Let’s be crystal clear about where we stand. This isn’t the time for obfuscation. We’ve divided the bull market into three stages since the pandemic lows.

The first phase (March to September 2020) was a policy-induced rally. The combined fiscal and monetary actions were unprecedented, with the global stimulus tally exceeding $20 trillion. The S&P 500 forward PE multiple jumped from 13 at the March lows to over 23, or 76 percent, offsetting a 12 percent drop in earnings for the 2020 calendar year. The S&P 500 soared 64 percent to reach its September high before falling 11 percent.

The second phase (September 2020 to December 2021) was a low-conviction rally. Labor shortages and supply chain bottlenecks were becoming more of a problem as the virus continued to spread around the world. Many were surprised by the strength of corporate earnings, which surged by 54 percent, and compensated for the multiple compression. During this period, the S&P 500 gained 50 percent, peaked on January 4, and then corrected 14 percent.

Since March 8, we believe the bull market has entered its third and perhaps final stage. This will be a high-conviction rally based on receding macro fears and rising economic optimism. Given the ongoing conflict in Ukraine and growing recession fears, this may seem incon