How are markets maintaining their upward movement when there’s civil unrest unfolding on top of the coronavirus pandemic? It’s all about cash and positioning, Ed Harrison said during today’s Real Vision Daily Briefing.

Historically, there’s been little correlation between civil unrest and the performance of markets in the short term, and we’re also living in a liquidity-driven market, he said.

Harrison noted that we’re almost back to the market highs we saw in mid-February; the S&P is down just 10% from its high, while the Russell 2000 is down 17%.

He said this suggests that people still going for growth over value and that passive investing in a market cap weighted world is driving flows into the top S&P stocks, which include Microsoft, Apple, and Amazon.

But while the S&P is approaching the next Fibonacci retracement level, Harrison said the market is only priced for the short term, it has overestimated the ability of corporate earnings to weather the storm, and the hallmarks of another leg down are all there.

He thinks we may see a checkmark-based recovery, where we go from 100% on the GDP level to 75%, then up to 85% or 90% in the initial snapback, but then that last 10% is difficult to muster and takes a very long time. That’s the scenario not being priced in right now, he said.