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No Normal Cycle, No Normal Recession

The short‐ and longer‐term implications of the coronavirus on global equities.

Laurence Taylor, Portfolio Specialist
T. Rowe Price,  May 2020

The crisis goes on, and much of the world remains in lockdown as the coronavirus continues to impact nearly every aspect of society. Financial markets, however, appear to have stabilized and perhaps are looking to the future. We have already seen the MSCI All Country World Index bounce 27.4% off its lows.1

Here, we look at the short‑term impact on the economy and corporate earnings, but also at the potential long‑term implications for inflation, style reversion, and de‑globalization. Could unprecedented stimulus measures from central banks and governments spark a return of inflation, and hence a style reversion to value-oriented stocks? Also, does the transfer of supply chains back to individual countries help accelerate the pattern of de‑globalization?

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