COVID-Recession Dynamics & Differences
Why this recession differs in speed and magnitude, and select opportunities across market caps are assessed by Chris Wallis, CEO, CIO, Vaughan Nelson.
- COVID-19 was an accelerant that brought us to the end of the business cycle and the liquidity cycle.
- Typical recessions cause a real GDP decline of sub-3 percent. In this case, we’re likely to see Depression-level declines of 25 percent. But, unlike prior recessions that tend to last multiple quarters and months, this one is a one-quarter phenomenon.
- This recession is a global phenomenon, unlike traditional ones where you’re recessing a sector or region.
- While a broad index may not have reached attractive valuations, or even comparable valuations during the March sell-off, like we saw during the Great Financial Crisis, individual securities did.
- Companies that were least affected by the COVID shutdown outperformed companies that were more affected by the COVID shutdown.
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This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. The views and opinions expressed are as of May, 19, 2020 and may change based on market and other conditions.
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