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Thursday, 2 April 2020
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Market uncertainty, low interest rates and the threat from COVID-19 to global economies have boosted the performance of high quality fixed income assets. Lesser corporates face another story.
Higher volatility, higher funding costs, US rate rises with AUD interest rates decoupling, Quantitative Tightening, maturing bond reinvestment flows all point to a difficult 2018.
Australia is in a relatively good position to borrow $200 billion, with the RBA using printed money to buy bonds in the market. The long-term consequences are better than the alternative.
Howard Marks is the largest investor in the world in distressed securities. What does he think after checking the virus positives and negatives, and how much has he changed his mind in only a few days?
Bear markets caused by recession fears follow a pattern, but we have never seen anything like coronavirus. If financial stimulus and medicine prove ineffective, all bets are off.
The turning point in this crisis will be when the number of new COVID-19 cases starts to decrease. Until then, can we mitigate the damage to businesses and the economy so that we can snap back?
Over the long term, the technology sector has a vital role to make the essential transition to a more sustainable global economy and a cleaner planet. We highlight a few names with strong prospects.