April 2020 - Monthly Commentary
The Weekly Market Insight includes an outlook into the future to see what the possible economic outlook for the US could be for 2020 and importantly 2021. This was done by RBC’s Chief Economist and includes in his view the most likely scenario for both years – an economic growth of -3.2% in 2020 and 5.6% in 2021 (see matrix on page 2). The interesting part of the 2020 scenario is that they would see a GDP growth trough of -15% lasting 10 weeks. This seems reasonably credible to us and means that we are probably looking at May for economic activity to start picking up. In terms of the equity and bond markets, they will likely anticipate this at some point and start to stabilize ahead of this uptick.
We found a couple of other interesting points in this article. Firstly, equity market volatility is calming down (see page 3 first paragraph). Second, "China’s official manufacturing Purchasing Managers’ Index (PMI) for March increased to 52.0 from 35.7 in February. The non-manufacturing PMI also rebounded, to 52.3 from 29.6.” (see page 4 under Asia Pacific).
On a personal note, we are thinking of you and your family during this time. Please stay safe as your health is most important. As always, we remain committed to managing the portfolio in line with your personal long-term goals. Should the economy be impacting you in other ways that we should be aware of, please don't hesitate to let us know.