This week marks our return to a weekly format for our blog with the launch of our new featured commentary. Integrated Insights will be posted Monday or Tuesday of each week. Blogs will include links to investment commentary from some of our sub-advisory partners, interesting data points, as well as salient planning insights.
While the pandemic & its impact on the economy remain far from over, we believe a weekly regular expectation is important for our clients. We will post ad hoc entries, should there be a necessity given developments to economic, social, or legislative changes.
Weekly Market Commentary -- BlackRock -- Warming up to Europe
BlackRock are warming up to European assets as the region steps up its policy response and demonstrates relative success in tamping virus growth.
They are tracking the interplay of containment measures and mobility changes on activity as economies have started to reopen.
A spate of business and consumer sentiment data this week should shed light on the pace of the activity rebound as economies reopen.
Even with Low Rates, a Place for Bonds -- Capital Group
Blackstone's Byron Wien shares thoughts on the rebound
| View of the Recovery |
| June 2020 |
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Here are my thoughts about where we are in the Covid-19 recovery cycle.
- We believe a recovery is underway and we have seen the cycle low for the economy and the financial markets. We expect to see continued volatility.
- We believe the recovery will be square root–shaped. The early phase, probably lasting through the summer, will be “V” shaped, followed by a gradual rise in the fall and beyond.
- We believe the economy will not reach the level of 2019 GDP until 2022. It usually takes several years for a post-recession recovery to get back to the pre-recession pace.
- We expect Covid-19 cases to increase during the recovery but not to the level that would be considered a "second wave," requiring another lockdown.
- We expect the unemployment rate to come down to 10%. It will remain that high because of the number of businesses that have permanently closed or gone bankrupt during the recession. More than thirty million were unemployed at the bottom and only twenty million will come back to work in the near term. Companies have also learned during the lockdown that they can operate effectively with fewer workers.
- The lockdown has made consumers somewhat cautious. The savings rate will continue to be elevated; travel will be restrained; and older, vulnerable people will spend more time at home until a cure or vaccine is available.
- While remote working and remote learning proved reasonably effective, we believe people want to interact and cross-fertilize ideas with each other. As a result, we expect offices and schools will resume face-to-face exchanges over the next year.
- We believe we will make important progress in managing the symptoms of the disease before year-end, but a vaccine will take time before it is developed, tested, manufactured in large quantities and available widely. Signs are encouraging that significant progress will take place before the end of 2021.
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Have great week.
Jason
