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Unprecedented times beget unprecedented measures—and with the global financial crisis still visible in our rear-view mirrors, global central banks have in some ways responded to fresh crisis with substantially similar tools. Meaning they’ve lowered rates (to the extent they can, given relatively low rates to start with) and they’ve offered various lending facilities to ensure markets maintain sufficient liquidity levels.

Another day, another grim US economic milestone amid the COVID-19 pandemic. On May 8, the US Labor Department released its April Employment Situation report. The magnitude of the numbers was momentous—nonfarm payroll employment fell by 20.5 million people and the unemployment rate jumped to 14.7%, from 4.4% in March.

Featured Author: Gurpreet Pal
Gurpreet Pal is an analyst on the Artisan Partners Sustainable Emerging Markets Team.

As the COVID-19 pandemic evolves, emerging markets are set to take center stage. The US, Italy and other developed markets appear to be flattening the curve and starting to reopen their economies. In comparison, many emerging markets appear to be in much earlier phases of an outbreak. Within EM, India is an especially intriguing country to watch as it seems to be managing the pandemic better than previously feared.

India has the seemingly right conditions for a high number of cases and rapid transmission:

The Q1 market selloff was broad-based and intense, fueled by deep uncertainty about the pandemic’s true threat. In our view, the market did little to discriminate among individual firms, preferring to re-rate sectors given the short timeframe, rapid price action and lack of information.

Of course, our process is built to capitalize on market dislocations, when fear and uncertainty dominate, as is the case in our current environment. But we are also vigilantly risk-aware. This is where a thoughtful and repeatable process makes all the difference. 

Oil has been the lead story recently—for a few reasons. In January, Saudi Arabia and Russia kicked off a heated competition for market share—after several years of cooperating and coordinating output in order to attempt to control oil prices. The result has been a well-documented collapse in oil prices—and growing challenges for oil producers and investors alike. Though it seems the near-term race to the bottom may have concluded, it also seems unlikely prices rocket back in the near term. Here are six interesting charts showcasing some of the recent phenomena.

Governments globally have responded to the ongoing COVID-19 pandemic variously—some have effectively shuttered their economies, full stop; others have taken less radical approaches (like Sweden). Similarly on the fiscal front, some governments have passed sweeping spending packages aimed at dulling a full shutdown’s likely economic impact. Top of this list in terms of scale is the US, where Congress passed and the President signed a roughly $2 trillion aid package on 27 March 2020. In the intervening weeks (yes, it’s only been weeks—believe it or not), some countries have followed suit—in intention if not in magnitude. Japan’s cabinet approved a $1 trillion package on 7 April. The EU is struggling to agree on a €500 billion package (more on the EU momentarily). 

Amid significant market volatility due to the COVID-19 pandemic, we remain steadfast in our commitment to our investment philosophy. With a foundation in long-term structural tailwinds, resilient businesses and strong operators, our approach is designed for not only good times but challenging ones as well. Acknowledging the unprecedented nature of these circumstances and the uncertainty of a global health crisis, we thought a few words about our investment approach and how the investment team is spending its time would be appropriate.

Despite the worst selloff for credit since the great financial crisis, investment grade companies set a record level of new issuance in March. The thawing of primary market activities comes just two weeks after the Fed returned to its crisis-era playbook, announcing several new emergency lending facilities to contain the fallout of the COVID-19 pandemic—including the unprecedent measure of purchasing investment grade debt in both the primary and secondary markets. Facing evaporating liquidity and a severe contraction in credit conditions, the Fed effectively moved to become the liquidity provider of last resort to facilitate price discovery, reopen primary market activity and stave off the risk of a potential credit crisis.

This is part 5 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here, part 2 here, part 3 here and part 4 here.

Long-term, sophisticated relationships require two willing partners. By design, our client base consists of long-term, sophisticated investors in two primary groups: 66% of our AUM is from institutional clients, and 29% of our AUM is sourced through financial intermediaries—including broker/dealers, bank trust departments and financial advisors. Over the years, these two groups have adopted similar research processes for selecting their investment management partners and have asked relatively similar questions of us. As I alluded to in my last post, one of the critical recent questions we’ve been getting is how liquidity currently looks in the markets—a multifaceted question. 

This is part 4 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here, part 2 here and part 3 here.

Leading a large organization during a global crisis gives you a front-row seat to clients’ and shareholders’ evolving thought processes and concerns. We started receiving questions from our clients in early March. At first, their focus was primarily on our business continuity plan—whether we have a formal plan and structure in place to allow us to continue business as usual and whether we were prepared to deploy it should circumstances warrant. Clients asked questions like: Could our employees work from home if necessary? Would our systems and existing technology support a remote workforce? As discussed in prior posts, business continuity planning has long been part of our normal operations, so we were pleased to readily answer these early questions in the affirmative. 

Over the ensuing weeks, the questions’ tenor shifted a few times.