‘Whatever it takes’: Fiscal Edition

UBP
By March 24, 2020 07:00

‘Whatever it takes’: Fiscal Edition

Key points

  • With the US and broader European economies entering the ‘acceleration’ phase of their respective COVID-19 infection cycles, fiscal policymakers across Europe and the United States have begun outlining plans to bear down on this growing shock to demand and confidence.
  • Much like former ECB President Mario Draghi promised ‘whatever it takes’ to preserve the Euro-area economies in 2012, US and European fiscal policymakers have sprung into action implicitly making the same commitment in the face of the COVID-19 pandemic.
  • Though these measures in combination with recent moves from the US central bank in particular are certainly necessary, policymakers must avoid losing sight of another potential shock to the global economy that remain on the horizon that, if it remains unaddressed, has the potential to extend and magnify the virus-related economic shock.
  • In particular, elevated disfunction in US credit markets means active intervention on the part of the US central bank and fiscal authorities is needed. Given the pace of recent actions, measures appear imminent.
  • With global authorities increasingly moving to a ‘whatever it takes’ strategy, investors should expect the one-way risk of the past two months to pivot increasingly to two-way risk as fiscal momentum looks to blunt the ongoing global demand shock.
  • As a result, already conservatively positioned investors can prepare portfolios to exploit opportunities to capitalise upon market mispricing in both risky asset (e.g. equities) as well as risk-off segments within portfolios.
UBP
By March 24, 2020 07:00

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Aanstaande donderdag 9 juli 13:00 is het webinar 'Asset Allocatie Consensus Online'. We gaan met Hans Stegeman en William de Vries @TriodosIM in op ESG en impact beleggen. Aanmelden kan via: https://www.alpharesearch.nl/event/asset-allocatie-consensus-online-juli-2020/

"Road to Recovery" -> https://www.opiniopro.com/2020/07/opiniopro-selection/road-to-recovery/ #recovery #credit #monetarystimulus #spreads

"Investment Strategy Commentary: Will the V Become a W?" -> https://www.opiniopro.com/2020/07/northern-trust/investment-strategy-commentary-will-the-v-become-a-w/

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