Exposure rates of the Dorval Asset Management Range – 19th June 2020

Initial economic indications on the post-lockdown period are encouraging, with May’s retail sales recovering much more quickly than expected in the US (cf. chart 1) and the UK.

The impact of the economy reopening along with the effects of stimulus plans are only just beginning, so GDP for developed countries should come out much higher than the average that forecast bodies expected for 3Q.


Consumer spending is recovering quickly and decisively in the US
Base 100 January 2020

Retail sales – excluding restaurants / Retail sales – total


Meanwhile, the expected rebound in manufacturing output is also set to be very significant. Preliminary results from June’s surveys with worldwide corporations will be published on Tuesday June 23, but the two US regional surveys already issued suggest that a robust recovery is under way (cf. chart 2). This obviously comes as no surprise after the historical flash crash over the past three months, but the pace of the rebound here – similarly to consumer spending – far outstrips expectations.


US manufacturing activity expected to recover sharply in June
Regional manufacturing surveys

Diffusion indices / Philadelphia area / New York area


We are seeing the same trends outside the US, at least in developed markets. Retail sales surged 12% in the UK in May, vs. a 6.3% rise expected, while in France, statistical office INSEE has started to upgrade its growth projections on the basis of indicators revealing a clear upturn in consumer spending in May and June. Lost economic activity resulting from the Covid-19 crisis, which was estimated at 28% in April, is poised to come out at “only” 12% in June. The near-total reopening of the economy along with the roll-out of stimulus programs – for example in the automotive sector – will definitely further fuel this momentum and help countries catch up over the summer.


So the process of upgrading growth projections has kicked off, but for the moment it is hampered by fears of a second surge in the epidemic in the fall. However, the virus’ resurgence in some regions, whether Beijing or the southern states of the US, does give some insight into a key aspect: greater understanding of the virus and improved logistical preparation mean that management of the health situation leads to much less economic disruption, even though the effects are obviously not neutral. Preparation and knowledge of the virus will continue to increase by the fall, particularly with the results of fresh trial phases for vaccines and treatments.


Here at Dorval AM, we continue to organize our portfolios to draw on this positive economic momentum, as we overweight cyclical plays, and particularly focus on the construction and industrial sectors.


Download the weekly letter in PDF version: Exposure rates of the Dorval Asset Management Range – 19th June 2020

Let us provide you with a customized discovery by giving us some clarification.

Choose your profile