Not even thinking about thinking

  

UBS House View - July 2020

In this letter, exactly one year ago, I wrote about Nobel Prize-winning economist Robert Shiller’s concept of “narrative economics.” Shiller believes the stories we tell ourselves can drive economies and markets far more than any economic statistics. Today, when investors are left to contend with an invisible virus and distorted data, the story is everything.

Markets are faced with at least three evolving narratives: the “Fed” story, the “second wave” story, and the “US election” story. But which narrative will prove most powerful, stable, and durable? While news headlines can make us think the second-wave and election stories are the biggest drivers for markets, it is the Fed story that will endure over the medium term. Against this backdrop, we think the most important thing an investor can do is to be invested, not sit on the sidelines. We are positive on the outlook for both equities and credit.

 

UBS House View

Our publication "UBS House View" gives you a compact overview of UBS's opinions on the financial markets. Drawing on our global investment and research capabilities, it aims to offer you the best, most up-to-date investment guidance.