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Wealth Management: Market Perspective – Looking across the valley | The bill: Foreword

Kevin Gardiner, Global Investment Strategist, Wealth Management

Our thoughts are with those hurt by the virus, and those who have been keeping the show on the road.

Headlines still talk of economies “facing” recession, but most are probably rowing again. We don't know exactly how deep a hole the global economy fell into, but we likely started climbing out of it in May.

It will take longer to get out than it did to fall in. Lockdowns will ease more slowly than they began; many businesses and jobs may not make it to the other side; renewed contagion is possible; some habits may change.

But nobody expects a symmetrical recovery anyway: the perfect V-shape is the pundits' straw man. What is less remarked upon is the possibility that the rebound now under way may nonetheless follow a timeline that make today's big corporate losses look small to far-sighted capital markets.

Least discussed of all, if our inboxes and reading lists are anything to go by, is the possibility of a more positive longer-term outcome. There must be some chance that confidence steadily gathers momentum, fuelled by continuing loose policy, relief and pent-up demand, and that this virus stays contained.

Such lopsided received wisdom is one way in which this downturn - otherwise so special - resembles others. The "wall of worry" has got bigger. Meanwhile, stock markets have, as usual, rallied before the economy. We suggest here that the two are not as disconnected as they seem.

In the second essay we discuss the possible economic costs of the downturn; and we ask if there will be any fiscal and monetary hangovers. It is the latter we'll be watching out for most closely. We're all fans of Hamilton these days, but his key insight concerned mutual borrowing, not printing.

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