Economic and Market Overview – May 2020

It feels like ages ago that a global trade war dominated news. It is sobering how quickly the spread of Covid-19 and the subsequent lockdown regulations changed the world while we were making other plans.

Most governments around the world are in the process of figuring out how to best balance a return to full economic activity whilst simultaneously curbing the increase in mortality rates associated with the spread of Covid-19. Harvard epidemiologist Marc Lipsitch made a very interesting distinction; He said that there are facts, informed extrapolations from analogies to other viruses and, lastly, opinion or speculation. Against this backdrop Howard Marks of Oaktree Capital added that “the scientists are trying to make informed inferences, and there’s not (yet) enough data to… turn these inferences into facts. Most of what we have today is opinion, and much of it is either optimistic or pessimistic. The gulf in between is massive: if you read just the optimistic pieces, you’d think the virus will soon be eradicated, and the economy brought back to health, and if you read just the negative ones, you’d think we’re all done for.”

There are many theories conjecturing what the best path from lockdown to freedom of movement is. The fact of the matter is that we simply do not know for sure, and that the range of potential economic outcomes varies greatly. Markets will reflect this uncertainty as it waxes and wanes along with the changes in investor sentiment.

View the full May Economic and Market Overview