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Integrated Insights -- Week of October 19

Integrated Insights -- Week of October 19

October 20, 2020

Central to a sound financial plan is an investment net worth structure that has a comfortable level of volatility to the investors. This is put the test when  a higher degree of uncertainty has entered the marketplace--usually seen during geopolitical unrest, major natural disasters, or presidential elections (among other events). These bouts of uncertainty can make it difficult to "stick to your plan." But it's also at these times that we need to look forward and through the upcoming waypoint. The US Presidential election will come and go in a few weeks--the sun will rise and the economy will continue to move on.

Here's what we're reading this week:

Weekly Commentary -- Restructuring opportunities -- BlackRock

  • Higher-yielding credit may present opportunities amid low rates, and BlackRock sees corporate restructurings offering growth and potential return diversification for private credit investors.

  • A pickup in Covid-19 cases may weigh on mobility and activity in the near term, but we see this wave of infections as much shallower than the spring one.

  • A spate of purchasing managers’ index data this week could shed light on any potential impact that increased virus infections has had on activity.

Winners and losers in the COVID economic downturn -- Capital Group

One perplexing element of the 2020 downturn is how uneven it’s been. For some areas of the U.S. economy, it has reached Depression-era levels: restaurants, hotels, retailers, airlines and, perhaps the hardest hit of all, thousands of small businesses that have closed and may never come back. But for others, it has been quite literally the best of times: e-commerce, cloud computing, video streaming and home improvement stores have skyrocketed in the stay-at-home era.

A Closer Look at Post-Election Policy Outcomes -- Hartford Funds

We now have more granularity around fiscal policy proposals from both President Trump and Biden:

  • Trump might slash spending by about 0.3% of US gross domestic product (GDP) and try to push through further tax cuts amounting to 0.9% of GDP, leaving fiscal policy stimulative, but only by about 0.5%.

  • Fiscal policy should be more stimulative following a blue wave than with Trump and divided government. Biden could up spending by around 3.4% of GDP per year (mainly on infrastructure, healthcare, and education), offset with a 1.9% of GDP tax increase.

  • That said, the policy mix resulting from a Democratic sweep may be less market-friendly, as corporate, individual, and capital-gains taxes could rise, along with greater regulation.