Beyond The Near Term – May 18, 2020



All eyes are focused on the near-run economic outlook as more countries gradually reopen, even though the COVID-19 pandemic rolls on. No doubt the financial markets will remain volatile, as they react to unfolding events. However, it is occasionally important to stand back and examine how the investment landscape will evolve over the longer term.

To this end, we have just-published a report that concluded the pandemic and resulting economic lockdowns were both the catalyst to end several of the mania trends that were in place, and will also help sow the seeds for future manias. Government bonds are sure to miss out on the upside fireworks in the coming decade, after being a star performer for much of the past 40 years. The depressed level of yields means that total returns will be poor if policymakers succeed in (eventually) rekindling economic activity. Aside from being insurance whenever risk-off phases erupt, government bonds are destined to fall out of favor.

The good news is that there is a record mountain of investable cash, earning nearly nothing, which will eventually look for a new home. The report outlined several potential candidates.







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