Recovery, Upcycle, Emerging Markets… Commodities next?
According to the global macro nowcasting part of Butterwire’s engine, we’ve moved to an economic upcycle phase on June 23, just over 3 weeks after moving into a recovery phase. Market-implied equity returns have shot up past 16% with a strong tilt toward Emerging Markets.
Brutal shift in top-down signals since last week
Butterwire users would have noticed how the application switched emphasis last week from “recession-resilience” to “recovery” scores...
Super-EU state or bust!
It will be a while before the true cost of the blanket lockdown across most of Europe is known. We do know however that countries with higher Covid-19 fatality rates have typically seen their equity indices underperform by ca. -7% for each extra 100 fatalities per million above Denmark’s rate (see chart below).
All the (Investing) World Needs is a Fed Meeting
The Fed’s Open Market Committee is holding today and tomorrow one of its 8 regular annual sessions. As the graph below shows, the mere fact that the FOMC meets is normally enough to boost equity returns. If only getting more protective masks was that easy!
Less unknowns on the pandemic, more unknowns on everything else
Early March, we reported on the staggeringly wide range of possible outcomes from the COVID-19 outbreak due to the uncertainty level surrounding the contagiousness (R0), lethality (CFR) and severity (SCR) of the virus.