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