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Jeremy Siegel on the COVID Stock Market (The Big Picture, 3 min read) The S&P overreacted to the COVID crisis according to Siegel, treating it as a replay of the 1918 Spanish Flu. If earnings drop to zero in 2020 and then revert to 2019 levels next year (assuming 20 P/E ratio), the stock market should have only lost 5-6%. He adds ‘75/25 is the new 60/40’ because low yields will end the bond bull market. [Bullish Equities, Bearish Bonds]
How Smart Manufacturing Could Lead to an Industrial Renaissance (Schroders, 8 min read) Smart manufacturing (i.e. 3D printing and robotics) will cause the next industrial revolution. Rising wages in China and ageing western societies will provide impetus to this trend. Environmental benefits and greater flexibility within supply chains are additional benefits. [Bullish Productivity / Growth]
Lockdowns Have Led to a Growth Surge for Digital Gaming (Invesco, 2 min read) COVID lockdowns have accelerated the growth of the global gaming industry, and Invesco expects this trend will remain even after economies re-open. [Bullish Tech]
The New Emerging Market Landscape: The Single Commodity Focus Has Shifted (Advisor Perspectives, 5 min read) EMs are no longer relying on single commodity exports according to Franklin Templeton. More diversified growth (technology and domestic consumption), increased value added, and more diversified supply chains post-COVID will all benefit EM. [Bullish EM]
2020 Mid-Year Outlook: Fixed Income (Advisor Perspectives, 10 min read) Charles Schwab favours ‘limiting duration to reduce the risk of rising long-term rates, and suggest[s] keeping the bulk of fixed-income investments in bonds with higher than average credit ratings.’ For investors concerned about inflation, they also see TIPS favourably. [Bearish Duration Risk]