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As parts of the world are still going through the Covid pandemic, the path and timing of the recovery remains very much uncertain. It seems therefore worth outlining below
the key characteristics of this new environment and its investment implications. This is very much a summary that we would be happy to discuss further with you at your convenience.

I. A new environment:

  1. It is difficult to forecast both the development of the coronavirus pandemic and the public policy responses to it. However, we know that traditional monetary policy has now been exhausted, and that economies will have to rely heavily on fiscal policies from here:
    • Fiscal policies will largely have to replace income for the people affected by the economic fallout of the pandemic, although increased spending will not necessarily follow;
    • Monetary policies will continue to stimulate markets, with both risky
      and protective assets benefitting from this;
    • Some countries will have limited abilities to stimulate their economies given risks on their currency and/or risks of uncontrolled inflation.