It is unsurprising that investors have shifted to a more risk-off stance in the construction of the typical portfolio, as a result of the impact of the COVID-19 virus. What is more surprising is the magnitude of that shift. The move out of equities and into cash (less so into bonds) was much less pronounced than during the Great Financial Crisis or indeed the period after the bursting of the dot-com bubble in 2001 and the relatively small global downturn that followed. Moreover, the early signs are that the risk-off move is already starting to reverse. Markets are beginning to price in a V-shaped recovery, influenced no doubt by the exceptionally aggressive response of macroeconomic policy around the world. A V remains our central case, but the risk of something worse than that remains significant. Investors are understating that risk in our view.
Refresh this chart in your browser | Edit the chart in Datastream
This chart is taken from our Recovery Watch newsletter. Click here to subscribe to Fathom’s Recovery Watch and receive invitations to regular Recovery Watch Forums and participate in lively discussions with our team and others in the community.
We are now in the process of producing our Global Economic and Markets Outlook for 2020 Q2. Our latest Recovery Watch Forum shares highlights from this forecast in the form of the enclosed presentation along with a short introductory video from Fathom’s Managing Director.
• Fathom’s presentation
• Introductory video by Erik Britton
__________________________________________________________________________________
Datastream
Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view points on the market.
Refinitiv offers the world’s most comprehensive historical database for numerical macroeconomic and cross-asset financial data which started in the 1950s and has grown into an indispensable resource for financial professionals. Find out more.
