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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.
Crisis Roadmap: Miracle CuresAs lockdowns begin to be eased around the world and infection rates slow, we mark-to-market our view against the roadmap we originally laid out back in March. Most developments fit in with our framework – revisions ratios and economic surprises are rising, for example. But central bank support has limited the risk of a credit blowout – and of course the equity market continues to defy gravity.
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.
“The real economy is so sick that people need government support,” said Marcus Chenevix, a Middle East analyst at TS Lombard, a London-based research firm.
This chart from Steve Blitz, chief U.S. economist for TS Lombard, uses ADP data and shows that unemployment for companies with more than 1,000 employees isn’t as bad as in the last recession; but for companies with fewer than 500 employees, it is already much worse.
“Challenges faced by the economy prior to the pandemic-induced crisis – from rising fiscal pressures to financial sector stress – are now being amplified,” says Shumita Sharma Deveshwar, senior director for India research at TS Lombard.
Constantine Fraser, Europe analyst at research firm TS Lombard, also told CNBC that “opposition politicians have already started to attack the plan, as too small in size, too slow in its prospective disbursements, or as coming with too much conditionality attached.”
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