Summary

Thanos highlighted the importance of understanding that there are always crises, all the time. Regarding COVID, he is hopeful that we will be able to deal with this crisis through continuous fiscal and monetary support which will be impacting the major economies. Expects policymakers in the major economies to provide as much support as necessary to help the recovery from COVID. If that means an increase in levels of debt, then that is a small price to pay for the potential economic cost of political upheaval and social unrest. Global economies will have a “U” recovery rather than a “V”, despite the rally across risk assets in general. He laid out 5 key investment points to note in the current situation: a strengthened Europe, a stronger China, receding globalisation, inflation is here to stay, and ESG. In Europe, he has a positive outlook on Germany in particular: the fiscal stimulus which Germany provided was unprecedented as a percentage of GDP, and Germany’s position is strengthening. Believes France, on the other hand, may suffer from social unrest as a result of COVID’s impact on the economy. Negative outlook on S&P500 due to the political uncertainness he sees coming through. Positive outlook on US High Yield from March’s highs, but is less confident on EM as this is the first crisis where both major central banks and EM central banks have been cutting rates. As a result, fears that once inflation comes through, EM central banks will be less likely to take out that stimulus. Retains a positive outlook on oil and copper. However, has moved to a neutral outlook on gold due to a mixture of indicators. The private markets will benefit from elevated public market volatility, expensive valuations and a search for yield. Positive outlook on EUR and KRW, a neutral outlook on CNY and ZAR, and a negative outlook on TRY and INR. COVID is also having a direct impact on the US elections. The concerns surrounding the pandemic has caused an increase in demand for voting by mail. This demand is much more significant among Democrat voters because, overall, Democrats are more concerned about COVID than Republicans. Although Thanos sees political uncertainty following the election, he does see Trump winning a second term. This is mostly due to his strong relationship to his core Republican voters. Another contributor is the fact that the US economy is also performing better than the rest of the Western developed economies; stock markets have remained relatively well contained, unemployment is also down from the peak. In the UK, Boris made a big miscalculation with respect to the US. Breaking international law by U-turning on an EU agreement has risked a US-UK trade deal. Brexit will still happen, but it will be a skeleton deal; later on, the UK will have to go back to negotiating with the EU. Regarding Belarus, the EU, Nato and Russia do not want to go back down the route of what happened in Ukraine. As a result, the EU and Nato will remain at an arm’s length.

Topics