I recently participated in a webinar for advisors and investors, Financial markets: Historical perspective and roadmap to recovery, followed by a brief Q&A session (you can watch a replay here). I’d like to take this opportunity to answer some of the questions we received but didn’t have time to address.
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In response to numerous client questions about portfolio positioning for a recovery scenario, we provide a historical perspective on stock market, sector, size, style and regional allocations. Also, we juxtapose typical recovery performance trends against recent price action.
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Unemployment rates for many countries are sky high and likely to remain high for some time. In response to the pandemic, many developed countries’ central banks have showered accommodative monetary policy on their respective economies. However, if history is a guide, that is unlikely to have a major impact on lowering unemployment. Instead, fiscal policy can be more impactful on unemployment because it is more direct. As governments around the world debate the next steps of their policy response, this is perhaps a valuable time to examine a case study in reducing unemployment through fiscal spending.
Comments Off on A case study in lowering unemployment: The Work Projects Administration
On March 23, the U.S. Federal Reserve (Fed) announced its intent to acquire investment grade corporate bonds. The purpose of the communication was to support a market in which sharp price declines were threatening to disrupt the normal functioning of primary (new issue) and secondary market activities. On April 9, the Fed announced an expanded definition of bonds eligible for purchase to include those with investment grade ratings as of March 23, even if they had since been downgraded to high yield, as long as they remain in the BB category.
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As the world remains in the grip of the coronavirus, we’ve received many questions about the outlook for Chinese and emerging market (EM) stocks – as China was ground zero for the pandemic. First and foremost, we’re asked what the challenges and opportunities are for that country and region?
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John Krasinksi of The Office and Jack Ryan fame recently initiated a web series entitled “Some Good News.” It’s a news program devoted entirely to good news. I wish I had thought of that. Since I didn’t, I’m left to borrow the concept. This blog, and subsequent ones in this series, will be devoted entirely to producing lists of good (or less bad) news. After all, as Dwight Schrute says in the episode of “The Office” in which Jim Halpert mockingly takes on Dwight’s persona, “Imitation is the most sincere form of flattery. So, I thank you.”
Comments Off on Need some good news? Markets, economy do offer some
Comments Off on U.S.-China tensions could be the biggest risk to U.S. stocks this year
As expected, the U.S. Employment Situation Report for April was abysmal. Unemployment rose dramatically as pandemic lockdown measures were implemented across the U.S., with hospitality and leisure posting the biggest job losses. Amidst all the terrible data, there was one obvious and glaring takeaway: Job losses were concentrated among low-wage workers. In fact, so many lower-paying jobs were lost that wage growth rose markedly, underscoring how hard hit lower-income workers have been by this pandemic.
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Following several positive trading sessions, investors may be asking whether the markets need to retest their prior lows.
Comments Off on Video: Do markets need to retest prior lows?
One month ago in this blog, I noted that April would be a critical month to gauge the global response to the COVID-19 pandemic. Across the board, it was a massive response, including significant monetary and fiscal stimulus from a variety of economies and widespread lockdowns designed to slow the rate of infection. But as we enter May, we are seeing differences in approach come to the fore – between countries, between localities, and between political parties.
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While the economy remains stalled under COVID-19 restrictions, some of the consequences may provide interesting opportunities. One is that the pandemic has accelerated the adoption of several innovations.
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To retest or not to retest – that is the question. Indeed, if Hamlet were around today he may be wondering whether the broad U.S. equity market, after posting the second best 25-day rally on record (trailing only 2009’s), will retest the initial market low hit on March 23 of this year.1 To many investment professionals, a retest of the market bottom is a foregone conclusion. In fact, a poll of financial advisors conducted in early April revealed that 81% expected the U.S. equity market to retest the March 23 low.2
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It’s hard to imagine the economic data getting worse, and yet the U.S. equity market has posted the second best 20-day rally on record.
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Investors who’ve been rattled by volatility in their fixed income portfolios may be seeking assurance about their underlying holdings.
Comments Off on Video: Bank loans’ senior, secured status has helped during crisis
For months, I have talked about the importance of policy in combatting the COVID 19 crisis: health policy, monetary policy, and fiscal policy. All three prongs need to be adequate and effective in order for the US economy to recovery quickly. While the Federal Reserve has bent over backwards to provide accommodation to support the US economy and markets, fiscal stimulus is still a work in progress.
In this week’s commentary I talk with Andy Blocker, Invesco’s Head of US Government Affairs, who breaks down where we are today in terms of fiscal policy – and what to expect next.
Our market strategists weigh in on what drove a recent market rally, how the shutdown will affect the economy and markets, and what additional government support may be coming.
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Recent market volatility has elicited a flurry of questions from advisors and investors alike.
Comments Off on Video: Answers to questions about today’s volatile markets
No two crises are exactly the same, but past crises can help you learn, improve and gain confidence in the processes you employ when you face the next one.
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Last week was another momentous one for economies and markets, with particular attention being paid to the economic recovery in China, earnings season for U.S. stocks, and the Federal Reserve’s views on interest rates. Below, my colleagues from the Global Market Strategy Office and I answer some of the most pressing questions we have received from clients in recent days:
Comments Off on Tracking China’s recovery and a dire U.S. earnings season
Earnings season is heating up in earnest, giving investors a clear glimpse into the economic impact of the global lockdowns designed to slow the spread of the coronavirus. While investors brace themselves for bleak business results, we are so glad to see that these lockdowns appear to be working as intended from a public health perspective – many countries show evidence of “flattening the curve” of infections and fatalities. This is leading to the inevitable conversations of how best to re-open economies – a task that will require caution so as not to overwhelm health care resources with a second wave of infections.
With all of this as background, our portfolio managers continue to look for ways to guard against the looming risks and to position themselves to find opportunities in the recovery – no matter what path that might take. In this blog, I highlight the perspectives of four Invesco investment experts:
