Major economies are beginning to see a rebound in July, but obstacles towards a recovery and a normalization of global activity continue to be present. Most recently, the U.S. has begun to see a reemergence of COVID-19 infections in many southern states, and a tightening of lockdown measures to control the spreading.
In this month's edition of RBC’s Global Insight, we highlight the following:
A U-turn for the auto sector?
It wasn’t that long ago that the auto sector was on an open road to the car of the future. But will the gauntlet of potholes left by COVID-19 cause the sector to swerve? Where is the auto sector going from here, and what does that mean for the prospects for autonomous and electric vehicles? John Stackhouse, Senior Vice President, Office of the CEO at RBC, and Joseph Spak, U.S. Auto Sector Analyst at RBC Capital Markets, LLC, explore where the auto sector is going from here, and what that means for the prospects for autonomous and electric vehicles.
Health Care in the sweet spot
The Health Care sector offers a unique combination of above-average forecast earnings growth, driven by powerful long-term trends, and below-average valuations. While the sector can be volatile in an election year, we believe investors should focus on its sustainable long-term prospects. Gopa Nair, CFA, of the Portfolio Advisory Committee discusses key trends in the health care industry, and its underlying fundamentals in 2020, and into the future.
Global equity: A show of restraint
Markets and the economy have both come a very long way in a short time. From a benign opening to the year, things rapidly transitioned to a wholesale shutdown of most developed economies, market collapses, and stimulus packages to head off credit crunches and support the economy. The Portfolio Advisory Committee share their thoughts on major economies around the world, and their performance thus far.
Global fixed income: The circle of economic life
The typical cadence of the business cycle appears to be holding true, no matter how atypical the current U.S. and global recessions might be. In a usual business cycle, we observe: curve steepening (i.e., long-term rates are higher than short-term rates) ahead of an economic expansion; curve flattening (i.e., long-term rates are at about the same level as short-term rates) as the cycle ages; and curve inversion (i.e., long-term rates are lower than short-term rates) ahead of recessions. Now that we find ourselves in an official recession, The Portfolio Advisory Committee explains why their eyes are fixed on the yield curve and what it might mean for both the duration of the recession and the robustness of the recovery.
