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Vantage Point: The fear of fear itself

The Roman alphabet has outlived its usefulness – at least as far as labelling the economic recovery is concerned. Having spent six months talking about ‘V’, ‘U’, ‘W’, ‘L’ and even ‘K’-shaped paths, for this edition we have decided to ditch the letters and go back to a simpler classification. The course of the disease remains the single most important determinant of the kind of economic recovery we get, but we now think a simple ‘good’ or ‘bad’ classification covers everything we need to discuss. We cover this reassessment and its impact on markets and investment conclusions in our new Vantage Point.

Weekly Market Roundup

October 19, 2020

Start your week off right with our market snapshot from the Global Economics and Investment Analysis Group.


  • Dissipating US stimulus prospects and a second viral wave in Europe weighed on risk sentiment in the latest week. Global stocks declined -0.3% but are still 3.2% MTD. Losses were led by non-US developed markets as the MSCI EAFE fell -1.5% while emerging markets were flat and the US was slightly positive (S&P 500: 0.2%; NASDAQ: 0.8%).
  • Interest rates declined and the most in Europe while the USD gained 0.7%.
  • US jobless claims climbed more than expected to 898K from 845K. After first falling below 1M in August, the rate of improvement has stalled and claims have largely remained between 850-900K.
  • US small business optimism beat estimates and gained to 104 from 100.2 in August. The current index level is only 0.5 from the pre-covid peak.
  • US University of Michigan consumer confidence beat estimates slightly and increased in October from 80.4 to 81.2. The level still remains far below pre-covid (101.0).
  • US inflation gained slightly by 0.1% to 1.4% y/y in September while core inflation remained at 1.7% y/y. Prior to covid, overall inflation was 2.5% and 2.4% for core.
  • After slowing each month since May, the monthly percentage increase in US retail sales increased from 0.6% m/m to 1.9% m/m in September. Retail sales were 5.4% higher vs. September of last year, the largest y/y growth in 2020.
  • US industrial production momentum slowed further and was -0.6% m/m in September, the first contraction since April.
  • With the virus spreading rapidly, governments in Europe continue to ramp up their containment measures, although for the time being restrictions are more targeted, regional and time-specific than in the first wave.
  • Volatility in sterling is rising as Brexit negotiations are entering the final, crucial stage before the end of the withdrawal agreement on 12/31/2020.
  • The monthly improvement in Eurozone industrial production slowed again in August to 0.7% m/m from 5.0% m/m. On a y/y basis, production was -7.2% lower.
  • China trade continues to show signs of improvement. Import growth improved to 13.2% y/y, the highest YTD. Export growth gained slightly to 9.9% y/y, the strongest since early 2019.

US High Yield Credit Spreads


  • US PMIs (Friday)
  • UK Retail Sales (Friday)
  • UK PMIs (Friday)
  • Eurozone PMIs (Friday)

Monthly Market Roundup

October 2020

Progress Continues, Risks Remain

  • Global stocks declined -3.2% in September, the first loss since March, bringing the YTD return to 1.8%.
  • Big tech and growth stocks, having led market performance YTD, led the fall. Risk-off sentiment helped drive safe-haven government bond yields lower and a 1.9% advance in the US dollar.
  • Global economic improvement continues but risks remain to the downside and further fiscal stimulus will likely be needed in the US.
  • A rise in Covid cases in certain areas around the world is a cause for concern, but it is too soon to gauge the potential economic impact, as full lockdowns seen in March and April will likely not be utilized again.
  • Signs of slowing labor market progress and rising structural unemployment remain a key risk.
Find out more

September 2020

Global stocks gained further in August and returned 6.2%, the best August in 32 years, bringing the YTD performance to 5.1% after surpassing the prior February peak.

Back to New Highs

August 2020

Global stocks gained 5.3% in July bringing the YTD loss to only -1.0%.

Stocks Gain Despite Signs of Slowing Recovery




Points of View

What’s priced into markets?

Inflation: Is It Coming Back?

Probably not in a big way, but if it were to it would change the investment landscape completely.


Read More

Interest Rates

Short term interest rates reached all-time lows in the US in May, rebounding only marginally since then. At face value, markets appear to be pricing in a significant probability of negative rates in the US. We see this scenario as unlikely.


Read More

Global Economics and Investment Analysis Group

Meet the minds behind the research.

Shamik Dhar

Chief Economist


Alicia Levine, PhD

Chief Strategist


Liz Young, CFA®

Director of Market Strategy


Lale Akoner

Market Strategist


Bryan Besecker, CFA®, CAIA

Market Strategist


Sebastian Vismara

Financial Economist