“Better be prepared for the second wave” — live stream #10

Livestreams , Insights , Coronavirus 14.05.2020
Reading time: 7 minute(s)

Get familiar with our new “second wave” checklist, presented by Frank Häusler and Stefan Eppenberger from Vontobel Asset Management

Simple rules of thumb or checklists are often more suitable for navigating in a world of uncertainty. In this live stream, our experts introduce you to a “second wave” checklist that will come in handy, as the possibility of a second lockdown cannot be excluded. Plus: Learn, whicht 10 key factors are worth keeping an eye on for investors.


9 key questions in this Q&A at a glance:

  • Why do analysts anticipate one of the worst years for global economic growth? And which numbers are currently forecasted?
  • What can we learn from the “Swedish approach” or the “Austrian approach” to prepare for a second wave of COVID-19?
  • What new measures could central banks still introduce in a second wave? And why would government debt become even more of a focus?
  • Have the markets already priced in the upswing after the lockdown – or is the impact of our “postponed” consumption possibly wrongly anticipated? Will the fear of recurring coronavirus waves significantly affect consumer behavior?
  • Why has the corona virus crisis opened a gap between individual sectors, but also between investments in stocks and government bonds? And would a second wave drive them further apart?
  • Why are the share indices of different countries exposed to different degrees?
  • Why are so-called “sentiment indicators” such as search engines so important for market analysts in Corona times to master the dynamics and speed of developments?
  • What relevance do comparisons with the Great Depression of the 1930s have?
  • What should states pay attention to, if they want to convert their current bridging funding into a productivity-enhancing investment?


What to expect in this 45' replay video: Our investment experts checked different scenarios that might arise. They explain why a “second wave” checklist helps investors stay on top of all the developments. Follow the introduction and a Q&A session with Frank Häusler, chief strategist at Vontobel Asset Management, and Stefan Eppenberger, investment strategist within investment content team at Vontobel Asset Management. © Vontobel, recorded on May 14th, 2020, 8:00 p.m.


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The “second wave” checklist

10 key factors that would prevent another financial market crash

Updated on June 18th, 2020, after most countries have put lockdown easings in place.

    Factor to monitor Current rating and comment
Vontobel_Pills_RGB_black.png virus & curation

The virus is less harmful than we think Vontobel_Smiley_Speechless_RGB_black.png Too many deaths to ignore
Medicine: Scientists find a cure in time
Vontobel_Smiley_Sad_RGB_black.png Many ap­proaches, no break­through
Prevention: Scientists find a vaccine in time
Vontobel_Smiley_Sad_RGB_black.png Broadly avail­able not before 2021
Vontobel_Virus_RGB_black.png viral spreading

Daily new cases do not signi­fi­cantly accel­erate Vontobel_Smiley_Sad_RGB_black.png No in­crease once first wave ended
Austrian approach” (early mover) works Vontobel_Smiley_Sad_RGB_black.png Daily new cases stay low
Vontobel_Medicine_RGB_black.png health­care infra­structure

Significant improvement in testing capacity Vontobel_Smiley_Speechless_RGB_black.png No suf­fi­cient solution avail­able
Health care capacity is sufficient for 2. wave Vontobel_Smiley_Speechless_RGB_black.png Infra­struc­ture keeps im­prov­ing
Vontobel_Information_RGB_black.png govern­mental actions

WHO criteria don’t recommend further lockdowns Vontobel_Smiley_Speechless_RGB_black.png Large country dif­fer­ences
Governments decide to forgo new restriction Vontobel_Smiley_Speechless_RGB_black.png Increasing anti-lock­down senti­ment
Swedish approach” (shutdown light) works Vontobel_Smiley_Speechless_RGB_black.png Too early to say
Smileys show the ratings’ accuracy:   Vontobel_Smiley_Sad_RGB_black.png Vontobel_Smiley_Speechless_RGB_black.png Vontobel_Smiley_Sad_RGB_black.png


How to read our “second wave” checklist: In order to fully value each rating’s implications, we recommend to follow the introduction and background information given above.


To the live stream replay (Q&A)



Expert interview

Read in this interview how the “second wave” checklist has been compiled and why it is more suitable for investors than other, way more complex models. — Are you prepared to ride the next wave?



Stefan Eppenberger

Investment Strategist at Vontobel Asset Management

Stefan, you are expecting that this is not the end of the virus. What makes you so sure there will be a second wave?

There are two strong arguments why we must assume that there will be a second wave. First, the experience of the other two similar pandemics: the Spanish flu at the end of World War I and the swine flu in 2009/10. Unfortunately, in both cases, the second wave was not only stronger, but there was even a third wave which was bigger than the first. The second argument is also quite convincing: the lack of herd immunity. To achieve this state, at least 70% of the population needs to have become immune to an infection, whether through previous infection or vaccination. We are most likely a long way from that. We have only temporarily stopped the spread of the virus, not killed it. Also, there is still disagreement among experts as to whether someone is permanently immune after having been infected with COVID-19.


“Simple rules of thumb or checklists are often more suitable for navigating in a world of uncertainty.”

What is a “second wave” checklist? How does it work? How can investors use it for their strategies?

In our industry, competitors are outdoing each other with increasingly complex models to predict the future of the financial markets. However, more and more studies show that simple rules of thumb or checklists are often more suitable for navigating in a world of uncertainty. In our experience, such checklists are not only useful for investment experts, but also ideal for discussions with end clients.

At present, the most important question for the coming weeks and months will be how the financial markets will react to a “second wave”. It is important to note that financial markets fear further lockdowns, not the virus per se. However, the reaction of governments to the next wave does not necessarily have to be the same as it was to the first wave. Many factors will play a role. In our second wave checklist, we have compiled the ten most important of these factors. For example, we look at the speed at which the virus is spreading and how governments are responding. The development of the testing and healthcare infrastructure will also be important. Of course, we are also keeping an eye on the progress of potential cures and vaccines for COVID-19. So this checklist serves as a kind of compass on the currently rough seas.


“We’re just being swamped with information. Our task is to check and filter this data.”

You are working with three scenarios, and a lot of other data connected to your second wave assumptions. Could you briefly describe how you have aggregated your opinion, given this mass of information?

Data is a great challenge, indeed. But it’s not about the availability of data. The data sets chosen should also be easily available and regularly updateable. This is particularly tricky with COVID-19 data, as comparability between different countries is questionable. Just to give you one example: Chile counts those who died of Coronavirus as “recovered” because they are no longer contagious. Despite these peculiarities, our goal is that not every portfolio or relationship manager has to do this exercise himself, but that we are able to make our analysis available to them in a clear and concise form. The great feedback we’ve received so far on our “Time to Buy Equities?” checklist encourages us to continue in this way.


Now the crucial question to the experts: of the three scenarios mentioned, which one has the highest probability? Moreover, does the learning curve we all came down in the first wave help prevent a second meltdown of the markets?

This is a question that cannot be answered yet. There will probably be major regional differences. Not only with regard to the extent of the second wave, but also in the reaction of governments. In general, we assume that governments will react less restrictively than in the first wave. They know more about the virus and are therefore better prepared. The economic repercussions will probably receive more attention, because the economic costs will become increasingly visible. More governments could try the Swedish approach, which has also been praised by the WHO. But even this approach has its pitfalls, so it is important to follow developments there closely. You will find this approach on our checklist too.


“Finally, people can get out of their homes and spend some money.”

Stefan, thank you for the insight into how we as investors can deal with a second wave. One last question: do you have any good, optimistic news for this week?

Of course it’s great to see that, starting this week, shops and restaurants will be reopening in Switzerland as well as some other countries. The generous stimulus from governments and central banks around the world is of little use if people cannot get out of their homes and spend some of that money. Our hope is that the level of self-discipline among the population will remain high, which will help keep the second wave under control. Here, of course, we are speaking not only from an investor’s point of view, but for the well-being of society as a whole.


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