The pandemic has spread around the world triggering an abrupt economic downturn. While there has been some good news in Asia and parts of Europe, the virus is still wrecking havoc in the laggard countries and regions, including the two largest financial centers, London and NYC. Massive uncertainty about when and how to re-start economic activity has made it challenging to price financial assets.
We updated our investment recommendations and strategy last Thursday, noting that the Fed et al must lower private sector borrowing rates after last month’s spike and keep the credit channels open. Indeed, at the end of last week, central banks further ramped up support programs, benefitting our overweight in credit within fixed-income and multi-asset portfolios. Equities are still not out-of-the-woods, and may yet test their March lows as grim economic data accumulates and investors realize that it will take longer to re-start economic activity than is currently discounted.
We continue to monitor COVID-19 trends daily on our website, and update our views on the global economic outlook and related investment opportunities and risks in our various reports.