Russia’s energy tentacles, intertwined throughout Europe’s power network, may prove difficult to excise.
Should the Russia-Ukraine conflict persist, it would lead to further tightening of financial conditions
Russia’s invasion of Ukraine opens a new phase of global uncertainty that could have major repercussions
Despite the recent coronavirus surge and probable upcoming socially isolating, winter hunkering required, we think stocks can continue to hold their own against bonds.
We continue to believe that risk-assets are worth the discomfort of uncertainty.
The Bank of Japan has failed to reach its inflation target for decades—is the Fed heading down a similar path?
Market sentiment is looking ahead to the end of the COVID-19 pandemic, probably in the first half of 2021, when an effective vaccine is widely distributed. An end date on the horizon is certainly a good thing for stocks.
We expect a big bounce in 3Q20 global growth, but because an effective COVID-19 vaccine is unlikely until mid- to late-2021, further gains in 4Q20 and 1H21 will prove more difficult.
As U.S. COVID-19 cases increase, so does the risk that economic recovery decelerates. We think policy makers will do what it takes to sustain the recovery, and therefore continue to prefer U.S. equities over bonds.
As May and June numbers are proving out, policy support is the lifeline the economy needs, serving as a bridge to help consumers emerge on the other side of the pandemic intact.
Despite our expectations for a dreadful drop in 2Q20 output, we believe a recovery will commence in 3Q20 and lead to a meaningful acceleration beginning in 2021. Accordingly, stocks still look more attractive to us than bonds.
We are still overweight U.S. large caps, believing winners will win until a broad-based economic recovery takes hold. Our preference for investment grade U.S. bonds remains; also, we now see opportunities among high yield bonds.