News
The Worst Seems to Be Over, Now It Gets Complicated
It seems like ages ago, but just seven weeks back, two of my colleagues in Equity Research and Data Science presented some eye-catching findings in this CIO Weekly Perspectives slot.
It was the height of the Delta variant scare. Concern was growing that this rapidly spreading strain could mutate and undermine our vaccination progress. But we urged a closer look at the local data, which suggested to us that new cases in the U.S. could “peak within one week.” The seven-day average rate topped out 12 days later.
News
Caution Today, Opportunity Tomorrow
It is the bitterest of the various economic cocktails, and we think fear that it is the only one currently on the menu has been the main cause of market volatility over the past month. Supply-led inflation shocks and concern about China’s growth engine appear to be the main ingredients. Stir in a grudging and only temporary Capitol Hill compromise on the U.S. debt ceiling, and we see investors really start to turn their noses up. The S&P 500 Index has suffered its first 5% drawdown for a year. Core government bond yields have jumped.
We think it is easy for the current, difficult inflection point between post-pandemic recovery and steadier, mid-cycle expansion to obscure what are still strong economic fundamentals. That said, we also acknowledge scope for this period of volatility to persist over the short term.