• Overview

    Governments around the world have approved almost $11 trillion to fight the pandemic, and an extra $5 trillion is still in the pipeline, according to the Institute of International Finance. That easily eclipses the stimulus provided during the global financial crisis. As the chart below shows, economic activity is beginning to recover as economies continue to open up.

    Chart 9: US financial conditions continue to drive equities

    Source: Bloomberg


    Despite an acceleration of the Covid-19 cases in a few states, business activity in the U.S., such as restaurant diners tracked by OpenTable and mobility monitored by the Transportation Security Administration (TSA), remains firmly on a recovery path. That’s perhaps why risk markets remain resilient.

    Chart 10: Activity indicators continuing to recover

    Source: Bloomberg


    The rotation to value stocks that seemed so full of vim and vigour a few weeks ago is fading again. Once again, the longevity of the rotation from growth to value was short-lived – compressed into the end of May, beginning of June. And while the ratio of the Russell Growth Index over the Russell Value Index surpasses the previous peak in 2000, the difference in valuation between the two indexes is far less extreme. Earnings among the growth companies, lead by the tech sector, this time around are substantially higher than in 2000.

    Chart 11: Growth investors continue to trounce value

    Source: Bloomberg

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