05 Apr 2020
Viewpoint is our quarterly publication where we provide an economic overview and an analysis of equity markets around the world.
This crisis is very different to the last time we saw markets fall as far as they have done since the beginning of the year. Unlike the GFC this is not about balance sheets but about a lack of supply and demand operating at the same time.
Today’s crisis is unique with governments now deliberately steepening the recession curve in order to flatten the infection curve to save lives. We are witnessing an economic stop which brings huge risks. To avoid these, governments need to step up with fiscal support of truly emergency proportions to secure the financial survival of both businesses and individuals until such time as the health crisis passes. Thankfully this is now at last happening on a global basis and is supported by the monetary policies of central banks.
The next two to three weeks will be critical for most of western markets with Spain and Italy now overtaking China in terms of the number of Covid-19 deaths, and the US having more cases than any other country across the globe. During the next few months it should become evident whether the lock-down policies in place in Europe and elsewhere are starting to work. Modelling suggests that the peak of active infection rates should be reached in early to mid April, but the actual path of reported cases depends on the ramping up of testing and increasing our knowledge of how it is spread.
Ken Rayner, Director & Graham O'Neill, Senior Investment Consultant
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