Investment Strategy Note - Markets on High Alert

By March 2020

Nothing good results from panic. History has reinforced this point time and time again. It is our response to the crisis that is critical. Global central bank intervention has been swift, coordinated and innovative. They have a good track record since the 2008 global financial crisis and they have shown they can adapt. This will continue. Government response over the past week has seen some of the most aggressive fiscal policy announcements for some time. More is needed. This is the time for bold and large fiscal stimulus to complement the very stimulatory monetary policy.

Equity markets, and risk assets in general, have always been driven by both fear and greed. There are significant uncertainties in the current market turmoil and the dislocation in markets is the result of these uncertainties. The human and health impact of the Coronavirus (COVID-19) has amplified our fears. Our privileged lifestyles have been impacted and the lack of resilience is notable. However, as difficult as it sounds, there will eventually be an end to the current severe crisis, there will be a health solution, and societies and economies will slowly begin to recover. Get comfortable being uncomfortable for now.

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