COVID-19: Seeking solace in numbers

The spread of the Novel Coronavirus (COVID-19) is an unprecedented global event in our lifetimes and the first challenge of its kind in the modern era. Despite countries all over the world responding to mitigate the spread and casualties of this pandemic, the economic and psychological consequences are still developing, as markets have clearly reacted with fear of COVID-19’s potentially significant consequences.

While so much uncertainty remains regarding the length and depth of this crisis, we have gleaned some valuable and interesting insights regarding some immediate economic developments with the help of alternative data. The goal of this latest white paper is to offer a deeper understanding of US subsector trends and our current perspective on this issue.

It is clear that there is likely to be some significant regional differences in the way economies recover, and that not all businesses will be impacted equally. We are learning and adapting to the new climate as best as possible and wanted to share some of the insights we are seeing through alternative data, which have helped us navigate this environment thus far. The title of this paper is “Seeking solace in numbers” and look to do just that by giving investors an unbiased granular view of the situation.

We have aggressively evolved our software, screening tools, external data vendor partnerships and processes to more closely track factors that will be central to investor sentiment over the next several months. While much remains unknown and the economic forecasts and predictions are wildly inconsistent, our investment approach has remained unchanged. It centres on considering methodically each situation one-step at a time with the real-time data available to us. In times such as these, it is particularly important to keep human emotion out of decision-making and to remain grounded in facts and figures.

In our view, quarantine measures and mandatory shutdowns – which have become mainstream across the US - have driven significant changes within consumer and business behaviour, which will likely persist for weeks at the least. Forecasting is dependent on how quickly we can make progress on COVID and re-open the economy so we attempt to track the potential curve as well as see how companies are handling the quarantine shutdowns in real time. No equity sectors were exempt from the broad initial selling in the markets. However, amidst the carnage, there are some silver linings and overlooked trends that indicate that this will not impact all businesses equally, which we explore in further detail with the help of real-time data.

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