Relative speed

  • The daily growth rate of Covid-19 cases in Italy is abating but stays at a double-digit pace.
  •  Beyond the inference we can make on a bottom-up, sectoral analyses, the economic impact is now showing in the” traditional” data in the US and the Euro area, strengthening the case for a steep recession worldwide in 1H 2020. We brought our forecasts further down.
  • The policy response is “almost there” but we need more details and politicking around the US stimulus is a concern. Swift implementation is of the essence given the level of market stress.
  •  Looking ahead, we explore whether the crisis will be inflationary. We think it won’t.

Lockdowns work but they take time

Focus last week was on the policy response and we will explore this in the next sections, but let’s first assess the damage already quantifiable. Lockdowns work, but they will take time to do so, and in the meantime the decline in economic activity is going to be very significant. We are dependent now on the relative speed of the pandemic and the policy response.

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.
This document has been edited by AXA INVESTMENT MANAGERS SA, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 393 051 826. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
In the UK, this document is intended exclusively for professional investors, as defined in Annex II to the Markets in Financial Instruments Directive 2014/65/EU (“MiFID”). Circulation must be restricted accordingly.
© AXA Investment Managers 2020. All rights reserved