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TS Lombard has a 30 year track record in making off consensus-calls on major turning points in economics, politics and markets. We have made our reputation by making bold calls ahead of major inflection points. For example, building on our global economic and financial analysis to find imbalances and fragilities, we identified the coming storm of the Global Financial Crisis – and just as importantly we identified the turning point and the bottom of the stock market too. The different policy responses to the crisis have led to the greater uncertainty and volatility that investors face today.
We believe that the global economy is at another inflection point. The world has changed and we see several new and different vulnerabilities coming to the fore, each one equally important and any one of which could lead to market ruptures. These issues call for deep thinking and strong analysis. The coronavirus COVID-19 is causing immense concern for investors and policy makers (see our updated policy response table). It has brought many of the financial and systemic risks we have been highlighting into sharp focus. To access all our research relating to the virus and what it means for growth and asset prices please register for trial access here.
Government policy responses to Covid-19 The world’s governments are introducing unprecedented packages of support to minimise the permanent economic damage caused by the coronavirus shutdowns. We track the main policy measures implemented in the world’s largest economies.
Real bear market starts now The equity rebound - just another bulltrap? Risk sentiment has recovered because policymakers have ‘underwritten’ global markets. Yet, the global outlook is as dark as it was a few weeks ago, with massive uncertainty about the timing and strength of the economic recovery. Since recessionary forces will persist beyond the official lockdown period, asset prices surely face another leg down.
Crisis roadmap: After the false dawn
As we forecast, China abandoned a numerical GDP target for 2020, with the Government Work Report placing more emphasis on job market stabilization and improving people’s livelihoods, say Jonathan Fenby, Bo Zhuang and Rory Green of TS Lombard.
Bo Zhuang, chief China economist at TS Lombard, looked at reported profit and productivity declines across industrial sectors—manufacturing, services, construction—to speculate on the number of laborers that would need to be laid off in each.
Charles Dumas of TS Lombard points out: “The combination of a plunging world market share and very high profit margins has only been possible with wage rates falling relative to output, incomes and gross business profits.”
Capital outflows from Hong Kong bear watching, TS Lombard’s Rory Green wrote in an email.
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