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.

Chris Wallis, CEO, CIO, Portfolio Manager, at Vaughan Nelson Investment Management explains the unique nature of the COVID-19 driven recession and select opportunities developing in the marketplace.

  • 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.
Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

The index information contained herein is derived from third parties and is provided on an "as is" basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.

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.

Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

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