Why a strategist says these affected actions will recover even if there is a second wave of pandemic

“There are times when leadership changes drastically and dramatically, and they generally correspond to funds, or close funds, from a recession after a period of accelerated deterioration of these asset classes.” And that is precisely what we have seen this year with small market caps, value stocks and emerging markets, ”he said in an interview with MarketWatch.

Solloway said he expects this change to occur when traders see new signs of openness in the economy.

“We have to be sure that any second wave that lurks will not be as terrible as the first. And in that sense, I am quite confident,” he said.

Countries will not be as flat as they have more equipment and testing capabilities. Over the next month, the United States will have test capabilities on par with Germany, he said.

“But I think the important thing is that now that we know what we are facing, we will have the opportunity to deal with the peaks or groups that arise,” he said.

“I think that when all is said and done, we are not going to have a second reaction as bad to another wave as the first, and if it is, then I think that is the fundamental reason why investors are looking for the most bombarded areas of the stock market, as they usually do. “

(After the interview, President Donald Trump said that the United States would not close again if there was a second wave of COVID-19 in the coming months.)

Solloway said most SEI funds avoid impulsive actions.

Doesn’t it make you nervous to bet against the winners?

I’m not talking about buying the [hard-hit] sectors and then maintain them throughout the next market cycle. I recognize that there is an age-old characteristic in superior growth performance, ”he said. “But at this point, we are at an extreme, and depending on the metric it measures, the extreme is even greater than what we saw at the top of the technology bubble.”

The graphic

Dallas Federal Reserve launched a new measure of social distancing, based on location data from mobile devices. At the height of social distancing in April, cities involved in social distancing 10% more than the national average saw an additional 0.6% of the population claim unemployment insurance, an additional reduction of 2, 8% of small business employment and a further 2.6% increase in small business closings, the Dallas Fed found. Interestingly, social distance data seems to differ recently from a measure of weekly economic activity, although it closely follows the measure of employment in small businesses.

“In the second half of April, social distances began to fade, while [weekly economic index] it has only slowed its decline. Although it is too early, a continuing decline in the WEI could indicate a more conventional recession dynamic as cautious consumers and businesses withdraw from spending and contracts, amplifying the initial disruption caused by social distancing “he said. The Dallas Fed.

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