Displaying items by tag: covid
China has another Covid-19 outbreak that could potentially shut down Beijing in the same way that the world saw a lockdown in Shanghai previously. This outbreak is sending a shockwave across all assets that are spiking volatility. The VIX hit its highest point since mid-March, and there was a mild reservation in the bond market. 10-year treasury yields spiked 14 basis points. Bonds and equities aren’t even the whole stories; everyone knows commodities are in a super cycle, but this outbreak is putting that at risk. A variety of different commodities' prices fell in response. Finally, Wall Street is starting to be concerned that a global recession is a possibility with Ukraine-Russia ongoing, Covid surging, and serious inflation risk.
Finsum: The yield curve is also starting to turn which could be really bad for equities markets.
The predominant sentiment in financial markets is that active funds have an edge during volatile periods because picks are more apparent and therefore easier to execute. However, according to the Euro Securities and Market Authority, active funds didn’t outperform passive funds during the critical stressed market conditions from February 19th to June 30th, 2020. This full cycle in financial markets didn’t give active funds an advantage and actually underperformed by 6.6% annualized in that period. This research backs up previous reports by morningstar that active funds didn’t outperform during high volatility Covid-19.
Finsum: Covid-19’s cycle was the K-shaped recovery Economists dream of, so this isn’t the nail in the coffin for active management.
The pandemic affected the economy in a variety of different ways, but combinations of unemployment and work from strategies caused a mass exodus from major American cities and New York has been no exception. However, UBS Group AG says that is about to change. They are recommending investments into REITs, e-commerce ETFs, and fintech/smart mobility in order to be a part of the comeback. A combination of higher vaccination rates and more tolerance for state and local governments to avoid shutdowns will help spur New York's comeback. They particularly cite Manhattan’s REITs for having a fruitful future.
FINSUM: More jobs than ever have moved fully remote and it's questionable whether the city lifestyle will be as appealing if it's not necessarily a requirement.
(Rio de Janeiro)
The international monetary fund cut its growth projections globally this week. The advanced economies are still expected to keep pace, but the low-income developing countries are lagging. Many low-income countries are lagging in vaccine coverage and their exports are suffering because of this. These exports slowing led the IMF to cut the growth projection for Indonesia, Malaysia, Philippines, Thailand, and Vietnam from 4.3% to 2.9%. There is a slight trickle into larger economies as worker shortages have hurt American companies such as Nike. China remained robust to most of the slashes as its 2021 projection only dropped from 8.1% to 8.0%.
FINSUM: Don’t look for these growth projections to bear out in emerging markets if vaccine rates tick up. However, Fed tightening could slow growth in dollar-dependent countries.
The United State’s trade war with China shifted lots of manufacturing…see the full story on our partner Magnifi’s site