Politics, policy, and the pandemic

Wellington
By October 15, 2020 14:43

Politics, policy, and the pandemic

KEY POINTS

 

  • Potential treatments/vaccines for COVID‑19, policy support, and gradually reopening economies make us more comfortable taking a pro-risk stance over our 12-month time frame.
  • However, the market’s rebound and the prospect of a slow economic recovery leave us only moderately bullish on risk assets.
  • Within equities, we prefer the US and the growth and quality factors, though we think some higher-quality cyclical companies are attractive.
  • We think rates will stay low and find some credit spreads attractive relative to government bonds.
  • Downside risks include the US election, a second wave of COVID-19, a deeper and longer recession than anticipated, and worsening US-China relations. Upside risks include a faster-than-expected, safe/effective vaccine, another major dose of policy stimulus, and/or a sharp economic rebound.
Wellington
By October 15, 2020 14:43

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