Measuring Recovery In Real Time

Key Points

  • The key for the markets is assessing the pace and success of a recovery.

  • For each of the major countries in Asia and Europe, we will be tracking weekly data on key elements of a recovery: rush hour commuting for how quickly people are returning to work, air pollution for manufacturing activity, retail foot traffic for brick and mortar shopping, weekend box office receipts for how quickly people are willing to come together in groups for entertainment, and new virus cases to see if the re-openings could lead to another shutdown.

  • Stock markets around the world are currently moving in sync, tied to the real time prospects for a successful recovery in jobs, earnings, and the economy - making our dashboards important to assessing the trajectory of stocks everywhere.

A lot has happened in the month following global stocks’ low on March 23, as represented by the MSCI All Country World Index. Nearly every major country seems to have put the peak in new COVID-19 cases behind them by several weeks and the discussion has now turned to the timing and staging of re-openings. Stocks have rebounded in anticipation of the end of the economic freeze and the timing of its restart.

There is still hard work to do. We need to answer key questions: What does the recovery look like? How fast is it? Does it lead to another shutdown? It isn’t enough for politicians to simply declare it is time to reopen—millions of individual workers and shoppers need to decide they feel safe enough to leave their homes.

Now, the key for the markets is assessing the pace and success of a recovery.

  • If re-openings proceed steadily and new virus cases remain contained, stocks around the world may add to their gains over the past month.
  • If people and businesses are slow to reengage, stocks could stall or head back down due to concerns about a muted economic recovery relative to expectations.
  • If the re-openings are not careful and virus cases surge, necessitating another shutdown, stocks could head back to the lows in fear of a “W”-shaped economic outlook.