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Navigating Market Uncertainty - What Next?

  • ,  Chief Executive |
  • 06 Apr 2020
  • Updated 07 Apr 2020

Alphabet Soup for Recessions - V, U, L, W or  just I?

Although the pace and depth of the initial sell-off were remarkable, markets appear, at least temporarily, to be forming a base. Sentiment in the short-term is likely to be driven by the changing shape of the curve and antibody testing/vaccine news on COVID-19. Navigating such turbulent waters can be difficult. Fortunately, asset managers have been offering a range of views about managing the uncertainty of the present, as well as the potential length and depth of a forthcoming recession. This 'alphabet soup' (V, U, W, L etc.) of recession and recovery reflects widely differing opinions on how badly GDP and corporate earnings growth might be affected and how long any downturn might last.

There are limits to the governmental actions that can take place on the monetary and (especially) the fiscal side of the coin. For the moment, it remains to be seen whether sufficient stimulus measures have been enacted to prevent a wave of large-scale corporate bankruptcies and to minimize potential job losses. Further questions also remain about which corporations may become state-owned enterprises and what the role of the state will be in these circumstances. For now, we can only offer the following collection of viewpoints on recent market volatility, navigating uncertainty, risk mitigation, and the potential shape of the next recession.

naviation with compass

Global Outlook: The path to recovery - What's next? (Franklin Templeton, Apr 2020)

For compliance reasons, this paper is only accessible in certain geographies

Franklin Templeton strategists outline their expectations of how recovery might manifest itself after the pandemic passes, and offers some investment insights on how to navigate periods of volatility and uncertainty.

Panic is the Enemy (MFS IM blog, Mar 2020)

MFS IM suggests that investors need to extend their investment time horizons if they are to take best advantage of recent market dislocations.

An instant economic crisis: How deep and how long? (McKinsey & Company, Apr 2020)

McKinsey offers their view on how deep and how long the coming global recession might last.

Podcast: Navigating a stock market crisis (Baillie Gifford, Mar 2020)

Baillie Gifford suggests how one might navigate a market crisis.

The Big Picture: Investing in an uncertain world - Quarterly Update (Invesco, Mar 2020)

For compliance reasons, this paper is only accessible in certain geographies

In this paper, Invesco presents a range of possible scenarios which, between them, imply a range of between 1400-3000 for the S&P 500 in 12 months.

Cross-Asset View: Covid could bring lasting change (Candriam, Mar 2020)

Strategists at Candriam offers their thoughts on how the COVID-19 pandemic might affect societies and economies, with implications for a number of investment markets.

Rob Lovelace on what a recovery could look like (Capital Group, Mar 2020)

For compliance reasons, this paper is only accessible in the UK & Europe

Capital Group's Rob Lovelace gives a snapshot of what he thinks the investing world might look like in 2022.

Implications of Coronavirus for Global Real Estate Markets (PGIM Real Estate, Mar 2020)

Strategists at PGIM Real Estate share their views on likely implications for the global real estate market resulting from the COVID-19 pandemic.

Covid-19 Fixed Income Update (M&G Investments, Mar 2020)

For compliance reasons, this paper is only accessible in certain geographies

M&G Investments offers a roundup of reactions from across the fixed income spectrum as the COVID-19 outbreak spreads to many more countries.

Man vs Nature: What the government can fix and what it can't (JP Morgan AM, Mar 2020)

JP Morgan AM's Michael Cembelast's latest take on the markets, unemployment, liquidity issues and potential drugs that might offer COVID-19 sufferers some relief.

Are markets ready for an unlikely “average recession”? (State Street blog, Mar 2020)

State Street's Global Head of Macro Strategy, Michael Metcalfe, wonders whether the declines in equity markets are now sufficient to be pricing in an 'average' recession.

Multi-Asset Outlook — A game plan for the volatility (Wellington blog, Mar 2020)

Wellington's Daniel Cook and Nanette Abuhoff Jacobson share their perspectives on the COVID-19 pandemic and its implications for multi-asset markets over the coming months.

Equities: The case for further caution (LGIM blog, Mar 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

LGIM remains cautious on the outlook for risk assets, as the economic impact of the COVID-19 pandemic is uncertain, and gauging whether the current policy response is sufficient remains difficult to determine.

A Viral Market Meltdown IV: Investing for a post-virus economy (Aswath Damodaran, Mar 2020)

In this blog post, Aswath Damodaran offers his insights as to how investors might best craft a response to the market turmoil, but notes that one has to be quite specific in one's approach.

Navigating the two-way risk in equities (Robeco blog, Apr 2020)

Robeco notes that for equity market indices, there is practically no visibility in earnings, or macro forecasts, which could lead to further falls. However, 10% bounces in bear markets are also commonplace, leading to an uncomfortable position for both bulls and bears.

Q2 2020 Outlook & Review (QMA)

QMA questions whether the bottom is near for equity markets, or whether another round of virus fears could see the market take a leg lower.

Full commitment from policymakers can stabilise markets in the end (NN IP blog, Mar 2020)

NN IP wonders whether secular stagnation forces, political uncertainty and empty monetary policy kits mean that a rapid recovery is unlikely once supply and demand disruptions relating to COVID-19 have abated.

COVID-19 and the Outlook for Global Real Estate Markets (UBS AM, Mar 2020)

UBS AM notes that the real estate sector is impacted in various ways by the COVID-19 pandemic. The retail, leisure and hotel sectors are likely to be worst affected, but data centres may benefit. Investment volumes will be lower, with little transactional evidence on which to base valuation estimates.

RBC GAM Quarterly Global Investment Outlook - Spring 2020

RBC GAM cautiously up their equity weighting as a result of recent moves across asset markets, and believe that bond markets are being too pessimistic on the depth of the recession.

How to handle market declines (Capital Group blog, Mar 2020)

For compliance reasons, this paper is only accessible in the UK & Europe

Capital Group offers investors six principles, which should help them to avoid making emotional decisions.